Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Baroness Pinnock Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 19th June 2018 Lords Chamber

Moved by

[Baroness Pinnock]

5: Clause 2, page 2, line 33, leave out subsection (1) and insert—
“(1) Section 11B of the 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), leave out “of not more than 50 as it may so specify” and insert “as specified in subsection (1A)”.(1B) After subsection (1), insert—“(1A) If a dwelling has been empty for—(a) between two years and five years, the percentage is not more than 100;(b) between five years and ten years, the percentage is not more than 200;(c) more than ten years, the percentage is not more than 300.””

[Baroness Pinnock (LD)]

My Lords, I remind noble Lords of my entry in the register of interests as a vice-president of the Local Government Association and a councillor in the borough of Kirklees in West Yorkshire.

As I made clear at Second Reading, we are broadly supportive of the measures in this Bill. Clause 2 gives powers to local authorities to increase the financial incentive to owners who have empty properties to encourage those same owners to take action so that their empty property can be brought back into use. This financial incentive can, of course, also be seen as a financial penalty. The purpose is clear: to ensure that the many thousands of long-term empty homes become homes for families once more. As there is a crisis in the supply of housing, we think that penalty is justified. Indeed, local authorities have the discretion as to whether to take advantage of the powers in this Bill, and there are exemptions to safeguard owners where homes are empty for wholly understandable and legitimate reasons.

Nevertheless, we want to explore more variation of the additional powers in the form of an escalator. The proposals in the Bill provide for the power to impose a 100% premium for homes left empty for two years or more. The proposal in this amendment is to increase that premium up to 200% for properties that are empty between five and 10 years, and up to 300% for those properties that are empty for 10 years or more and do not obviously fall within the exemptions already described in the legislation—in other words, to increase the financial penalty or incentive, whichever way you look at it, the longer the property is kept empty. This amendment is tabled to explore the potential of this approach. Can the Minister indicate whether increasing the council tax premium in this way will have the desired effect of bringing more long-term empty properties back into use?

One reason for this approach is because previous government legislation has not been anywhere near as effective as it was hoped to be. The empty dwelling management order of 2006, then amended in 2011, is far too complex and costly for local authorities to implement, except in extremis, so it has been used on very few occasions, considering the extent of the problem of long-term empty properties. Local authorities have tended to use other less legalistic methods of tackling the scourge of empty homes. It is apparent from the statistics of longer term empty homes that more needs to be done—hence the proposals in the Bill and hence our amendment. We support the council tax premium way of doing this, but are proposing in this amendment to extend the variation to take account of the length of time in which a property has lain empty. I beg to move.

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I am certainly willing to discuss the escalator without prejudice to an ultimate decision, but the energy efficiency points are best left to local authorities. I can see the strength of the argument put by the noble Lord, Lord Stunell, but localised decision is best. With that, I urge noble Lords not to press their amendments.

[Baroness Pinnock]

I thank everybody for contributing to this debate. The escalator idea was a bit of a shot in the dark and it has generated some useful comments. I am grateful to the Minister for responding relatively positively to the idea.

I absolutely support the energy performance amendment tabled by my noble friend Lord Stunell. It is a pity that the Minister thinks that it will be too difficult to pursue further. I thank the noble Lord, Lord Kennedy, for his supportive comments.

The noble Earl, Lord Lytton, said this was complex. He asked whether the escalator is a penalty and whether the 300% premium that I have proposed for very long-term empty properties goes too far. Right from the outset, it can be viewed as a penalty, because it is not related to service provision or the rateable value or banding of your house in the way that other council tax is. In that sense, it is a penalty—or it could be seen as an incentive because we are trying to bring more empty homes back into use.

