In 2013, the government introduced powers for local authorities to charge a discretionary council tax premium of up to 50% on ‘long term empty homes’. A ‘long term empty home’ was defined as a home that had been empty for at least 2 years.
In 2018, the maximum council tax premium increased to
- Up to 100% for properties empty for 2-5 years;
- Up to 200% for properties empty for 5-10 years; and
- Up to 300% for properties empty for 10+ years.
The Levelling Up and Regeneration Bill contains a provision to amend the definition of ‘long term empty homes’. For financial years from 2024-25 onwards, dwellings unoccupied and substantially unfurnished for a continuous period of at least 1 year will be liable to the council tax premium.
The Bill will provide powers to billing authorities to charge a discretionary council tax premium of up to 100% for second homes.
Exemptions from the empty homes and second homes premiums
There are specific circumstances in which the government recognises that the empty homes and second homes premiums should not be applied.
There is currently an open consultation on proposals to exempt categories of dwellings from the council tax premiums in England. The consultation runs until 31 August 2023.
Three of the categories under consultation for exemption are:
- Properties in an estate where probate has not yet been granted;
- Properties being actively marketed for sale or let; and
- Empty properties undergoing major repairs.
Proposed changes for properties awaiting probate
Unoccupied properties that have become vacant due to the death of the owner or tenant, are exempt from council tax until probate is granted.
Currently, following a grant of probate (or letters of administration), a further period of exemption of 6 months may be available – this is a Class F exemption.
If the property remains unoccupied at the end of the Class F exemption, it may immediately become liable for the long-term empty homes council tax premium OR if it is substantially furnished, it may be liable for the second homes premium.
The consultation proposes that properties awaiting probate should be exempt from both the second homes and empty homes premiums for 12 months
- The exception would start after probate or letters of administration have been granted; however
- This would not affect the Class F exemption or the ability for billing authorities to charge the normal rate of council tax following the expiry of the Class F exemption.
Proposed changes for properties being actively marketed for sale or let
Where owners are using their best endeavours to bring a property back into productive use, there will be changes so they are no longer penalised by the long-term empty homes premium.
- Empty properties that are being actively marketed for sale or let would be exempt from the council tax premiums;
- The exemption would apply for a maximum of 6 months from the date that active marketing commenced; OR
- Until the property has been sold or rented, whichever is earlier.
Proposed changes for properties undergoing major repairs
If a property is undergoing major repair work or structural alterations to make it habitable, new regulations would be introduced so the premium is no longer charged as soon as the property has been empty for 1 year.
- Empty properties undergoing major repair works or structural alternations would be an exception to the premium for up to 6 months once the exception has been applied; OR
- When the work has been completed, whichever is earlier; and
- The exception could be applied at any time after the property has been empty for at least 12 months, so long as the billing authority is satisfied that the necessary repair work is being undertaken.
Eligibility for more than one exception
It may be the case that properties are eligible for more than one of the exceptions.
For example, a property may be granted 12 months’ exception after probate has been granted and then subsequently put on the market for sale – the owner can then apply for an additional 6 months’ exception period. Where both exceptions are available, the maximum exception period would then be 18 months.
An extension to the current exemptions would be much welcomed due to the time it can take to determine the future use of a property following the death of an owner.
To read the consultation in full click here
Responses to the consultation can be emailed to council.tax@levellingup.gov.uk
How M+A Partners can help
For any queries on how the proposed changes may impact your estate please get in touch with your usual M+A Partners contact or one of our experts below.
