Agenda item

To consider a report by Councillor Gwyneth Ellis, Lead Member for Finance, Performance and Strategic Assets (copy enclosed) updating Cabinet on the public consultation on the option to increase the council tax premium for second homes and long-term empty properties and seeking Cabinet’s views on proposals to progress with additional charging to these homes in Denbighshire.

RESOLVED that Cabinet recommends to Council –

(a)       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 (c) below;

(b)       that 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, and

(c)        that properties that have been unoccupied and unfurnished for 5 years or more pay a higher premium at 50% more than the standard premium.

In the absence of the Lead Member Councillor Rhys Thomas presented the report on legislation introduced by Welsh Government (WG) to increase the maximum level of council tax premiums for second homes and long-term empty properties, and updated Cabinet on the public consultation on proposals for additional charging to these homes in Denbighshire.  Cabinet’s views were sought on the proposals to progress with additional charging, and to recommend accordingly to Council for a final decision in September.

The reasoning for the proposals was to increase housing stock in the county and provide more housing for local people.  The report covered the council tax premium only for second homes and long-term empty properties and not any other matters that may be subject to other legislation.  Cabinet had agreed a public consultation on proposals to retain the 50% premium charge for April 2023, increase to 100% from April 2024, and to 150% from April 2025, with a higher premium at 50% more than the standard premium for properties that had been unoccupied and unfurnished for 5 years or more.  The maximum permitted increase was 300%. 

The Head of Finance and Audit drew attention to information in the report which included the background and context, legislative changes, feedback from the consultation exercise and data tables, and the Wellbeing Impact Assessment.  The consultation results demonstrated that the majority of respondents who lived in Denbighshire felt there was a need for an increase in the charges for both long term empty and second homes; thus supporting the recommendation.  Second homes and long term empty owners did not generally support the proposals.  The Senior Revenues Officer referred to other planning and taxation measures introduced by the WG to address the housing issue, and the phased approach would allow for careful monitoring of the situation.  The Council also had discretionary powers to waive any premium in cases of financial hardship or exceptional circumstances.

Cabinet welcomed the report and proposals to address housing need in the county, encouraging properties back into use and supporting local people to remain in their communities. The Wellbeing Impact Assessment clearly stated the aim of the proposals to address the demand for housing in the county and opportunity to use income from the premiums to address local housing needs, including homelessness and to lessen some of the impacts second homes and long term empty properties had on local communities.  Cabinet also agreed with the phased approach to increasing the premium to enable monitoring of the impact of the proposals alongside potential other measures to tackle the lack of affordable housing.  The various exemptions from the premiums had been set out and Cabinet was also pleased to note the safeguards in place for those suffering financial hardship or exceptional circumstances which could be considered on a case by case basis.

Officers responded to questions regarding various aspects of the report, including how the proposals would be applied in particular circumstances, as follows –

·         explained how Denbighshire’s approach compared to other North Wales local authorities, with indications that most councils were looking to review current rates with a view to increasing premiums in light of the new charging flexibilities

·         a property was not classed as long term empty until it had been unoccupied and unfurnished for 12 months, and if a property was on the open market for sale or let the exemption would apply for a further 12 months, effectively resulting in 2 years where there would be no premium charge.  Any specific circumstances not covered by those exemptions could be considered on a case by case basis

·         there was set criteria for a holiday let to be considered for business rates: the property had to be let for a number of days per year (the number had recently increased from 70 to 140 days) and be available for let for 250 days.  If the criteria were met, most properties qualified for small business rate relief and therefore did not pay either tax.  Given the recent increase in the number of days for the property to be let, it was anticipated that more properties would naturally move from business rates to council tax at which point consideration could be given to waive the premium in cases of financial hardship or exceptional circumstance

·         detailed robust policing processes and work of the Property Inspector including visiting properties, virtual inspections, credit searches/utility checks, and planned work later in the year to uncover unidentified empty and second homes

·         in terms of temporary rental properties, under a tenancy the resident would be liable for council tax for the amount of time they were resident in the property; once the property was vacated, providing the property was unfurnished, the landlord would have 6 months without council tax charge; rental properties were not classed as second homes

·         elaborated on the creation of a Project Officer role to work with disadvantaged groups across Denbighshire raising awareness of income maximisation and building on previous good work undertaken in that regard.  It would be a temporary post funded by the service in the first year to evaluate its effectiveness before consideration of making the post permanent.

Having reviewed the report and supporting information, including the feedback from the public consultation exercise and officer recommendations, it was –

RESOLVED that Cabinet recommends to Council –

(a)       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 (c) below;

(b)       that 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, and

(c)        that properties that have been unoccupied and unfurnished for 5 years or more pay a higher premium at 50% more than the standard premium.