Other methods have been tried—I referred to the empty dwelling management orders—and have not been successful in bringing empty homes back into use. There is a scourge of long-term empty properties across the country. My gut feeling is that local residents would support an escalator on the grounds that very long-term empty homes are a blight on their community. I have them where I live. There is such a property at the end of a terrace of homes. Everything is overgrown, with grass and trees beginning to grow out of the gutters. It has not been used for years. Nobody seems to know where the owner is. There is a problem that we ought to try to address, because from local residents’ point of view it is not just the blight on their community but the fact that they are seeing their usually much-loved green spaces built on to provide the homes this country needs, when at the same time they can see properties that have been empty and nobody seems to be able to do anything about it. Any measure that will provide greater incentives for owners to bring those dwellings back into use would be generally supported by council tax payers.

I think I have covered all the issues that have been raised. I thank the Minister for saying this is worth considering. As I said at the beginning, this was a bit of a shot in the dark. Let us have a think about an escalator rather than a set time limit, because the longer homes are empty, the worse they become for people who live around them. There should be a penalty in order to get some action to bring such dwellings back into use, so that people can live in them and the community in which other people live is not blighted in that way.

Given all that, and the fact that we are in Committee, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

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[The Earl of Listowel (CB)]

My Lords, I missed most of the earlier debate and the commencement of this one but I have two or three questions that the Minister might be able to help me with now or, if not, to write to me about. My questions arise after listening earlier to my noble friend Lord Lytton. I know of men, for instance, who care for their mothers who are getting frail and elderly, and I can imagine a man in a rather unattractive rental area in the north who has a property which he vacates so that he can live with his mother and look after her. It is all a bit too much to manage as money is short and there is not much demand by people wanting to use that property. I would not want someone like that to have to pay a fine. Local authorities are very tough on those who do not pay their council tax. I imagine that that may well have been dealt with in earlier debates, and I am sorry that I could not be here for those. However, that is an example of something that might happen.

I guess that this discussion brings up the question of how we make the private rented sector attractive so that there are not areas in the north of England where it is difficult to find people to rent properties.

[Baroness Pinnock]

I am just a bit concerned that we seem to think that all these problems are in the north of England, where I live. I would rather that we were all a bit more careful about how we describe the north of England. There are some wonderful places there in which to live and, like everywhere else, including this great city of London, there are some not so pleasant places in which to live. I hope that noble Lords do not mind me saying that we should not always use the north as an example of an area where there are difficult places to live.

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Moved by

[Baroness Pinnock]

11: After Clause 2, insert the following new Clause—
“Definition of long-term empty dwelling
In section 11B of the LGFA 1992 (higher amount for long-term empty dwellings: England), after subsection (8) insert—“( ) The Secretary of State must by regulations provide guidance to billing authorities on how to determine whether a dwelling is “unoccupied” or “substantially unfurnished”, under subsection (8).””

[Baroness Pinnock]

My Lords, this amendment seeks definitions of the terms “unoccupied” and “substantially unfurnished” dwellings. On the face of it, the descriptions pose no difficulties of interpretation—but in practice that is far from the position. Is a dwelling unoccupied if it is used for, say, all but two or three weekends in a year? Does that usage enable the property to be classified as, for instance, a second home? What does “unoccupied” mean? Under the Bill there would be a significant financial cost to the owner if the dwelling is deemed to be unoccupied—one that a homeowner might well challenge if there is no clarity as to the definition.

There is a similar fog around the meaning of “substantially unfurnished”. There must have been calls for clarity from the local government sector, because in September 2014 the DCLG, as it then was, sent a letter to local authorities headed:

“Council Tax Information Letter: Council Tax—Definitions of Empty Homes and Second Homes”.


In my view, the letter does little to clarify the definitions. It states, unhelpfully, that it,

“outlines the current situation and the Department’s informal view on these matters”.

In other words, the descriptions provided have no basis and are open to challenge. For instance, it states:

“There is a misconception that the premium”—


on council tax—

“is easy to avoid by simply placing some furniture into a property. We do not have evidence that this is the case. ‘Substantially unfurnished’ is not defined in council tax legislation, but is used for the purposes of the empty homes discount regime and the empty homes premium”.

