Owners of empty homes should be hit with extra tax, new research note suggests

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Britain's housing crisis is being made worse by hundreds of thousands of homes left empty, according to a new report from the Institute of Public Policy Research. The report argues that giving local authorities power to increase tax on empty homes would ensure more become occupied and bring 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 especially high, over 60,000 homes are empty, including over 20,000 that have been empty for over six months. The report argues that local authorities should be offered an enhanced set of powers, including removing the 50% premium cap from council tax on empty homes. In effect, this would allow local authorities to determine their own banded council tax premiums on long term empty homes, the report explains. It also says that local authorities should have 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. The report argues that discretion over these two features would allow local government to account for differences in housing market dynamics, such as the common length for property voids and the scale of housing need in the local area. In Scotland long term empty homes 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 report argues that England should be brought into line with Scotland and 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 £1,000 and draw in an additional £110 million nationally. This would be around £11 million across London, it claims. The report says that local authorities could then channel these extra funds into their local housing markets. The report also models a tougher approach that could raise as much as £215 million 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, IPPR researcher. ‘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 pointed out. ‘Local authorities should be allowed more discretion to tax long term… Continue reading →

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