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

Rishi Sunak Excerpts

Tuesday 16th October 2018 Commons Chamber

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

I beg to move, That the House agrees with Lords amendment 1.

It gives me great pleasure to speak in support of the amendment. As previously discussed in this House, this Bill takes forward two important measures that featured in the Chancellor’s Budget speech of last November. The first fulfils the Government’s promise to end the so-called “staircase tax”, giving welcome relief to businesses. The second, which is the subject of our deliberations today, addresses the issue of long-term empty homes, doubling to 100% the council tax premium that local authorities can charge on homes that have been empty for two years or more.

[Neil O'Brien (Harborough) (Con)]

Is the Minister aware that in my constituency the number of empty properties has been driven down by a third by the existing empty homes premium? I am delighted to see this measure, because it will reduce the number of empty homes in my constituency, which is currently at 400—that represents a village the size of Great Bowden. That means far less pressure on development and a better use of our housing stock.

[Rishi Sunak]

I thank my hon. Friend for that intervention and for his support for the measures in this Bill. I also pay tribute to his local authority for the sterling work it has clearly done, as have so many others across the country, in tackling this blight of empty homes. I am particularly grateful to him, because I know he has another housing-related debate coming up in short order and so I am privileged that he has made time to speak in support of this measure. I wish him well in his further debate later this afternoon.

[Simon Hoare (North Dorset) (Con)]

My hon. Friend is promoting a very welcome measure. Is he able to give the House any indication of the quantum of properties that lie vacant for more than two years and would therefore accrue this additional council tax? Will he add some indication of the potential uplift in revenue to our local authorities, which certainly need it?

--- Later in debate ---

[Rishi Sunak]

If my hon. Friend will bear with me, I will be grateful for that little bit of patience and I will go over all the facts and figures of the current policy later in my speech. I hope he will find what he is looking for in that section. If he wants to come back to me for more detail at that point, I would very much welcome a further intervention.

[Simon Hoare]

I am not known for my patience.

[Mr Deputy Speaker]

You also should not test ours. [Laughter.]

[Rishi Sunak]

As my hon. Friend mentioned, this measure will strengthen the incentive for owners to bring long-term empty properties back into use. Hon. Members will recall that this Bill received widespread support when it was considered by the House earlier this year. I am very pleased to say that that cross-party support continued through the debates in the other place.

Before we turn to the detail of the amendment, I thought it would be helpful to recap the purpose of this clause and the background to the policy in general. Our housing market is not working as we would want. Young people are often struggling to get on to the property ladder—struggling to enjoy the same opportunities as their parents and grandparents.

[Rachel Maclean (Redditch) (Con)]

I absolutely support the measures the Minister is putting forward. Does he agree that in a town such as Redditch, which is growing rapidly, we need more housing? We struggle to expand, however, because we just have not got the room. It is therefore right that we are bringing more empty homes back into use to meet the housing need of our young people in our growing town.

[Rishi Sunak]

I thank my hon. Friend for her intervention. She is absolutely right to say that the Government are doing many things to increase the supply of new housing, and I will come on to discuss those, but that we must also do better with the housing we already have. That is what this measure will enable us to do.

Today, the average house price in England is almost eight times the average income, whereas it was four times the average income in 1999. Costs are also rising for private renters, who spend, on average, more than a third of their household income on rent. The Government are committed to boosting housing supply to ensure that hard-working people have a secure place to call home. The Government and the tireless new Housing Minister, my hon. Friend the Member for North West Hampshire (Kit Malthouse), are taking end-to-end action across the entire housing system to address these issues, releasing more land for homes where people want to live, and building them faster and cheaper.

[David Linden (Glasgow East) (SNP)]

The UK is going through a housing crisis. Does the Minister accept that one of the best ways of tackling the social housing crisis is to abolish the right to buy?

[Rishi Sunak]

The right to buy has helped thousands of young people, first-time buyers, up and down this country to get on to the housing ladder. I have seen the measure transform people’s lives in my constituency, as I am sure many Members have in theirs. It supports what this Government and the Conservative party stand for—allowing people to fulfil their dream of owning their own home.