So it says that, while there is no evidence that people are putting furniture into property, “substantially unfurnished” is not defined. I am seeking a definition. If these penalties or premiums on council tax are to be raised significantly, local authorities require further guidance on what “substantially unfurnished” means.

The letter further states:

“Local authorities will have formed their own views on the definitions”—


which of course may result in a multitude of definitions of “substantially unfurnished”, and that could lead in turn to disputes. I quote again from the letter:

“A property which is substantially unfurnished is unlikely to be occupied or be capable of occupation. A property which is capable of occupation can reasonably be expected to contain some, if not all, items from both of the following categories: furniture such as bed, chairs, table, wardrobe or sofa, and white goods such as fridge, freezer or cooker”.


Noble Lords will recognise that properties which are left unoccupied often contain such items as are listed, as they are nowhere near as valuable as they once were and so are not worth removing.

The letter goes on to explain further checks that can be made. For instance, it suggests that,

“it will be reasonable for the local authority to cross-check with the electoral roll, or ask for evidence, such as utility bills showing usage of services, driving licence as proof of address, or receipts or other proof of moving costs”.

Of course, that means that the owner can be traced—but in my experience of properties in the neighbourhood where I live, certainly long-term empty properties, that is often not the case. I am sure that the Minister knows that many property owners now live abroad and are difficult to contact. Certainly, my experience of the electoral roll is that it is not a sure test of occupancy in either direction.

In our view, the Government have a responsibility through regulations to provide guidance to billing authorities on how to determine whether a dwelling is unoccupied or substantially unfurnished. The financial cost to an owner of a dwelling that has been classed as unoccupied could be significant, so natural justice demands that local authorities have that legal guidance. Failure to provide such guidance may result in local authorities not using the powers provided for in the Bill, for fear of a legal challenge and the inability to get the supporting evidence. This would undermine the whole purpose of the Bill, the direction of which I support: namely, to try to get empty homes back into use by families, whether in the relatively short term or the very long term, and to cut the need for the building of even more homes on greenfield or green-belt land. I beg to move.

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[Lord Bourne of Aberystwyth]

I thank the noble Lord very much for putting down lots of Questions: my officials will be doing cartwheels at the news. However, there is a serious point behind what he is putting forward and I absolutely accept that this is a national issue. Our officials will certainly be speaking, if they have not already—I suspect they may have done—to Welsh and Scottish officials to see what is being done there. We are taking it urgently. I will cover this in more detail in a letter: it is certainly very much on the radar though I had not expected that it would come up in this context—and I should have. I will make sure that we get some more detail in the letter and I thank noble Lords for raising this. I realise now that the noble Lord, Lord Campbell-Savours, who is not in his place, raised a similar issue in Questions today. I could not quite understand what he was getting at but I understand now and I apologise to him. We will make sure that he gets the letter as well.

Given that, and the fact that I and my department take this seriously, I ask the noble Baroness, Lady Pinnock, to withdraw her amendment.

[Baroness Pinnock]

I thank everybody for a really interesting and stimulating debate. My noble friend Lord Shipley raised some issues. I am glad that my proposal has gained support because this affects all areas of the country that have large numbers of second homes, including in the north—the Lake District, for instance. We have all noted the new definition of “seriously considered”. I look forward to this being seriously considered.

I brought the definition of “unoccupied” and “substantially unfurnished” to the attention of the Committee because, with the rise in the premium, it is more likely that there will be challenges from owners that their homes are furnished and all the rest of it. Therefore, it would be helpful to local authorities to have more definite clarity on this, rather than an information letter. I think that could be achieved. I know that from time to time the department sends guidance notes to local authorities, which have greater import than information letters. That would give them something to fall back on if they are challenged, as I think may well happen. Those are the reasons for my endeavours this afternoon but I beg leave to withdraw the amendment.

Amendment 11 withdrawn.