Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill
Wednesday 18th July 2018
(6 years, 5 months ago)
Lords ChamberRating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018 View all Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 107-TR(a) Amendment for Third Reading (PDF, 53KB) - (9 Jul 2018)
“(1) Section 11B of LGFA 1992 (higher amount for long-term empty dwellings: England) is amended as follows.(1A) In subsection (1)(b)(maximum percentage by which council tax may be increased)—(a) after “that day” insert “(“the relevant day”)”, and(b) for “50” substitute “the relevant maximum”.(1B) After subsection (1) insert—“(1A) For the financial year beginning on 1 April 2019 the “relevant maximum” is 100.(1B) For the financial year beginning on 1 April 2020 the “relevant maximum” is—(a) in respect of any dwelling where the period mentioned in subsection (8) ending on the relevant day is less than 5 years, 100;(b) in respect of any dwelling where the period mentioned in subsection (8) ending on the relevant day is at least 5 years, 200.(1C) For financial years beginning on or after 1 April 2021 the “relevant maximum” is—(a) in respect of any dwelling where the period mentioned in subsection (8) ending on the relevant day is less than 5 years, 100;(b) in respect of any dwelling where the period mentioned in subsection (8) ending on the relevant day is at least 5 years but less than 10 years, 200;(c) in respect of any dwelling where the period mentioned in subsection (8) ending on the relevant day is at least 10 years, 300.”(2) The amendments made by subsections (1) to (1B) have”
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, this amendment, which allows for increases to the council tax empty homes premium cap according to how long a property has been empty, follows amendments with the same effect moved in Committee and on Report. I am grateful to the noble Baroness, Lady Pinnock, and the noble Lords, Lord Shipley and Lord Kennedy, for bringing forward this so-called escalator amendment.
As noble Lords will undoubtedly be aware by now, this amendment will allow local authorities to charge premiums of up to 200% on homes empty for at least five years and less than 10 years, and to charge premiums of up to 300% on homes empty for at least 10 years. It will not change the provisions for homes empty for at least two years and less than five years. The maximum rate for such homes will remain at 100%, as proposed by the original Bill. Neither does the amendment fetter the discretion of local authorities, which will retain the right to decide on the precise level of premium charged, taking into account local circumstances, guidance and the maximum thresholds set by government.
Lord Campbell-Savours (Lab)
My Lords, I was having a conversation the other day in which a matter arose that we did not consider when we were dealing with the provision at earlier stages. Today we are setting out the council tax premiums payable on empty property. The Explanatory Notes state that:
“Since 2013, local authorities in England have had the power to charge a council tax premium of up to 50% on ‘long-term empty dwellings’—that is, homes that have been unoccupied and substantially unfurnished for two years or more. This premium is in addition to the usual council tax charge that applies to that property”.
It is a power, not a requirement—but that is not strictly true. The assumption that we have all been making is that within the first two years the council tax remains the same as payable at the moment—but that is not strictly true. If you have a single person discount, which is 25%, then the council tax you will pay once your property is empty is not based on the single person discount at all; it is based on dual occupancy.
I will give an example of that, which I have taken from Windsor & Maidenhead. For band G properties the full council tax is £1,767.67 per annum. With the 25% discount it is £1,325.75 per annum. In the current year the total council tax on a band G property is £1,855. After two years, that council tax will double to £3,712, as against £1,325 at the moment. That is nearly a tripling of the council tax payable on that property, because the single person concession is not carried forward. To take the current year, someone in a band G property in Maidenhead will currently pay £1,325, but if they empty it their council tax will immediately increase by a third, to £1,855. That is a 33% increase, because they have emptied the property and, again, because they lose the single person discount.
I raise this because in the Minister’s presentation to the House he mentioned that guidelines would be issued. Can we deal with this issue in guidelines? Can local authorities be advised that when they send out those council tax demands for an empty property subject to a single person discount, the new rate will be based on the council tax payable with the discount, not on the rate payable in the event that the property has been occupied by two persons or more?
The Earl of Lytton (CB)
My Lords, I am pleased to follow the noble Lord, Lord Campbell-Savours, although I have different reasons for wanting to know what might be included in the guidance. As we are at this stage of the Bill I reiterate my declarations of interest: I am a vice-president of the Local Government Association and a professional who deals with rating, as well as an owner-occupier of residential property.
My concern goes back to a point I made at Second Reading: namely, that we do not always know the full range of circumstances which lead to long-term vacancy. It is probably generally true to say that owners of residential property do not deliberately leave it vacant long term; it simply deteriorates. But there are reasons why it occurs, notwithstanding what one would reasonably suppose is owners’ innate desire to make best use of the asset. I am thinking of areas subject to some sort of wholesale blight; those might be areas which are destined for redevelopment and which are held in that form. If they are held by a developer, good luck to them, but if you happen to be a private owner of property that is in part of an area which is destined for long-term redevelopment, you are stuck with it, possibly with none of the end benefits.