[Eddie Hughes (Walsall North) (Con)]

Obviously, Mr Deputy Speaker, I am concerned about your latitude in allowing us to venture slightly off the topic—

[Eddie Hughes]

Indeed, but I could not stay in my seat having heard that. Just this summer, the Government announced voluntary right to buy across the west midlands, which is a valuable opportunity and has been heavily subscribed. Members of the public in those homes clearly think it is a good idea.

[Rishi Sunak]

As always, my hon. Friend puts it well. He has the pulse of the people in his constituency; he knows what they want. We serve to fulfil their aspirations, and I am delighted that the interest in the new scheme has been so high. I look forward to seeing the fruits of that and welcoming all those new people into homes that they will own for the first time.

This set of reforms is putting us on track to see an average of 300,000 homes delivered per year by the mid-2020s, and we are making strong progress. Last year, 217,000 new homes were delivered in England, which is the highest number seen in all but one of the past 30 years. In 2017, the number of first-time buyers stood at about 365,000, which is the highest level in more than a decade.

Building new homes is undoubtedly a fundamental part of improving our housing market, but, as we heard from my hon. Friend the Member for Redditch (Rachel Maclean), we must also make more efficient use of our existing housing stock.

[Layla Moran (Oxford West and Abingdon) (LD)]

Does the Minister agree that in addition to all the measures in the Bill, the Government must get their own house in order? Some 10,000 Ministry of Defence homes are left empty; does he not think it is slightly ironic that we are discussing this issue when the Government have so many homes that are not being put to use?

[Rishi Sunak]

I am not aware of the precise statistics for the Ministry of Defence, but in general we encourage all organisations and private owners to bring empty homes back into use. The Bill will apply to all homes. As far as I am aware, there is no statutory exemption for MOD housing, but I am happy to look into that and write back to the hon. Lady. As an MP who represents a constituency with a heavy military presence, with Catterick garrison on my patch, I know well the issues relating to serving personnel and their families having access to good-quality accommodation. I hope that there are few empty homes in my area and that they are all being well utilised. I thank the hon. Lady for bringing that issue to my attention.

It cannot be right that while many households are waiting to find a house to call home, thousands of properties stand empty, some for many years. Beyond that, homes left empty for the long term can often be a blight on a neighbourhood, as well as sites of crime and antisocial behaviour. I am pleased to say that the Government’s record in this policy area is strong. We have ensured that local authorities have powers and strong incentives to bring empty homes back into use.

[Graham P. Jones (Hyndburn) (Lab)]

The Minister says that he is empowering local authorities, but the Government refuse to have a register of landlords. An enormous amount of paperwork is required for local authorities to chase landlords and get these backyards into use, or whatever the problem is that he says his Government are happy to see resolved. Will the Government help local authorities, as he suggests, and introduce a national register of landlords so that we can take the action that he describes?

[Rishi Sunak]

I will be careful not to stray too far from my brief, but the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for South Derbyshire (Mrs Wheeler), who has responsibility for housing and homelessness, is actively looking into appropriate regulation in the private rented sector and the potential introduction of a single housing ombudsman, among other things. I should point out that the Government introduced measures to tackle rogue landlords and, indeed, created a rogue landlord database and a new set of penalties to tackle the issue. I hope that the hon. Gentleman finds some comfort in that and will wait for my colleague’s findings on the general regulation of the private rented sector.

Before 2013, councils could not collect any council tax from properties that were empty for up to six months, so the coalition Government at the time decided to support councils and ensure that they had the freedom, should they want it, to charge the full rate of council tax on such properties. That same year, the Government enabled local authorities to charge a council tax premium of up to 50% on long-term empty homes.

[Alex Burghart (Brentwood and Ongar) (Con)]

I strongly welcome the Minister’s comments. There are a number of empty properties in my constituency that I would very much like to see come back on the market. Will the Minister tell us what effect the Government’s action has had in this policy area? By what proportion has the number of empty homes come down since the Government made those changes?

[Rishi Sunak]

I am pleased to tell my hon. Friend that the powers that were introduced in 2013 have been taken up by around 90% of all local authorities, all but three of which applied the full 50% rate. I am glad to tell him that the number of long-term empty properties subject to a premium has fallen by 9% among those councils that have used the power every year since 2013.

