Council tax premiums and empty homes

Policy Officer Dan Cumming provides an update on a consultation around council tax premiums, second homes, and empty properties.

The Government is seeking the views of landlords in a consultation about how council tax premium exemptions should apply to second homes and empty properties. 

The consultation focuses on adding to the existing list of exemptions to the empty homes premium, an increased level of council tax that applies to long-term empty homes. 

The proposals that are put forward include: 

• The empty homes or second homes premiums should not apply to properties going under probate. 
• The empty homes or second homes premiums should not apply to properties being actively marketed for sale or let. 
• The empty homes premium should not apply to properties undergoing major repairs – however this is time limited to 6 months at most. 
• The second homes premium should not apply to annexes which form part of, or are treated as part of, the main dwelling. 
• The second homes premium should not apply to job-related dwellings. 
• The second homes premium should not apply to occupied caravan pitches and boat moorings. 
• The second homes premium should not apply to seasonal homes where year-round or permanent occupation is prohibited, or has been specified for use as holiday accommodation, or prevents occupancy as a person’s sole or main residence. 

Long-term Empty Homes 

The empty homes premium applies to long-term empty homes, those dwellings that are “unoccupied and substantially unfurnished for a defined period”.  

Since 2013, to encourage these dwellings being brought into use, local authorities gained powers to increase the council tax by up to 50% for homes that were empty for more than 2 years.

In 2018, these powers were strengthened to greatly increase the maximum premium and link it to how long the property had been empty for. 

Currently, the maximum levels of possible council tax premium that can be applied is: 

• 100% for properties empty between 2-5 years. 
• 200% for properties empty between 5-10 years. 
• 300% for properties empty for 10+ years. 

In addition to this, the Levelling Up and Regeneration Bill contains a provision to amend the definition so that from the financial year 2024/25 a long-term empty home only needs to be empty and substantially unfurnished for one year to be liable for a premium. 

Second homes 

The same bill will also provide the powers for local authorities to charge a discretionary council tax premium of 100% for dwellings that are periodically occupied, or essentially, to second homes. This is defined as a dwelling that is substantially furnished and has no resident. 

Landlords may be interested in responding to this consultation as it presents a number of positive outcomes. Of course, there is the potential for situations where landlords can face less costs at times where it would be welcomed, situations like probate where there may be lots of emotional stress, and where there are repairs needed the costs are already higher than normal. 

From a wider point of view, if these changes are implemented in a sensible manner, it has the potential to go some way in alleviating the supply crisis currently facing the sector. 

The consultation is available here and is open until the 31st August.