March 27

Council to Collect Half a Billion in Higher Taxes


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A lettings agency has projected that significant revisions to council tax rates concerning empty properties could result in an additional £540 million in revenue starting from the upcoming Monday. This adjustment stems from legislation dating back to April 2013, granting billing authorities the authority to impose council tax premiums of 50% on residences left unoccupied for a period exceeding two years. Subsequently, in April 2019, this provision was enhanced to allow for premiums of 100% to be levied on properties that remained vacant for the same duration.

The anticipated surge in revenue underscores the government’s efforts to incentivize the efficient use of residential properties and address housing shortages. By imposing higher tax rates on long-term empty homes, authorities aim to encourage property owners to either occupy or rent out their properties, thereby revitalizing communities and maximizing housing stock utilization. This measure aligns with broader initiatives aimed at promoting sustainable housing practices and mitigating the impact of housing shortages on local communities and economies.

Starting April 1, including Bank Holiday Monday, homes left vacant for 12 months will be subject to a 100% council tax premium, albeit with certain exceptions in place. Anticipating these changes, Benham and Reeves, a lettings agency, conducted an analysis on the prevalence of long-term empty properties across England, defined as those unoccupied for a minimum of six months. Their findings shed light on potential increases in council revenues from such properties under the new legislation.

According to their research, there are approximately 261,189 homes across England classified as empty for six months or longer. Considering an average annual council tax of £2,065 per property, current collections from empty homes amount to an estimated £540 million annually for councils nationwide. These figures highlight the significant financial implications of the upcoming changes, signaling a potential boost to council incomes as a result of the revised regulations on long-term empty properties.

If homes remain vacant for 12 months or longer, council tax per property could soar to an average of £4,130, resulting in a substantial boost to council tax revenues. This change in legislation has significant implications, potentially yielding councils a staggering £1.1 billion annually from empty properties. The prospect of such a substantial increase underscores the importance of addressing the issue of vacant homes to both local authorities and property owners.

The North West emerges as the region with the most significant potential for increased council tax revenues from empty properties. With approximately 42,454 vacant homes, councils in this region already collect an estimated £91 million per year in council tax on vacant properties. However, with the new legislation in place, this figure could potentially double to £182.1 million annually. This exponential growth in revenue highlights the impact of the legislative change on regional council finances.

Similarly, in the South East, the potential for increased council tax revenue from empty homes is significant. Currently, council tax collected on vacant properties stands at £73.1 million, but with the new legislation, this figure could double to £146.3 million annually. This substantial increase underscores the financial implications for councils across different regions, prompting a closer examination of strategies to address vacant properties and maximize revenue streams.

In London, an estimated £65.2 million is currently collected annually in council tax from the 36,210 empty homes across the capital. With the new legislation, this figure could potentially double to £130.4 million. Director of Benham and Reeves, Marc von Grundherr, expresses concern over the housing crisis and the neglect of supply issues by the government. He finds it unacceptable that numerous homes remain vacant when there’s a pressing need for more housing stock.

While acknowledging the government’s efforts through changes in council tax premiums for empty homes, von Grundherr doubts its effectiveness in encouraging these properties back into circulation. However, he highlights the potential financial benefit for local councils, hoping that the additional income will be used to address housing availability issues. Despite the financial gains, the underlying problem of empty homes persists, requiring more comprehensive solutions to tackle the housing crisis effectively.

“When you consider the money they stand to make, it does highlight the benefit of utilising these empty homes to at least address the issue of supply within the rental sector. Rather than pay a 100% council tax premium, these properties could be generating rental income, while also providing tenants with the homes they desperately need. ”


Council to Collect Half a Billion in Higher Taxes, Empty Homes UK

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