There are carrots as well as sticks. Our new homes bonus scheme gives local authorities the same financial reward for bringing an empty home back into use as for building a new home. We have allocated £7 billion in new homes bonus payments to local authorities since 2011. Following those interventions, the number of properties that are empty for six months or longer is down by a third since 2010, from 300,000 to just over 200,000.

It is worth touching on one or two local authorities that have done a particularly impressive job of tackling the scourge of long-term empty properties in their areas. Several years ago, Bolton had close to 3,000 empty properties, but now has fewer than half that number. Bolton Council offered interest-free loans to bring a long-term empty property up to a suitable standard for rental. The council has also introduced an online matchmaker scheme that matches empty-home owners with potential buyers and offers advice about how to rent out properties through the Bolton landlord accreditation scheme. Between March and October of last year alone, more than 300 long-term empty properties were brought back into use. The council has recently joined forces with Bolton College and the University of Bolton on a new pilot project to bring a rundown empty house back into use.

Kent is another example of a local authority on the cutting edge of tackling this issue. Several years ago, Kent County Council launched the “No Use Empty” programme to bring empty homes back into use. Loans available through the scheme are repayable over five years and then recycled for further use. The scheme has now administered loans totalling almost £20 million, unlocking investment from owners totalling a further £20 million, and has returned over 5,000 empty homes back into use over the past decade. Notably, the programme ran a £3 million project to deliver new homes on the site of a former pub in Herne Bay that had been empty for five years following a fire. The pub’s conversion was undertaken in partnership with a local developer, which bought the property and applied for a loan from the “No Use Empty” fund to unlock the redevelopment. The project has now delivered 14 new apartments.

[Rachel Maclean]

I am delighted to hear of the good work that is going on in Bolton and Kent, but I am obviously much more interested in what is going in Worcestershire and in my local area. Will the Minister go on to discuss how my council can learn from the excellent examples that he describes?

[Rishi Sunak]

I am always willing to learn from and listen to local authorities up and down the country. My hon. Friend and I have corresponded on various issues that have been brought to my attention in Worcestershire, and it will always be a pleasure to meet her local authority. She could bring officials here or I could go and visit them.

[Sir Roger Gale (North Thanet) (Con)]

As my hon. Friend has been kind enough to pay tribute to the development in Herne Bay, which is part of the magnificent constituency that I represent, perhaps he would like to come and see the finished development for himself.

[Rishi Sunak]

I can see my diary filling up rapidly as the debate progresses, but I would be delighted to visit my hon. Friend and the successful redevelopment. Indeed, I will perhaps mention it to my hon. Friend the Housing Minister for when he is next in the area.

[Neil O’Brien]

I promise not to invite the Minister to my constituency—although I stress that he is always very welcome there. He tempted me to intervene with his mention of the pub that was brought back into use through the “No Use Empty” programme. Does he agree that this legislation is an example of a wider point that needs to be discussed: the reuse of our existing building stock more generally? Permitted development rights and other things that make it easier to reuse older buildings have taken the share of new properties coming on to the market through change of use from about 12% of supply to 20% of supply over the past couple of years. Does he agree that that is saving a huge amount of countryside?

[Rishi Sunak]

As ever, my hon. Friend makes an insightful point. He has great experience in this area. Indeed, he has published proposals relating specifically to this area, on which my hon. Friend the Housing Minister is engaging with him. More intelligent use of development rights and our existing stock can help play a part in solving the housing market problems that we see.

[Graham P. Jones]

I am interested in what the Minister says, and do not disagree with it, but I will say the same thing that I said when this legislation came around last time. It is great to talk about Bolton, a unitary authority, and Kent may have a progressive county council—I do not know—but my local district, Accrington District Council, only receives 15% of the precept with 72% going to the shire authority which, unlike Bolton, is not interested in reinvesting. When will we have a change in the law that allows district authorities to retain 100% of the extra precept on the council tax?

