Tax breaks on empty houses may end

New government proposals could see local authorities removing tax breaks for empty homes in an attempt to increase the local housing supply and drop council tax. Eric Pickles the Secretary for Local Government has proposed the changes which would give town halls powers to take away council tax relief on unoccupied homes, possibly forcing these properties back onto the market.

The Department for Communities & Local Government stated that removing the current discounts that property owners enjoy would also help reduce council tax bills overall. A consultation on the proposals runs alongside ideas to introduce an empty homes council tax premium for properties which remain empty for more than 24 months.

“It is time that we took away these undeserved tax breaks for people who leave homes empty while other people struggle to find a place to live,” said Pickles.

Owners of empty properties are currently not required to pay council tax on them for small periods of time, but homes which require significant repairs are allowed to remain empty without charge for longer. Those which are simply empty have six months grace currently and those requiring repairs have a year of council tax breaks.

The consultation document looks at reform of council tax. It also examines whether councils should be able to set their own discount rates. As expected, the proposals do not look to introduce changes to the exemptions and relief which cover homeowners who have been taken to hospital or who have to be cared for elsewhere.

Councils may also be allowed to set up the new premium rate of council tax which would affect properties vacant for two years or more. The document comments that if some authorities already remove the discounts available for empty properties they would then be able to levy more than the entire council tax bill that would normally be due on such a property.

The consultation document has been sent out to local councils and other governmental bodies and interested parties and they are being asked if they believe that the new procedures would have definitive effect on the bringing empty properties back onto the market. Also set out in the document are proposals to discount council tax bills for those who use electronic payments such as direct debit, as many payers do with utility bills.

Pickles commented that these practical measures would work in conjunction with the tax freeze announced by Chancellor George Osborne. He added: ‘By taking away these unfair tax breaks for empty homes we can get more home available and bring the council tax down by about £20 per household.