Agenda item

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

 To recommend  that Full Council agrees to increase the Council Tax Premium on Properties empty for more than five years  in 2020 and 10 years in 2021.

The Cabinet Member for Finance and Strategic Regeneration introduced the report which requested Cabinet recommend that Full Council agrees to increase the Council Tax Premium on Properties empty for more than five years in 2020 and 10 years in 2021.

The Cabinet Member detailed that the Administration’s manifesto was clear that it was committed to redistributing the burden of Council Tax. This included exploring and evaluating the scope of the existing discretionary reliefs the Council provided in the borough to ensure that it was targeting support at those residents in particular need.

The Cabinet Member noted that, since 2013, Councils had 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. After implementing the last permissible change from 1 April 2019, the amount of Council Tax premium for such properties is currently 100%, so that the payer was liable to pay a total 200% Council Tax. The legislation again had recently been changed to give Councils the power to increase the premium on 1 April 2020 from 100% to 200% on properties empty for more than 5 years with a further increase on 1 April 2021 from 200% to 300% for properties empty for more than 10 years.

The Cabinet Member informed that some of the Council’s neighbouring boroughs, such as LB Enfield, LB Islington and LB Barnet currently charged the maximum existing premium of 100% (as did this Council)and were also considering increasing this following the change in legislation. Therefore, the proposal was likely to mean Haringey is aligned with its neighbouring boroughs. In this financial context, the Cabinet Member proposed it was correct to increase the premium payable on long-term empty properties.

The Cabinet Member closed by noting the proposal would create additional income for the Council and contribute to the delivery of vital services and support for the most vulnerable residents.

In response to a question emanating from a Freedom of Information request concerning the number of homes within the borough which were considered long term empty, the Cabinet Member invited Councillor Palmer to provide further details of that request and would look into the matter. The Cabinet Member assured that the Council did collect tax premium on any long-term empty properties.

RESOLVED

That the Cabinet recommends to Full Council:

1. Increasing the premium charged on long-term empty dwellings, empty for more than 5 years, from 100% to 200% this would take effect from 1 April 2020.

2. That from 1 April 2021 there is a further increase from 200% to 300% for properties empty for more than 10 years.

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. After implementing the last permissible change from 1 April 2019, the amount of Council Tax premium for such properties is currently 100%, so that the payer is liable to pay a total 200% Council Tax.

The legislation again has recently been changed to give Councils the power to increase the premium on 1 April 2020 from 100% to 200% on properties empty for more than 5 years with a further increase on 1 April 2021 from 200% to 300% for properties empty for more than 10 years.

Increasing the premium 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 100% (as does this Council) and are also considering increasing this following the change in legislation. Therefore, the proposal is likely to mean Haringey is aligned 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. Council Tax is not charged, however, 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

Not increasing the premium to 200% from 1 April 2020 for properties empty over 5 years and/ or not increasing the premium from 1 April 2021 to 300% for properties empty over 10 years

The Council could choose not to extend the premium and leave it at 100%, or to increase the premium from 1 April 2020 to more than 100% but less than 200% for properties empty over 5 years.

The Council could choose not to increase the premium to 300% from 1 April 2021 for properties empty over 10 years, or to increase the premium to more than 200% but less than 300% for properties empty over 10 years.

These alternatives are not proposed because the Council is under significant financial pressure to deliver a sustainable Medium Term Financial Strategy. Increasing the Council Tax premium from 1 April 2020 to 200% for properties empty over 5 years and from 1 April 2021 to 300% for properties empty over 10 years would generate additional income for the Council.

In addition, increasing the premium to the maximum 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.