[Rishi Sunak]

Opening up a conversation about the redistribution of council tax is probably beyond the scope of this measure, but we encourage co-operation between local authorities, and there are good examples of that from across the country. Indeed, business rates retention is now working deliberately to incentivise local authorities across tiers to partner together, and we have found that that has unlocked conversations beyond the pooling of business rates to strategic co-operation on other matters, such as housing.

[Graham P. Jones]

Will the Minister come to Lancashire to encourage Lancashire County Council to give money back to Hyndburn and Chorley?

[Rishi Sunak]

I am always happy to visit all local authorities, and many of the authorities in Lancashire have submitted proposals to be in the upcoming 75% business rates retention pilots. I am pleased to see lots of local authorities in Lancashire working together, and I look forward to reading that application with interest in the light of those comments.

As we have seen, different areas, from Redditch to Lancashire, will have different housing needs and different numbers of long-term-empty homes, so it is absolutely right that decisions on whether to apply a premium, and the exact rate to charge, should be taken at local level, as they were before. Councils are acutely aware of the needs and demands of their areas. We recognise that local authorities will want to reflect carefully on the local housing market when deciding whether to issue a determination—for example, where a homeowner is struggling to rent or sell a property in a challenging market. We are clear that the premium should not be used to penalise owners of homes that are genuinely on the market for rent or sale.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I also put on the record my support for these proposals. At a time of housing crisis, it is incredibly important that we bring more homes back into use, which is exactly what this measure will do. Will the Minister set out measures for similar situations in which retail premises are unused? Filey, in my constituency, has a shop—I am sorry, Mr Deputy Speaker; I am about to conclude—that has been disused for some time and is a blight on its street. What can the local authority do about that?

[Rishi Sunak]

It is always a pleasure to take an intervention from my constituency neighbour, who represents what is without doubt the second most beautiful part of the country. I must admit that I am not familiar with that particular shop in Filey, but I will be delighted to chat with my hon. Friend afterwards, to make sure that the full resources of the Department can supply him with as many options as he can supply to the local authority in question.

[Eddie Hughes]

Does my hon. Friend have any thoughts on empty dwelling management orders, which councils can use to take possession of a property that has been left vacant for six months or more? I understand that those are rarely used by councils in England.

[Rishi Sunak]

My hon. Friend is absolutely right that empty dwelling management orders exist as a tool for councils to take control of long-term empty properties that cause a social nuisance. I do not have the exact figures to hand, but he is right that those orders are not extensively used. However, they are a measure that local authorities should be aware of. The orders are a tool at local authorities’ disposal and are one of the various measures that they can use to tackle this particular problem. I thank him for raising that option here today.

[Bob Blackman (Harrow East) (Con)]

Does the Minister agree that it is vital that landlords bring properties back into use? They should not be penalised while carrying out genuine work to bring those properties back into use, but equally they should not take an extended period and say that they are doing work when no work is actually going on.

[Rishi Sunak]

I thank my hon. Friend not only for his intervention but for all his work on the Bill, as both an individual and in his role on the Housing, Communities and Local Government Committee. I am grateful for all his comments as we debated the Bill during its earlier stages. He is absolutely right, and the Government published guidance to that end in 2013—when the original premium was introduced—reminding local authorities to take into account the specific reasons for a property being empty. Hon. Members may wish to note that the provision we are discussing will not bring any additional properties within the scope of the premium; only properties that would already have been potentially liable might be affected by the higher premium.

On the flexibility and discretion raised by my hon. Friend, no property covered by an existing statutory council tax exemption can be liable for the empty homes premium. For example, exemptions are already in place for homes that are empty owing to the council tax payer living in armed forces accommodation for job-related purposes, or for annexes that are used as part of a main property. Furthermore, the council tax system already provides specific statutory exemptions for properties left empty for a specific purpose, such as when a person goes into care. On probate, such properties, where left empty, are exempt from council tax for up to six months after the granting of probate or after letters of administration have been signed.

I also say to my hon. Friend that section 13A of the Local Government Finance Act 1992 gives billing authorities a wide power to reduce the council tax that a person or group of people is liable to pay. That can be reduced to such an extent as the billing authority sees fit. The power can be applied to situations pertaining to the status of a dwelling or the category of a person, and can be used in cases of hardship, fire or flooding. Together with the guidance that I will speak about more broadly in a moment, I hope that this reassures all hon. Members that councils and local authorities will have the flexibility and discretion that they need to treat each situation on a case-by-case basis.

