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.
Contents
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!
... Please login or signup to continue reading this content- Amendments being made by The Council Tax (Exempt Dwellings) (England) (Amendment) Order 2012 ↩
- Changes made by the The Council Tax (Prescribed Classes of Dwellings) (England) (Amendment) Regulations 2012 ↩
- Changes made by the Local Government Finance Act 2012 (in particular section 11) ↩
- 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 ↩
- ibid ↩
- Section 6(6) Local Government Finance Act 1992 ↩
- Chapter 5 – Section 1, page 46 – CPAG council tax handbook 6th edition. ↩
- Welsh Government, Council Tax and Long-Term Empty Homes in Wales, July 2012, page 6 ↩
Hi, my subscription expires 23/02/2017
How can I not read on…?
cheers
laetitiawittock
laetitia@amplitude.co.uk
Hello
It’s because you have an accredited subscription but your not a subscriber to the Guild of Residential Landlords. Most of our articles are open so you can read them when you are accredited but sometimes I produce articles just for the benefit of Guild members such as this one (although I have purposely left all the important information unprotected for all to read).
However, I have opened up the page to accredited landlords too so if you try again it should work. I will remove this in a week or two.
Many thanks
Guild of Residential Landlords
Thanks! I’ll go and have a look.
I hate to have to give a six month fixed term in case of a bad tenant, however I have just had a homesick tenant on a three month FT, leave after four months but while annoying it does not make up for the above problem.
Obviously it pays to pick a good tenant who ticks all the required boxes & has a guarantor. If this means a slightly longer void period then paying a small amount of tax deductible Council Tax is a lot better than rushing in to an early tenancy and suffering the consequences of rash action later.
Jim Corbett
Member No. 1
Hello
Even if you granted a 6 month tenancy in this case, frankly, the tenant would probably have vacated in month 4 if they wanted to and realistically very little you could do about it (except protracted court proceedings trying to get the rent). That’s why 3 month tenancies work in my view but it seems those days are gone for now.
Many thanks
Guild of Residential Landlords
Hello Adrian – This is clearly very bad news for landlords but I am interested how existing tenancies are effected where we gave a 3 months fixed term and the tenant has lived at the property for more than 6 months already – will the 3 months tenancy rules apply or the fact that they have been residents at the property – will the over 6 month rules apply. Also will the new rules effect all tenancies that started before April 2013 or only those which start from now on Regards Alan Fear.
Hello
Thanks for this question. It was my intention to put this information in the article but I forgot!
The new rules have no correlation to when a tenancy was or is granted, ie before or after April 2013. All that matters is on what date is the property unoccupied? If the property is empty (and unfurnished) prior to April 2013, it’s exempt. On or after 1 April, there will be no exemption. It then falls to your local authority. In our case, Harrogate has one week of 100% discount, then 40% discount after April.
However, like you, all our tenancies are 3 month fixed terms so if the property becomes unoccupied after April, the tenant will most likely not have a material interest and so we will have council tax to pay (after one week). This is such a worry and problem, we are considering granting new tenancies of 6 months to all our tenants within the next few weeks. This would be a massive job though in particular because all the guarantors would need resigning so in all honesty we will probably let things naturally change and take the risk. As long as we relet without a void (or within a week) it should be fine and in most cases we don’t have a void period of any major degree anyway.
The other problem will of course be like happens with housing benefit tenants. Often, tenants move into another property but not vacate your property so in essence have two tenancies running. Then, a month later, simply vacate your property (usually without notice) but tell the council they vacated a month earlier. Why would the council disbelieve this? After all, they have evidence of a new property from a month earlier. In this type of case it’s almost impossible for a landlord to persuade a local authority that the tenant was in fact occupying your property for this month.
In this situation of two properties, only one can ever be regarded as “occupied” because it’s the “only or principle home” that matters (not quite the council tax definition but good enough for here).
Once the tenant is on a six month tenancy, it then doesn’t matter because they can have multiple tenancies and the tenant will be classed as the “owner” so will have a “material interest” in the property and liable to pay until the tenancy is properly ended. (Assuming Oysten v Leeds was correctly decided). But, on a 3 month tenancy, as there is no material interest, this scenario could be an issue.
Many thanks
Guild of Residential Landlords
Dear Landlords Every one is missing the main point and that is as a Country we are bankrupt , the Government and councils have no interest in any of this ,its all about getting as much money as they can from an already struggling country , they do not care where it comes from , just look all around the world at currencys you will see the pound is sinking like the Titanic , and nothing we do can stop it ,unless to tackle the well fair-state problim and are debt , which no politician will do .
Just for the record we owe 37,000 pounds for every man , woman, and child in the country ,money which we can never pay back . Mr Jones
If there’s no water in the swimming pool, we’re not going swimming!
Six month tenancies still have the advantage after reading all comments above.
Personally if required I point out to Guarantor that they have signed a legal document that no judge is likely to disagree with, so they had better pay up which is what Guarantor ship is all about & carefully explained to them at the time of signing.
It is also to be born in mind by the tenant who is beholding to them as a relative or close friend.
Failing that we would point out to both party’s that our Debt collection Co. will pursue them & that all of their credit facilities can be will be nullified. That usually causes most Guarantors to pay up in our experience.
Jim Corbett
Member No. 1
I have had to move towns for work and now live in rented accomodation, paying rent and council tax (with single person discount). I own a house in my home city which i am trying to sell. There is no one living in it (including me).
I have been told i have to pay full council tax on my empty property which is causing me great financial hardship. My council is Blackpool.
Please advise.
Hello
Obviously you need to check what exemptions your local authority are offering because each authority can create their own discounts / exemptions. But, once those are used up, I’m afraid you will have council tax to pay. The only way to avoid would be to rent the property out I suppose whilst it’s for sale.
Many thanks
Guild of Residential Landlords