Could the Minister therefore give us some clarification and reassurance that where there is an impact of some planning or public policy—perhaps including a local authority’s policy for an area—that results in genuine reasons for vacancy, this sort of thing will be covered by the guidance? If it is not, it does not matter how genuinely you are in the market and with what rent or other terms you might wish to let or sell the property; if it is in an area that is subject to serious blight, first, nobody will get a mortgage for it, and secondly, maybe nobody will want to live there. Crime, deprivation and so on are part and parcel of that algorithm. We therefore need to be careful that where there are genuine reasons, not all of which can be imagined at this juncture, provision in the guidance will cover that sort of thing. Can the Minister also say whether the guidance will be subject to wider public consultation than perhaps between just the professions—the sort that I belong to—and local authorities?
Baroness Pinnock (LD)
My Lords, I remind noble Lords of my relevant interests, which are in the register, as a councillor and a vice-president of the Local Government Association.
I thank the Minister for accepting the principle of the amendment that I and my Liberal Democrat colleagues tabled both in Committee and on Report. That amendment has now been transformed into a fully fledged amendment, and I thank the Minister for tabling it on behalf of the Government.
We fully support the amendment before us today. Its purpose is clear: to significantly reduce the number of homes that lie empty and unused, which some reports say is as high as 200,000. This is at a time when all agree that there is an urgent need to increase the supply of housing. This amendment is one way of making the most of the housing stock that we have. There are, rightly, exemptions to this policy, and the Minister has outlined what they are. Implementation of the legislation is at the discretion of local authorities, and I hope and expect they will take into account areas that are destined to be redeveloped, and where the sale of a house would be very difficult.
I also welcome the Minister’s comment that there will be a review of the guidance attached to the Bill. Like the noble Earl, Lord Lytton, I raised concerns about that guidance in the Bill’s early stages, namely that it probably lacked the clarity to ensure that the legislation was properly and fairly implemented.
As I said before in discussion on the Bill, there are some owners who, to my personal knowledge, leave properties empty for no other reason than that they do not want to sell them. One property that I mentioned before has been empty for 29 years. I asked the local authority concerned what action it has taken. It said that it has discussed the matter with the owner, who simply does not want to sell the property. So it is left there like a historic relic of 30 years ago. There are instances of that happening. My hope is that with an escalation of the premium on council tax, it will be a financial disincentive to leave homes empty for so long.
That is why I am totally supportive of this amendment, based on the principle that I and others laid before the House in Committee and on Report. I thank the Minister for the discussions we had and for his positive reaction to the principle that I set out. I am also grateful for the help I received from the Liberal Democrat Whips’ office in formulating this idea as an amendment. We fully support the amendment.
Lord Mackay of Clashfern (Con)
My Lords, I wonder whether the situation that the noble Earl, Lord Lytton, described would not be dealt with by the power to require the local authority compulsorily to acquire the property. If a property cannot be sold because of a planning blight implied by the actions of the local authority, this might be a way out of it. The noble Lord mentioned that the rating value of the property should be affected by the way it was occupied. I wonder whether the local authority can make that a matter of guidance, or whether it is part of the statutory provision that the premium is payable on the rateable value of a property, rather than on the way in which it was occupied before it became unoccupied.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I draw the attention of the House to my relevant interest as a vice-president of the Local Government Association. I do not intend to detain the House for very long as there is widespread support for the amendment. I am very happy to support the amendment tabled by the noble Lord, Lord Bourne of Aberystwyth, which, as we have heard, came out of a proposal from the noble Baroness, Lady Pinnock, and the noble Lord, Lord Shipley. The proposal introduced the concept of having an increasing scale of how much council tax can by charged on an empty property. It was a very good, sensible idea. This government amendment looks at the practicalities of delivering it and has my full support.
My noble friend Lord Campbell-Savours raised the issue of the single person’s discount, and I hope that the noble Lord will address that in his response to the debate. The noble Earl, Lord Lytton, and the noble and learned Lord, Lord Mackay of Clashfern, raised the issue of the blight of empty properties. I hope the noble Lord can confirm that that will be addressed in the guidance that comes on the back of this Bill. As I said, I am very happy to support the amendment, and I thank the noble Lord and the Government for listening to the concerns that have been raised.
Lord Bourne of Aberystwyth
My Lords, I thank noble Lords who have participated in the debate on this amendment. If I may, I will deal with the contributions in the order in which they were made, and turn first to the noble Lord, Lord Campbell-Savours. I understand where he is coming from on this, but the essential point, as was just made by my noble and learned friend Lord Mackay of Clashfern, is that the premium is payable on the value of the property and not on the circumstances of the person or persons who happen to be there at the time. I can provide him with the precise provision that makes this absolutely clear.
Lord Campbell-Savours
We are talking here about an incidence of empty properties which may well increase in times of a depression in property prices. In parts of the country now, property prices are collapsing. The danger is that people will go into negative equity in the event that they are driven into selling because they are faced with what might appear to be extremely high increases in their council tax where they have been living as a single person in a property. I understand what the noble Lord said about the rateable value but I wonder whether it might be possible to detach from that formula and move to the actual sum payable, which is what really affects the council tax payer more than anything else.