Before I turn to the Lords amendment, I will recap some of the statistics on the operation of the current policy to ensure that everyone has the facts to hand as we reach our deliberations. As I said earlier, 90% of billing authorities have applied the empty homes premium, to around 61,000 homes—that we have data for—in the last year. All but three of those councils did so using the maximum 50% rate. Of the remaining 10% of councils that were not applying the premium, more and more are now starting to. We estimate that the empty homes premium generated around £40 million in the last year for local authorities, when we take into account individual local authority collection rates.

[Alex Burghart]

I sorry to ask the Minister this question; it is ignorance on my part. How do councils ascertain that properties are empty? Might we need to give councils additional powers so that they can identify which properties are truly empty?

[Rishi Sunak]

That is a very thoughtful question. Every council takes a slightly different approach. An interesting method is to offer a temporary discount on empty homes for a short period of time, providing a financial incentive for homeowners to register their home as empty. Down the line, the council then has a list of properties that might become long-term empty. Of course, councils also require people to fill out forms, and there are civil and criminal penalties for filling them out with false or misleading information. Indeed, the authority also has other intelligence from the various other ways in which it touches an individual property. Together, councils can build up a picture of which homes are long-term empty, and apply the appropriate premium as and when necessary.

Hon. Members may be interested to know that the proportion of dwelling stock across the country that has been empty for six months or longer is about 0.85%, with the lowest numbers being found in London and the south-east, and the highest being found in the north-east and the north-west.

[Rachel Maclean]

I thank the Minister for giving way again. One issue that has been brought to my attention as a local MP is the time that it can take the council to turn around the voids when one tenant leaves and another comes on stream. Will this provision affect the council’s housing stock? I would be grateful for that clarification.

[Rishi Sunak]

My hon. Friend raises a good point. Council housing is governed by a slightly different set of regulations, so it will not be affected by this particular measure. However, in general she is right to highlight that all local and public authorities have a duty to bring empty homes back into use as quickly as possible for the benefit of all potential residents.

I now turn to the Lords amendment, which makes a helpful improvement to the Bill. I am grateful to the noble Lady Pinnock, the noble Lord Shipley and the noble Lord Kennedy, who originally tabled this amendment in a cross-party spirit. I also thank the noble lords and ladies in the other place for all their contributions on the Bill. Having attended the debates and read through the Committee transcripts, I am grateful for the valuable experience and insight that all those who commented on the Bill brought to bear, as this has helped to inform how we have thought about the legislation. I am glad that there was wide cross-party support in the other place for this Bill and this measure in particular.

This so-called escalator 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. I am sure that hon. Members will agree that the amendment is entirely in keeping with the spirit of the legislation, which is to strengthen local authorities’ existing powers to tackle empty homes for the benefit of their communities.

[Eddie Hughes]

I completely agree that it is in keeping with this legislation. It seems crazy that in this day and age, when we have people who are desperate for a home, there might be up to 11,000 properties in England that have been vacant for over 10 years.

[Rishi Sunak]

rose—

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. The Minister has now taken up 50% of the time. It is only an hour’s debate, so I am concerned. We have a lot of Members in the Chamber, and I hope that he is not trying to take up all the time.

[Rishi Sunak]

Thank you, Mr Deputy Speaker. I have tried to take any interventions that have come my way from all parts of the House, but I will take your steer and try to reach my conclusion in a slightly more swift fashion, if that will help.

I am sure, as I said, that hon. Members will agree that this amendment is in keeping with the spirit of the legislation and will enable local authorities to do more. However, we are not proposing to alter the provision on homes empty for at least two years and less than five years, as we have discussed previously.

[Layla Moran]

I thank the Minister for paying tribute to my colleagues in the House of Lords who led on this amendment. Does he agree that another issue is land banking? It is all very well if homes are being brought back into use, but we also have an issue of land that is often kept for a very long time. What does he intend to do about that?

