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Council Tax Changes for Empty Rental Properties
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
A reminder has been issued to agents regarding new changes in Council Tax rules.
Changes
From the 1st April, local authorities have the option to charge full tax on all uninhabited properties. Notably, these changes will affect properties where exemptions have been given; including both renovated and unfurnished rental homes.
In addition, landlords who have been given a break from paying Council Tax due to building work will now lose this benefit for up to 12 months. A number of councils have chosen to charge the full figure from the first month.
The exact changes to the bill are as follows:
1. Exemption class C (properties that are empty and unfurnished for up to six months) has been abolished and each council can decide whether to award a local discount in its place.
2. Councils can decide to charge an additional premium of up to 50% on homes that have been empty and unfurnished for two years or more.
3. Exemption class A (properties requiring or undergoing major repairs for up to 12 months) has been abolished and each council can decide whether to award a local discount in its place.
4. The minimum discount that councils can give for furnished homes that are no one’s ‘sole or main residence’ – i.e. second homes and unoccupied furnished lets – has been reduced from 10% to 0%.[1]
Council Tax Changes for Empty Rental Properties
Varying approaches
The changes in legislation allow councils to use their own discretion on pricing and discounts for property owners. Some local authorities have chosen to charge full Council Tax from April 1st, while others have agreed on a short period of lower fees.
Southwark Council in London is to allow uninhabited, unfurnished properties to be exempt of any charges for two months. There is to be no exemption for fully furnished rental properties. Spelthorne Council has chosen to give just a one-month exemption for empty, unfurnished properties, with a 50% discount in month two and 25% in month three.
Each council should outline their chosen charges on their website. It should also be noted that the relevant local authority should be contacted in the case of any void periods experienced for a property, no matter how short these periods may be.
Rising rent?
There is concern that the new changes in regulation will lead to landlords raising rents. Other concerns surround features such as tenants who have given two-months notice that they are to leave quitting before their agreed tenancy. Under current rules, tenants would have to pay rent until their agreed termination date, but would be excused Council Tax. This could lead to landlords becoming increasingly unhappy if they would have to pick up any Council tax bill, after a tenant has been excused.
[1] http://old.lettingagenttoday.co.uk/news_features/Countdown-to-big-Council-Tax-changes-for-empty-rental-homes
