Annual Impact Report 2024
Empty homes and the council tax levy
The council tax levy, or premium, is something that local authorities can apply to properties that have been empty for twelve months or more, provided that the property is not being actively marketed for sale or let.
The levy is intended to be a tool to help local authorities to make the best use of existing housing stock, including by ‘bringing long-term empty homes back into use as safe, secure and warm housing’.
The premium was extended in April this year to include second homes, to assist local authorities in ‘influencing ownership patterns to encourage second homeowners to use their accommodation differently, for the benefit of local communities such as from personal use to a private rental tenancy, which could help increase supply in the private rented sector’.
The levy remains an important tool to motivate owners to bring properties back to use. However, we know that there are many owners for whom the premium on empty homes will make no difference whatsoever. This is because they can easily afford to pay it and are not motivated to bring their home back to use. Similarly, the recent introduction of a premium that can be charged on second homes will also not lead to every second home owner deciding to sell or rent their property so that it returns to full time residential use.
At the same time, it is important that people who would love to bring an inherited property back to use, but can’t afford the repairs and/or have a home in an area where no one is buying because of systemic empties, are not unfairly penalised or prevented from bringing their home back to use as a result of the premium.
If the premium is to have the desired effect of working to increase the availability of housing across the country, we would like to see local authorities investing revenue raised through it into providing support for owners to bring empty homes back into use as social or affordable housing.
This would mean that owners who still choose to leave their homes empty, notwithstanding the higher premiums, would at least be indirectly contributing towards bringing homes back to use and addressing the housing emergency.
As noted previously, a recent amendment to the regulations means that where an owner has purchased an empty property, and can produce evidence to establish that it is undergoing repairs or renovations that contribute to the improvement of the property; the council tax premium cannot be applied for at least six months after the date the person purchased the property. It also provided local authorities with discretion to extend this period.
The minimum six months grace period will help EHOs in areas where there is no policy to use discretion. It may also increase the appeal of buying an empty home, if owners know that they have the extra time to refurbish the home without having to worry about facing double council tax.
Further guidance issued in May gave a non-exhaustive list of repairs and renovations that contribute to the improvement of the property. These include; upgrades e.g. new kitchen and bathrooms; energy efficiency works e.g. new windows and heating systems; modernisation works e.g. new wiring and plumbing systems; general repairs e.g. roof restoration and new render; Non-structural remedial action e.g. subsidence and rising damp.
The guidance also gave examples of where local authorities may find it beneficial to use their discretion in determining whether a premium should apply, including where:
A property that is taking a long time to sell/let in a stagnant market despite being priced appropriately;
An Empty Homes Officer has assessed the owner is taking positive steps to re-occupy their property and a time-limited council tax increase “holiday” would encourage the property to be brought back into use sooner.
We welcome the issuing of this guidance and hope that local authorities who do not currently offer discretion, will recognise the importance of flexibility going forward.
The regulations that established the premium, give local authorities discretion to disapply it in a range of circumstances.
Our survey asked respondents:
‘Does your council have a policy to use discretion when applying the council tax levy to long term empty properties?’
Of 27 responses, 17 said yes and 10 said no.
“Discretion can help to incentivise returning unoccupied properties to residential use. Where owners funds are restricted discretion may help to quicken the process of returning a property to residential use.”
“This is of assistance as it encourages action as well as removing the financial penalty/drag. Also helps engage owners with the service and allows management and awareness from an empty homes perspective and, where appropriate, can steer end use towards our priorities.”
“This helps to encourage owners/ executors to get properties back into use, working together to help achieve the end result. With the EHO’s working with the empty home owners and council tax staff this saves the owners/executors awaiting a response from the general council tax mailbox therefore speeds up the process and allows the EHO to deal with any other issues in respect of this empty property.”
“When successful this this will often free up finances which the owner will then use for renovations or preparing the property for sale/ let. It is also a useful tool to engage owners as the surcharge is often an extra strain and they welcome my assistance and will keep me informed of their progress.”
Comments from empty homes officers in local authorities that don’t use discretion included;
“Some properties that really need the assistance just don’t get help due to policy”
“It could be used as a bargaining tool with owners to bring their property back into use if it were in place”
“Owners are unable to repair their properties as a result of the council tax levy.”
“It means we cannot be flexible with owners who may be struggling financially, resulting in a delay in bringing property back into use.”