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

Scott Mann Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 1st May 2018 Public Bill Committees

[Rishi Sunak]

As we have discussed in the past, our housing market is not working as well as we would like. Young people are struggling to get on the property ladder, and to enjoy the same opportunities as their parents and grandparents. Today, the average price of a house in England is almost eight times the average income, compared with four times the average income in 1999.

The Government are committed to boosting housing supply to ensure that hardworking people have a secure place to call home. Our reforms put us on track for an average of 300,000 homes to be delivered per year by the mid-2020s. Although building new homes is undoubtedly a fundamental part of fixing a dysfunctional market, we must also make more use of the our existing stock. It cannot be right that while many are waiting for a house to call home, thousands of properties stand empty, some for years. Homes left empty for the long term can be a blight on a neighbourhood, as well as the site of crime and antisocial behaviour.

[Scott Mann (North Cornwall) (Con)]

I have spoken to the Minister about this several times, and I know he understands the challenges we face in Cornwall with second home ownership and vacant properties. How will the Bill differentiate a second home and a vacant home?

[Rishi Sunak]

My hon. Friend has raised second home ownership in his rural constituency many times with me and other colleagues, and he is right to do so. Rural areas face challenges with second home ownership—coming from a rural constituency myself, I fully sympathise with some of his points.

Current legislation makes a distinction between second homes and empty homes. We are considering long-term empty homes, which are defined as homes which are “substantially unfurnished” and have been unoccupied for two years. Second homes are covered by a different part of council tax legislation, and the Government previously removed the necessity for local authorities to charge a discount on council tax. They are now allowed to charge the full amount. My hon. Friend will be aware that the Department is considering the treatment of second homes and business rates—he and other colleagues have asked me whether it is appropriate for some second home owners registered for business rates to benefit from small business rate relief and therefore pay no taxes, and whether our legislation captures fair use of that provision correctly. I am currently investigating that.

Before 2013, councils could not collect council tax from properties that had been empty for up to six months. Since then, we have ensured that councils can charge the full rate of council tax on such properties. That same year we enabled local authorities to charge a council tax premium of up to 50% on long-term empty homes. That power has been taken up by nearly 90% of councils, all but three of which applied the full 50% premium in 2017. 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. The new homes bonus scheme gives local authorities the same financial reward for bringing an empty home into use as for building a new one, and the Government have allocated £7 billion in new homes bonus payments to local authorities since 2011. Following those interventions, the number of properties left empty for six months or more has reduced by a third since 2010, from 300,000 to just over 200,000. The Bill goes even further, and doubling the cap on the empty homes premium will allow local authorities to strengthen the incentive to bring empty homes back into use.

Different areas will have different housing needs and different numbers of long-term empty homes. It is therefore right that decisions on whether to apply a premium and the exact rates to be charged are taken at local level as 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 in 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 sale or rent. We published guidance to that effect in 2013, reminding local authorities to take into account the reasons why a property is empty.

Hon. Members may finally wish to note that this provision would not bring any additional properties within scope of a premium. Only properties that could have been liable might be affected by the new higher premium.