[Rishi Sunak]

I agree that land banking should be looked into. The hon. Lady will be aware that my hon. Friend the Member for North Dorset (Simon Hoare) is currently looking at that issue. Interim findings have been published and more findings will be coming out shortly. I hope that she will be happy to wait for the findings of those reports.

Nor are we proposing to change any other arrangements for charging premiums. It will rightly remain a matter for local authorities individually to decide whether and what premium to charge. In making these decisions, local authorities should of course consider local circumstances, as we have discussed, as well as the guidance issued by the Government.

It is right that we target particularly the homes that are empty for excessively long periods in this way. To be sure, they are likely to be few in number— potentially 11,000, as we heard from my hon. Friend the Member for Walsall North (Eddie Hughes)—but where they exist, they can indeed be a nuisance and a blight on their community. Such properties may even become sites of crime and antisocial behaviour. It is right that local authorities are equipped with greater powers in these difficult cases, where a 100% premium may be ineffective. We are proposing that these higher premiums come into effect slightly later than the original measure, which was announced at last year’s autumn Budget. This will give homeowners sufficient notice of the change. The 200% premiums will come into effect from 1 April 2020, and the 300% premiums a year later. The original proposal, of which people have had good notice, will come into effect from 1 April 2019, as planned.

We recognise the crucial importance of ensuring that premiums are applied fairly. That is why in 2013 the Government published guidance reminding local authorities to take into account the specific reasons a local property is empty, as indeed we heard from my hon. Friend the Member for Harrow East (Bob Blackman). In the light of this amendment, I can confirm that the Government will take a fresh look at the guidance with the aim of publishing revised guidance ahead of the introduction of the 200% and 300% premiums. This refreshed guidance will be subject to consultation, of course, and we will welcome the opportunity to benefit from the experience of local authorities, council tax payers and others when the time comes. In particular, we are keen to ensure that the guidance clarifies that premiums must be applied with due consideration to issues facing low-demand areas and cases of hardship. We expect to revisit the wording of the guidance to set out clearly the Government’s expectation that premiums are not applied where homeowners can demonstrate that their properties are genuinely on the market for rent or sale and appropriately priced.

Another area we expect to consider is cases where homeowners, as my hon. Friend the Member for Harrow East noted, are struggling to complete or afford renovations that are necessary before the property can be occupied or sold on and where they can demonstrate progress and hardship.

I am delighted to bring forward this amendment, which has been termed the escalator amendment. I am grateful to all colleagues, the Select Committee and partners in the rating agencies for helping to get this amendment and this Bill to the House. By strengthening the incentive for owners of long-term empty properties to bring them back into use, this amendment will surely come as good news for local government, for families seeking a place to live and for the affected local communities as a whole. I commend it to the House.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

It takes a very good education to be able to talk at length without saying much at all.

We are at the end of a process as we reflect on the Lords amendment, which I should say is entirely in line with Labour’s manifesto. If anything, it could have gone much further. While the Lords have suggested a 10-year period regarding the charge on empty properties, the Labour manifesto proposed that after a year, because we recognise not only that there are lots of people on the housing waiting list and many people who are homeless—sofa-surfing and on the streets—but that these properties are often a blight on their local communities. It is right that the owners of the properties are held to account, and a charge is one way of doing so. Of course we welcome the amendment, but we would have liked it to go much further.

We have heard in Committee and in the Chamber that the staircase tax was about listening to the interests of business and how the business rates system was adversely affecting them, but it is slightly odd that of all the issues that businesses are raising when it comes to business rates, this is the sole one that has been picked out for this place to address. There is absolutely nothing about the condition of our high streets and town centres, and nothing about business rates’ impact on our pubs. There is no recognition that while we have rural rate relief for the last pub in a village, council estates are not given the same luxury for the last pub on the estate. Businesses are raising plenty of important issues.

Fundamentally, we see with rates the same thing that we are seeing with council tax: we are incrementally putting more and more pressure on what is a diminishing resource in many places. We have seen that with the revaluation, where the value shifted to London and the south-east, and certainly away from my region. The Conservative party has been in power for 10 years, through the coalition and more recently with the support of the Democratic Unionist party, and the housing shame in this country is a national scandal.