Technical reforms of council tax - EHN draft Consultation Response

This is the place to discuss our response to the proposed changes to Council Taxc. With Christmas looming there is not much time to discuss the issues, given that the deadline for responses is the 29th December.

The latest (and eventually final) version of our response can always be found here in our Information Library. But drafts will also be attached to this forum post.

Please make your comments by replying to this post.

Thank you.

Forums: 
EHN policy

Hello
Is it worth a mention in question 14 about a break in levying the premium to people who purchase long term empties, perhaps just for a 6 month period, or whatever is afforded the owner that chose to leave them empty. Particularly if a 150% after 2 year amount is brought in, we wouldn't want to discourage potential purchasers from buying a long term empty because they will instantly receive an inflated CT amount.
Thanks

Hi Luke
You have touched on quite a big issue which comes into a number of  empty-homes-related measures.  it goes back to this: what is a property worth
I will  talk from personal experience.  I bought a house that needed some work doing to it, that was picked up in the survey.  This was at a time when renovation grants were readily available and you did not have to have to have owned the property for any lenght of time to get them.
The conversation with the vendor goes like this: "there is no need for me to reduce the price becauas you can get a grant to do the work".  Which was true....
This happened twice to me.  So this is not hypoethetical, it is how markets actually work.  That is why the rules subsequently changed to require that you owned a property for a certain period of time before  you could qualify for renovation grant. 
So take your scenario.  When the property is sold, the price offered should reflect the fact that higher council  tax will be payable  And the person buying will be incentivised to  get the work done sooner rather than later.  
If you do not adopt this logic, you end up rewarding the owner of the empty home - you don't save the person buying the property money.
Take this example. Two houses next to one another. One  is occupied, one has been empty for 2 years.  Both are for sale.  Both need £100,000 of work doing.  Works on the occupied home will attract VAT at 20%; on the empty, VAT at 5%.  So the works on the empty one will be £15,000 cheaper.  The net result is that a rational buyer ought to  be prepared to pay £15,000 more for the empty home.   It is the owner of the empty who will benefit,  not the purchaser.  The VAT rules are not necessarily that well known so it will not necessarily work out like that - but it could and should.  The council  tax rules will  be well known so they are likely to be factored in to purchase prices.
Why should the taxpayer inflate the value of your asset if you haven't looked after it?
I hope that makes sense. It is quite important for these basic principles to be understood.
What might be nice would be deferring the tax until  the works were complete. Probably not very easy to do though.
 

I'm for owners who own a property that has been vacant for 2 years paying extra - with no consessions. Paticularly if the extra can be kept by the LA and used to finance empty property work that may return more empty properties to use. The HCA funding is capital only with no revenue to provide even basic advice. The new Homes Bonus is not ring fenced for empty property work.  We need to work to make these strands of funding compliment one another.
There is an argument that the premium may cause higher levels of fraud with owners claiming a property is occupied for the 25% discount. maybe so, but that depends on what the local authority do about fraud. As a london driver I remember flouting parking regulations without much penalty - not anymore.
 
 

A new draft has been added with some additional points and refinements, particularly picking up the points that Luke had made about the possible impact on NHB if exemption classes are scrapped.
The new draft is attached to the original post and changes are tracked. It is also in the Resource library.

The final version has now been submitted and is attached to the original post.  Draft 3 is the same but shows all the tracked changes.