JANUARY 07, 2015 | BY A & S Property
Give councils more power to tax empty homes, urges report
An independent thinktank is calling for English councils to be given more power to tax empty homes in order to tackle the country’s housing crisis.
The Institute for Public Policy Research (IPPR) – publisher of the Back on the market report – says that hundreds and thousands of empty homes are making England’s housing crisis worse.
The firm’s report argues that giving Local Authorities power to increase tax on empty homes would ensure more become occupied, bringing England into line with Scotland.
The report shows that there are 635,000 empty homes across England, including 216,000 that have been empty for over six months.
In London - where house prices and rents are particularly high - over 60,000 homes are empty, says IPPR, including over 20,000 that have been empty for over six months.
The report says Local Authorities should be offered an enhanced set of powers, including:
• The removal of the 50% premium cap from council tax on empty homes. In effect, IPPR says, this would allow Local Authorities to determine their own banded council tax premiums on long term empties.
• Local Authorities having the discretion to define what a long-term empty property is, including the ability to shorten the timeframe that defines eligibility for the discretionary tax to one year (rather than two) and the freedom to determine what constitutes the inhabitation period that restarts the clock.
IPPR says that by giving Local Authorities discretion over these two criteria, they can account for differences in housing market dynamics up and down the country.
The firm draws attention to Scotland where long-term empties are defined with a one-year threshold (rather than two years in England) and the length of time a property would need to be inhabited to reset the starting gate is three months (instead of the English standard of six-weeks).
The Back on the market report argues that this would get more homes occupied, rather than act as a revenue raiser, but if there was no response from empty home owners, a premium of 70% of a Band D Council Tax payment would result in a charge of around £1000, drawing in an additional £110m nationally.
Local Authorities could then channel these extra funds into their local housing markets, IPPR suggests, with an even tougher approach being able to raise as much as £215m a year.
“Long-term empty homes are a luxury England cannot afford. With rising house prices, substantial levels of homelessness and lengthy housing waiting lists, empty homes are making the housing crisis worse,” said Bill Davies a researcher at IPPR.
“Short-term vacant properties are a natural part of the housing market. Properties will be without residents as estates are disposed of, as sellers await buyers, or as landlords await new tenants. But when properties are left empty over the long-term it increases pressure on rents and house prices,” he argued.
Davies concluded by saying that a more flexible approach to council tax powers is part of the solution to Britain's housing crisis.
IPPR's full report can be viewed here.