Agenda item

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

The report will seek agreement from Cabinet to recommend that Full Council agrees to increase the Council Tax Premium on properties empty for more than two years.

[ Councillor Blake arrived at the meeting 7.10pm]

The Cabinet Member for Finance introduced this report which requested Cabinet to recommend to Full Council to increase the Council Tax premium charged on long-term empty dwellings from 50% to 100% from 1 April 2019.

The Cabinet Member highlighted the administration’s manifesto commitment to redistributing the burden of Council Tax. The proposal to increase Council Tax premium would create additional income for the Council. The Labour administration believed it was correct time to increase the premium payable on long-term empty dwellings.

Following questions from Cllr Tucker and Cllr Barnes, the following was noted:

• The Cabinet Member concurred that the imposition of an increased Council Tax premium was an appropriate measure and would deter against individuals leaving properties empty long-term and could result in such properties being brought back into usage, which would help address the borough’s housing shortage.
• The Cabinet Member also concurred with the position that the Council was in a difficult financial position because of the central government’s austerity policies. The extra income provided from the Council Tax premium increase would have the potential to bring much needed funding into the Council to use on essential services.
• In 2018, there were approximately 500 long-term empty dwellings.
• The London Boroughs of Barnet, Enfield and Islington had introduced a 50% Council Tax premium on long-term empty dwellings but it was understood they were also considering increasing this to the maximum 100%.
• There were side effects to long-term empty swellings, such as squatting, anti-social behaviour, structural issues from lack of maintenance. In addition, neighbouring properties suffered an adverse impact on the price of their properties.
• There were two exemptions from the premium. This included dwellings which formed part of a single property where other parts of the property are used as a sole or main residence, and properties owned by service personnel posted away from home.
• In 2017/18, the Council received £92,900 from the long-term empty dwelling premium and the proposed increase in premium would therefore result in extra income likely being generated. However, the Cabinet Member noted it was not possible to predict how much extra income might be generated but it was projected it would be net positive for at least two years.
• The potential increased revenue would be an inadvertent gain but the main reason for the increase was to deter the properties from being long-term empty dwellings, as opposed to a financial gainer for the Council.

Agreed that the appropriate officer would write to Cllr Barnes to confirm the number of Empty Dwelling Managing Orders the Council had issued.

RESOLVED

To recommend to Full Council to increase the premium charged on long-term empty dwellings from 50% to 100% from 1 April 2019.

Reasons for Decision

Since 2013, councils have been given the discretionary power to charge a premium on dwellings deemed to be ‘long-term empty’, i.e. properties which have been unoccupied and substantially unfurnished for at least two years. At present, the amount of Council Tax payable for such properties can be increased by 50%, so that the payer is liable to pay a total of 150% Council Tax.

The legislation has recently been changed to give councils the power to increase the premium from 50% to 100% from 01 April 2019. This means that the total amount of Council Tax payable for such properties could be increased from 150% to 200%.

Increasing the premium to 100% has the potential to bring in additional income which would support the Council’s Medium Term Financial Strategy and help mitigate its funding pressures.

Some of the Council’s neighbouring boroughs, such as LB Enfield, LB Islington and LB Barnet currently charge the maximum existing premium of 50% and are also considering increasing this to a 100% premium following the change in legislation.  Therefore, the proposal is likely to mean Haringey is acting in line with its neighbouring boroughs.

It is recognised that Council Tax payers who are liable to pay the premium are unlikely to be making full use of Council services whilst the property is long-term empty.  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 long-term empty.

In addition, an increased premium may encourage residents to bring long-term empty properties back into use. There is shortage of housing in the area and so there is potential for long-term empty dwellings to be put to better use if used to increase the available housing. This would in turn reduce the pressure on housing stock.

Some properties are exempt from the premium by statute and this will not change:

• A property which would be the sole/main residence of a person but which is empty while that person resides in accommodation provided by the Ministry of Defence by reason of their employment (e.g. service personnel posted away from home).
• A dwelling forming part of a single property, where other parts of the property are used as a sole or main residence.

The Council will continue to have the means to reduce or eliminate Council Tax liability, for example to cater for cases of exceptional hardship.

Alternative Options Considered

No change or increasing the premium to less than 100%

The Council could choose not to extend the premium and leave it at 50%, or to increase the premium to more than 50% but less than 100%. 

This is not proposed because the Council is under significant financial pressure to deliver a sustainable Medium Term Financial Strategy. Increasing the Council Tax premium to 100% would generate additional income for  the Council.

In addition, increasing the premium to the maximum 100% may encourage residents to bring long-term empty properties back into use which could in turn lead to an increase in available housing.

Removing or reducing the existing premium

The Council could choose to remove or reduce the existing premium.

This is not proposed because the Council is under significant financial pressure to deliver a sustainable Medium Term Financial Strategy. Removing or reducing the Council Tax premium would reduce the Council’s income.

In addition, removing or reducing the premium may reduce the incentive for residents to bring long-term empty properties back into use.