Tuesday, 3 January 2012

The Governments Council Tax premium on empty homes is right in principle but ...

Councils have been requested to submit responses to the Governments "Technical Reforms of Council Tax - Response to Consultation October 2011”; In short the Government are going to allow Councils to charge, say 150% Council Tax (and removing any discounts) on empty properties in an effort to deal with the 750,000 empties in the UK.

I believe these proposals as a whole may lead to a reduction of empty properties in England and provide a boost for local regeneration and that the Government should be committed to taking them forward.

However there are serious flaws in the Government thinking and as usual, it is East Lancashire and Haslingden & Hyndburn that will lose out. Following helpful discussions with my Labour colleagues at Hyndburn Council, I have written to the minister to highlight amendments to the reforms that would be helpful in areas like Haslingden & Hyndburn.

The key points the Government needs to take onboard are;

  1. Discretion should be given to local Councils over the length of period and the premium % that can be charged. For instance, local circumstances may differ in different parts of the country and it may be appropriate to introduce a premium after 6 months as in Hyndburn with2,200 empty properties, in certain areas 12 or 24 months may be more applicable.

  2. Local Councils also need discretion on the additional premium rate above 100%. The premium might work very effectively at 110% in certain places, but needs to be over 200% elsewhere (such as Haslingden & Hyndburn) to be effective. Localism would seem to be the best solution.
  3. It would also be beneficial if local authorities are given the discretion to apply the premiums immediately from the 1st April 2013 on properties deemed to have been empty for a long period at that date.
  4. ln two tier areas there will be a need to introduce some funding mechanism to provide adequate incentives for District Councils to impose a long term empty property premium.
  5. lf no incentive is provided it is likely District Councils that only receive 15% of the full value of the extra premium (the remainder going to County, Police and Fire Preceptor) but bear all the additional costs of collection and administration, along with the local political fall out and may well not be persuaded to introduce an empty property premium.
  6. I would suggest the distribution methodology employed should be the one used for New Homes Bonus with Districts retaining 80% and Counties receiving 20% (with Fire and Police Authorities receiving nothing as they are not active in the housing and regeneration functions) including any premium. These properties are not benefiting from County Council services (essentially social services, education, environment, highways).
  7. The premium would need to be separately identified when collected at a District level. Local authorities do have wider powers as already granted to utility companies, telephone companies and other agencies, to recover accounts owed, as we suspect a large increase in non-payment if these changes are made. Therefore Councils should also be allowed to charge interest on outstanding balances in the same way as HMRC impose charges to late payments to ensure timely payment of Council Tax takes place.I would add that where payments are not forthcoming, Council's should have swifter powers under the 1925 Law of Property Act to seize, sell and recover any outstanding Council liabilities.