Rising rates on empty homes

With media attention firmly focused on council tax rises applied across the board, a trickier but potentially much more important change is flying under the radar: the ability for local authorities to double council tax on empty homes. And while it’s unlikely to raise the kind of funding that broader increases will, these new powers could be a major boon to councils if their potential is fully realised.

Understanding the new powers

First announced in the 2017 Autumn Budget, the new powers were conceived of by the Ministry of Housing, Communities and Local Government as a way of discouraging the ownership of multiple properties. They apply to any property unoccupied for two years and allow local authorities to increase council tax by as much as 100%.

Exemptions are available for property owners in the armed forces, or when they are empty for a specific reason – for example, the owner going into care, or the property being uninhabited due to circumstances like flood or fire.

Raising essential funds

At the time of the policy announcement, critics were quick to label the tax as ineffective against rich owners, with one luxury property agent describing the added cost as ‘water off a duck’s back’ to wealthy buyers. However, if they are proven correct, the extra income could be a silver lining for cash-strapped councils.

The average increase of 5.1% applied to council tax bills across England may have boosted council coffers, but the Local Government Association (LGA) has been keen to emphasise that it’s still not enough to plug the growing funding gap. Not only that, but a fresh income source like this could be a significant boon in some boroughs.

The issue of enforcement

Although the powers represent a solid opportunity for councils to address issues at a local level, and raise vital funds, they do come with some concerns. Collecting the tax from absentee owners is no mean feat and may require active enforcement.

In a climate that is occasionally still wary of debt enforcement, councils must be careful to ensure that they give debtors every opportunity to pay on their own terms – before moving on to enforcement agents. For more information about how Dukes Bailiffs ethical debt collection services can help you with this process, contact one of our operators today.