Currently, a number of exemptions and discounts are available for council tax where no one occupies a dwelling as their main residence. These include holiday homes, second homes and empty properties. The changes outlined below only apply to England. For Wales, see later in this article.

England

Exemptions

Amongst others, currently, if a property is unoccupied AND substantially unfurnished, it will be exempt from council tax for up to 6 months.

In addition, if a property is undergoing major works which includes structural alteration to render a dwelling habitable, the dwelling is exempt for up to 12 months or until the works are substantially completed.

From 1 April 2013, The Council Tax (Exempt Dwellings) Order 1992 is amended [1] and the unoccupied and unfurnished exemption is removed. As too is the major works or structural alteration exemption.

Discounts

Currently, under the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 a number of classes of dwelling are designated for the purpose of providing a discount.

Second homes currently achieve a discount of between 10% and 50% as determined by the local authority (classes A and B). Also, unoccupied and substantially unfurnished dwellings can achieve a discount of between 0% and 50% (after the initial 6 month exemption) (class C).

From 1 April 2013, those 2003 regulations are amended [2] as too is the Local Government Finance Act 1992 [3] and additional classes of dwelling to which a discount can be applied by local authorities are specified. Also, classes A and B (second homes) have the minimum 10% discount removed allowing local authorities to provide 0% discount on furnished second homes.

A new Class D is added which allows a local authority to offer a discount of between 0% and 100% where a dwelling is vacant and requires, or is, undergoing major repair work to render it habitable, including structural alteration. The amount of the discount is determined by the local authority and can be for a maximum of 12 months. [4]

The end result of all these changes is that from 1 April 2013, the exemption for unoccupied and unfurnished dwellings for up to 6 months and properties undergoing major works will no longer be available and depending on individual local authorities, council tax will in most cases be payable on dwellings in England during void periods between lets and also during refurbishment works.

The below table compares the position before and after 1 April 2013.

Before 1 April 2013 After 1 April 2013
Class A: second homes where continuous occupancy for 28 days or more is prohibited Discount of 10%-50% Discount of 0%-50%
Class B: second homes where continuous occupancy for 28 days or more is not prohibited Discount of 10%-50% Discount of 0%-50%
Class C: properties which are “unoccupied and substantially unfurnished” Exempt for up to six months, followed by a discount of between 0% and 50% Discount of 0%-100%
Class D: vacant properties undergoing “major repair work” or “structural alteration” Exempt for up to twelve months: property where work finished six months ago or more cannot fall into this class Discount of 0%-100% for up to twelve months: property where work finished six months ago or more cannot fall into this class

Long term empty properties

Section 12 (2) of the Local Government Finance Act 2012 amends the Local Government Finance Act 1992 to allow local authorities to set a council tax rate for long-term empty properties of up to 150% of the normal liability. A ‘long-term empty property’ is a property which has been unoccupied and substantially unfurnished for at least two years. This is often called the ‘empty homes premium’.

The empty homes premium cannot apply to homes that are empty due to the occupant living in armed forces accommodation for job-related purposes (Class E); or to annexes being used as part of a main property (Class F). [5]

Examples of areas

The amount of council tax payable during void periods will be determined by the local authority and will vary from council to council. The table below shows some examples:

Area Discount for unoccupied and unfurnished April 2013 Discount for major repairs / structural alteration April 2013 Second property discount (furnished) April 2013 Long term empty (2 years or more) April 2013
Harrogate Borough Council 100% discount first week, then 40% up to 6 months, then 0% (100% payable after 6 months) 50% discount max 12 months 0% discount 125% payable
Leeds City Council 0% discount 0% discount 0% discount 150% payable
Plymouth City Council 100% discount for 1 month only 50% discount max 12 months 0% discount 150% payable

What can landlords and letting agents do?

There are a number of things that can be done to minimise the impact of the new legislation which includes changing the way landlords and agents work and here we will look at:

  • Who is liable?
  • Notice from a tenant and surrender
  • Repairs
  • Access to view properties
  • How to avoid (as best possible) the empty homes premium

Who is liable?

One question worth asking is who’s second home is it? So, if a tenant rents your property, then vacates (without notice) and moves into another, surely they should pay the council tax on both? Well, not necessarily!

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  1. Amendments being made by The Council Tax (Exempt Dwellings) (England) (Amendment) Order 2012  ↩
  2. Changes made by the The Council Tax (Prescribed Classes of Dwellings) (England) (Amendment) Regulations 2012  ↩
  3. Changes made by the Local Government Finance Act 2012 (in particular section 11)  ↩
  4. Regulation 7 The Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 as inserted by regulation 2(4) The Council Tax (Prescribed Classes of Dwellings) (England) (Amendment) Regulations 2012  ↩
  5. ibid  ↩
  6. Section 6(6) Local Government Finance Act 1992  ↩
  7. Chapter 5 – Section 1, page 46 – CPAG council tax handbook 6th edition.  ↩
  8. Welsh Government, Council Tax and Long-Term Empty Homes in Wales, July 2012, page 6  ↩

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