Agents are reminded that as from Monday (April 1), local authorities will have the discretion to charge full Council Tax on empty properties.
The change will affect properties that have currently been given exemptions and discounts, including properties for sale and rent, and second homes.
Owners of properties that are empty because of building work will also lose the automatic right to be let off Council Tax for up to a year. Many councils have decided to charge the full amount from day one.
These are the exact changes:
1. Exemption class C (properties that are empty and unfurnished for up to six months) has been abolished and each council can decide whether to award a local discount in its place
2. Councils can decide to charge an additional premium of up to 50% on homes that have been empty and unfurnished for two years or more
3. Exemption class A (properties requiring or undergoing major repairs for up to 12 months) has been abolished and each council can decide whether to award a local discount in its place
4. The minimum discount that councils can give for furnished homes that are no one’s ‘sole or main residence’ – i.e. second homes and unoccupied furnished lets – has been reduced from 10% to 0%.
Local councils vary in their approach. For example, some are charging full Council Tax from day one, while others are allowing a short ‘grace’ period of perhaps a month and then either levying full Council Tax or a proportion of it for the next five months.
For example, Southwark Council in London is allowing empty, unfurnished properties to be exempt for two months, after which the full charge is applied. However, there is no exemption at all for empty, furnished rental properties. On properties empty for two years or more, it will charge a ‘premium’ of 50%.
Spelthorne Council is giving a one-month exemption to empty, unfurnished rental properties, and then giving a 50% discount in month two, followed by a 25% discount in month three, followed by no discount. It, too, will be charging 150% Council Tax on properties empty for over two years.
Information as to what each local council has decided should be on their websites. It should not be assumed that neighbouring councils will have adopted the same pricing policies – it is unlikely.
The local authority in question will have to be notified promptly of empty periods – which could mean an agent having to notify the council of an empty rental property on the day that tenants move out, even if it is going to be vacant just a very short while.
The changes have been brought in to help local councils fill their coffers, but also to discourage long-term empty homes. However, could the law of unintended consequences apply?
It will be interesting to see whether the change affects sale and rental prices. There has been speculation that landlords will raise their rents as a result. But surely a landlord faced with having to pay, say, £150 a month on an empty rental property is going to be more likely to accept a lower rent if the tenants can move in immediately?
Would the sellers of a property that is lying empty because they have had to move for a new job be open to negotiation on the asking price because buyers have wised up to the changed Council Tax situation?
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Comments
I do think this statement is a little confusing as it implies that mortgagees in possession acting as vendors are liable to pay the council tax which isnt the case. Class C exemption for empty and unfurnished properties which is an accurate description of repossession properties has now been removed which implies that lenders are now liable. However, this is not the case as repossessed properties fall under class L exemptions which are still in force and under discussion by the CML / Government / Local Authorities. Hope this helps. Mark Rothwell / Spicerhaart.
Make it 100% for all properties. job done.
@Unfurnished v Furnished
In rating/council tax law the owner/leaseholder of a furnished property is deemed to be in receipt of beneficial occupation i.e. the storage of their furniture and belongings! No account is taken of the fact that they are not utilising local services although, presumably, the police would still attend if their possessions were stolen from the empty property. This has now become academic anyway where those Local Authorities are not allowing a council tax free period whether the property is furnished or not.
One interesting point that will cause problems for landlords is, where the local authority offers a council tax free period, and a tenant gives notice but moves their furniture out before the end of the notice period he/she will benefit from all or part of the free period leaving the landlord to pay full council tax as soon or shortly after the notice expires. - I can envisage some unhappy landlords in those circumstances
Will this never end!
Another piece of over complicated property legislation that throws common sense out of the window. Should be (say) 2 months no tax for totally unoccupied properties then full tax. Too simple?
Another charge, which i believe is new, that one of our Landlords has made us aware of it that where council tax has been paid in advance and a refund requested (as say a tenant has now moved in) the council (Westminster in this case) will charge 5% to process the refund.
Its because a furnished proeprty has the option to be used sporadically by the landlord. EG staying one night while in town. It a bit more difficult to do that in an unfurnished place.
Apparently.
Can anyone explain in simple (and sensible terms) WHY an empty furnished property should pay council tax from Day 1 yet an UNfurnished doesn't?
Does an EMPTY furnished property throw out more rubbish or use more street lighting?
council tax is not over 10 months it is an annual bill that can be spread over 10 payments
anyone even businesses are now legally allowed to pay their annual council tax/rates spread over 12 payments, I know because I do
Obviously where a tenant pays 10 months up to Feb, if they move out they get rebated.
There's an even bigger saving to be had for landlords who move back into the property for the period between tenancies... claim 25% off the rental property Council Tax.... AND claim 25% off the home as that could become single occupancy too!!
Oh the paperwork for the council!!!! What a silly rule. What they bring in gets spent on administering it.
Wouldn't a 1 month exemption have worked better for everyone?
Our local Council - Cotswold District - has gone for zero tolerance and there is no exemption for vacant properties - even though properties with single occupants get the standard 25% discount. I can see several landlords claiming that their wife, partner, family member has moved into the property in order to save 25%.
They have failed to appreciate the cost of administration in issuing and chasing bills for small periods of time when say, a tenant moves out on a Saturday and a new tenant moves in on a Monday.
Also Council Tax is payable over 10 months, so what happens to periods over the 2 month period? They have already received a full annual payment from the tenant so claiming another payment from the landlord (or even the next tenant) loads it even more.
It would be interesting to see a summary of what other councils have adopted - how many are taking a pragmatic approach and how many are going for zero tolerance.
Another stealth tax shame on the councils