Agenda item

To consider a report by Councillor Gwyneth Ellis, Lead Member for Finance, Performance and Strategic Assets (copy enclosed) updating Cabinet on the legislation introduced by the Welsh Government to increase the maximum level of council tax premiums for second homes and long-term empty properties and seeking Cabinet’s views on how to progress with any potential additional charging to these homes in Denbighshire.

RESOLVED that Cabinet –

(a)       agree that there be parity between the standard second home and long term empty premium, to minimise avoidance by taxpayers (who may apply to switch to the more favourable category) and so ensure the administrative burden is not increased significantly, except for properties that fall within recommendation;

(b)       agree to the following proposals that will inform a public consultation prior to final decisions by Cabinet and Council:

·         the second home and long term empty Premium charge will remain at 50% for April 2023 then increases to 100% from April 2024, then 150% from April 2025

·         that properties that have been unoccupied and unfurnished for 5 years or more pay a higher premium at 50% more than the standard Premium, and

(c)        that the decision be implemented immediately in accordance with paragraph 7.25 of the Council’s constitution given the need to complete the necessary consultation in a timely manner.

Councillor Gwyneth Ellis presented the report on the legislation introduced by Welsh Government (WG) to increase the maximum level of council tax premiums for second homes and long-term empty properties and sought Cabinet’s views on how to progress with any potential additional charging in Denbighshire.

WG had introduced a range of measures to address the lack of affordable housing in Wales, which included new flexibilities for charging higher rates for long-term empty and second homes up to a maximum of 300%.  Officers had recommended a measured response to retain the 50% premium charge for April 2023, increase to 100% from April 2024, and to 150% from April 2025.  Any proposed increase required wider public consultation.  The aim of the proposed increase was to reduce the number of empty properties and second homes, not income generation.

The Head of Finance and Audit detailed the tight timescales in the process to allow for public consultation and report back to Cabinet and ultimately Council for final decision.  Given the time constraints involved Cabinet was also asked to approve immediate implementation of the decision.  The decision at this stage was to consult on the proposals with any substantive decision subject of a further report.

Cabinet welcomed the proposals in the report as a means of encouraging properties back into use, increasing the number of affordable homes available for those in need of housing and to enable local people to remain within their own communities.  The gradual approach to increasing the premium on a phased basis was also welcomed with sufficient notice being given of the proposals to allow homeowners time to consider their position.  Reference was also made to the co-operation agreement between WG and Plaid Cymru and the commitment to tackling issues such as the housing shortage and lack of affordable homes for local people.  Officers confirmed there was still a lack of clarity around the intentions of neighbouring local authorities as to how they would utilise the new flexibilities.

Comments and questions were raised by two non-Cabinet members relating to the potential detrimental impact on tourism, small businesses and the local economy as a result of the proposed higher charges together with potential income generation.

Cabinet and officers responded to the issues raised as follows –

·       the aim of the proposed increase in charges was to change behaviours and encourage properties back into use within communities, not income generation

·       the proposals provided a gradual, measured approach up to a maximum 150% increase which fell short of the maximum permitted increase of 300%

·       there was a balance needed between the impact on tourism and housing provision with housing need and homelessness being a top priority

·       any properties classified as businesses would be subject to business rates and therefore not liable for council tax

·       highlighted the difficulties in estimating any additional revenue, particularly given the reasoning for the increase in charges was to reduce the number of second homes which would not produce any additional revenue if successful

·       any additional revenue generated by the increase must be used to mitigate the housing issues, including homelessness and shortage of housing

·       a Wellbeing Impact Assessment would be provided as part of the decision making process on the proposals via reports to Cabinet in July and Council in September

·       provided assurances that safeguards were in place as part of the process to support people suffering financial hardship.

Having reviewed the report and supporting information it was –

RESOLVED that Cabinet –

(a)      agree that there be parity between the standard second home and long term empty premium, to minimise avoidance by taxpayers (who may apply to switch to the more favourable category) and so ensure the administrative burden is not increased significantly, except for properties that fall within recommendation;

(b)      agree to the following proposals that will inform a public consultation prior to final decisions by Cabinet and Council:

·       the second home and long term empty Premium charge will remain at 50% for April 2023 then increases to 100% from April 2024, then 150% from April 2025

·       that properties that have been unoccupied and unfurnished for 5 years or more pay a higher premium at 50% more than the standard Premium, and

(c)      that the decision be implemented immediately in accordance with paragraph 7.25 of the Council’s constitution given the need to complete the necessary consultation in a timely manner.