Agenda item

[Report of the Interim Director for Finance. To be introduced by the Cabinet Member for Finance.]

To agree the approach for revised Unoccupied and Unfurnished Property Discounts.

The Cabinet Member for Finance introduced the report, which summarised the proposed cessation of two of the Council’s discretionary Council Tax discounts related to (i) unoccupied and unfurnished properties, and (ii) vacant properties requiring or undergoing major repair or structural alteration.

The Cabinet Member for Finance continued to outline the manifesto commitment to redistribution of the Council Tax burden. This included exploring discretionary relief and targeting support for residents in particular need. Over the last 4 years the Council had managed to maintain a balanced budget in a difficult financial context and these financial pressures were likely to continue. The cessation of two of the Council’s discretionary Council Tax discounts would also mean that the Council joined the pool of neighbouring boroughs that had already abolished this discount.

In taking forward this decision, Cabinet were aware that Council services need to be run and properties in the borough benefit from these services, including those that were vacant. The cessation of these discounts would enable the Council to raise money to mitigate the cost in supporting families most in need.

The following information was provided to questions from the Leader and Cllr Dennison:

• The cost of not abolishing these discounts sooner was more than £1m to the taxpayer over the last 3 years.

• In relation to homeowners of vacant properties which were undergoing major repair and restructure being deterred from bringing their home back into use, due to additional expense of the Council Tax payment, the Cabinet Member contended that the property would still benefit from Council Services and house price rises and therefore this was a fair charge.

• With regards to a Housing Association being deterred from updating properties or bringing them back into use by these discounts, the Cabinet Member responded and advised that Housing Associations had their own business model and would likely be able to take account of these additional charges.

• With regards to getting more empty properties back into use, and the suggestion to increase the liability of the home owner on a month-by-month basis, this would be considered going forward.

• Noted that there was a high degree of description, contained within government guidance, on what the Council could do with discounts and the report was seeking to operate within these descriptions, whilst seeking to bring properties back into market as soon as they can be included.

RESOLVED

To recommend to Full Council to cease two of the Council’s discretionary Council Tax discounts from 1 April 2019, namely for:

• Unoccupied and substantially unfurnished properties; and
• Vacant properties that either require or are undergoing major repair work to render them habitable; that have undergone such work in the past six months; or that are undergoing structural alteration.

Reasons for decision

The two Council Tax discounts are at the Council’s discretion. The administration has indicated a desire to appraise the existing fleet of discretionary powers given the continuing need to make savings to the wider budget.

Abolishing the two Council Tax discounts would generate an estimated saving of £462,800 per year, which would support the Council’s Medium Term Financial Strategy and help mitigate its funding pressures.

Under the current arrangements, an unoccupied and furnished property receives no Council Tax discount, while an unoccupied and unfurnished property receives the discount. The Council seeks to address the imbalance and bring the arrangements in line with those for unoccupied and furnished properties.

Some of the Council’s neighbouring boroughs, such as LB Enfield, LB Islington and LB Barnet have abolished both Council Tax discounts. Therefore, the proposal would bring Haringey in line with its neighbouring boroughs.

It is recognised that Council Tax payers who currently claim these discounts are unlikely to be making full use of Council services whilst the property is unoccupied. However, Council Tax is not charged on the basis that every payer will use every service and Council services do not stop or reduce in cost when a property becomes empty.

There are a number of means of reducing or eliminating Council Tax liability available and that would not be affected by the recommendation. For example, the exemption following the death of the occupant, the single person discount and disregards for students or those detained in hospital.

Alternative options considered

No Change

The Council could choose not to abolish its Council Tax discount for either (i) unoccupied and unfurnished properties, or (ii) vacant properties requiring or undergoing major repair or structural alteration.

This is not proposed because the Council is under significant financial pressure to deliver a sustainable Medium Term Financial Strategy. Abolishing the

Council Tax discounts would generate substantial savings to the Council.

Remove only one of the discounts

Removing only the discount for unoccupied and unfurnished properties would generate an estimated saving of £341,300 per year. Removing only the discount for vacant properties requiring or undergoing major repair or structural alteration would generate an estimated saving of £121,500 per year.

This is not proposed because the Council is under significant financial pressure to deliver a sustainable Medium Term Financial Strategy. Abolishing both Council Tax discounts would generate substantial savings to the Council.

Extend the scope of the Discounts

This is not proposed as it would increase the level of funding pressures already