Lord Bourne of Aberystwyth
I understand the point that the noble Lord is making but, if he will forgive me for saying so, it is a somewhat different point. I will come on to the hardship issues and the guidance, because hardship could attach to a couple or to a family as much as to a single person. The premium is payable in relation to the rateable value of the property and not the circumstances of the person who was last there. For example, it could be that a single person dies and then a family inherits the property, and so it would be complicated if it were otherwise. It also applies the council tax in the relevant year, and I fully concede that it is more likely to go up than go down. However, it is conceivable that it could go down and, if that happens, that is just the way it is, if the noble Lord will forgive me for saying so.
As I think I said in relation to the point raised by the noble Earl, the guidance we issue will be subject to full consultation and will take care of hardship cases. Hardship is a circumstance that I am very keen we address in the guidance, which will be open to full public consultation for anyone who wants to participate. Ultimately—
Lord Bourne of Aberystwyth
Forgive me, but I will just finish this point and then give way briefly to the noble Lord. Ultimately, this is a matter for the discretion of the local authority. We have been very keen to ensure that that is the case, as the local authority will know of the hardship more than anybody else in the local area.
Lord Campbell-Savours
On exactly that point, according to the statistics that the noble Lord gave the House when we last considered the matter, 90% of local authorities are now choosing this option. It may well be that local authorities feel under pressure, irrespective of the hardship criteria that the Minister may lay down in the guidelines. That is why I want something a little firmer. They are taking the money because it is available, and 90% is the noble Lord’s own figure.
Lord Bourne of Aberystwyth
If the noble Lord looks at what I said, I also said that they are exercising their discretion, and there is evidence of that, too. This is not a revenue-raising measure, as is borne out by the statistics. It is very much to deal with the specific case of blight on the local landscape and, as the noble Baroness, Lady Pinnock, said, freeing up homes. That is what is behind this. There is not a great incidence of cases, as the figures will bear out, but it makes a real difference in communities up and down the country.
As the noble Earl, Lord Lytton, said, this is something best left to the local authority. I am grateful for having my powers exaggerated but I cannot enumerate in a list what they may be. They are things for the local authority to look at. We will approach the guidance in such a way that we can give clear indications of the sort of factors that local authorities will want to bear in mind. Once again, it is important that we give the local authorities that discretion and trust them in the exercise of that locally. I stress that this will be subject to full consultation.
I am very grateful to the noble Baroness, Lady Pinnock, who first came up with this escalator amendment and for the work we have done on this together and, indeed, across parties, with the Labour Party as well. We have come to a very happy conclusion on this. As I say, the review of the guidance is the next stage in this process, and I expect us all to engage in that together as well. I am very grateful for the contribution of my noble and learned friend Lord Mackay of Clashfern on compulsory purchase. There are compulsory purchase powers in relation to planning blight. They might not cover every conceivable instance that the noble Earl was thinking of, but that certainly would be part of the solution to that quandary. I am very grateful to the noble Lord, Lord Kennedy, as always, for being supportive and constructive in contributions as we have developed this escalator amendment. It has been a very useful exercise and we have, as is appreciated in government, come up with something that has improved the Bill before us, so I am very grateful for that. With that, I beg to move this amendment.
Lord Bourne of Aberystwyth
My Lords, in moving this Motion, I express my thanks to noble Lords for their helpful insight and support throughout proceedings. I especially thank the noble Baroness, Lady Pinnock, and the noble Lords, Lord Shipley and Lord Kennedy. I am grateful to the noble Earl and other noble Lords who have participated in our discussions. For example, the noble Lords, Lord Campbell-Savours, Lord Stunell and Lord Best, and my noble friend Lord Deben, who is not in his place at present, have contributed as this has gone forward.
I also thank the Local Government Association for its engagement with my officials during the passage of the Bill—indeed, even before it was introduced in the other place. The conversations were constructive, and we will continue these as the Bill takes effect. Additional thanks are due to the Federation of Small Businesses, the Rating Surveyors Association, the Royal Institution of Chartered Surveyors and the Institute of Revenues, Rating and Valuation. Their expertise has been invaluable, and I am grateful for their assistance in developing the solution to the staircase tax, which has enjoyed wide support across both Houses.
I would also like to thank officials and the Bill team who have contributed to the Bill: Joshua Hardie, Gareth Adams, Shaun Morroll, Nick Cooper, John Hutchinson, Peter Bates, Thomas Adams, Antony Henderson and Hannah Ram—my cheerful, charming and efficient private secretary; that has earned me some Brownie points—who has worked incredibly hard on this Bill.
In summary, the Bill is much improved and has enjoyed broad support across the House. I beg to move.
Lord Kennedy of Southwark
My Lords, I join the Minister in thanking everyone in the House for their contributions to the Bill. It is a small, three-clause Bill, but an important Bill, which, as we know, deals with the staircase tax among other things. I also thank the department officials for their work, other colleagues around the House and all the organisations that the Minister listed, including the Local Government Association. Though small, the Bill is useful and will make a difference. I also thank the Minister, as always, for his management of the House.