Agenda item

(Cabinet Member with Special Responsibility Councillor Bryning)

Report of the Head of Resources

(Cabinet Member with Special Responsibility Councillor Bryning)

Cabinet received a report from the Head of Resources to inform Members of various council tax changes being proposed by Government, particularly in light of future potential developments regarding empty homes strategy, and to endorse the outline approach regarding future consultation and decision-making.

As this report was presented primarily for information, no options were presented, although Cabinet was asked to endorse the outline plans regarding consultation in particular and so it might have specific ideas for consideration.

Specific Proposals contained in the Bill

Empty and Exempt Dwellings

The new discretionary powers contained in the Bill focused on the following exemption categories in relation to empty properties:

·               Class A – vacant dwellings where major repair works or structural alterations are required, under way or recently completed. (This exemption applies for a maximum period of twelve months.)

·               Class C – an empty property that is substantially unfurnished. (This exemption applies for a maximum period of six months.)

The Bill provided the discretion to remove the statutorily prescribed time periods and 100% exemption for these categories, and gave billing authorities the power to charge between 0% and 100% from the date the property becomes empty.  Proposals to implement discretionary powers to remove the exemption for Class L (in relation to properties repossessed by the mortgagee) had been postponed at this stage, pending further consultation with mortgage lenders.

Appendix A to the report contained a table detailing:

-              the numbers of properties in Class A, Class C and classed as Second Homes and Long Term Empties in the Lancaster area as at April 2012.

-              the approximate amount of overall council tax foregone in 2012/13 for this number, based on the total charge for a Band D property of £1514.13, and

-              the amount foregone by Lancaster City Council based on its own charge for a Band D property of £192.25.

Second Homes

A property was classed as a second home if it was furnished but no-one lived there as their sole or main residence.  Council tax legislation currently allowed the billing authority to award a discount on these properties of between 10% and 50%.  Currently the City Council awarded a discount of 10% only in these cases, with the bulk of the income from the 40% discretionary charge being allocated under the protocol agreed with the County Council – although it was uncertain whether this would continue next year.  The current statutory 50% charge formed part of each authority’s precept, or general funding from council tax.

The Bill provided the power for billing authorities to charge 100% on second homes in future, should they choose to do so.  The number of second homes and the financial details were also contained in Appendix A to the report.

Empty Homes Premium

Billing authorities currently had discretion to provide a discount of up to 50% on empty properties that were not exempt.  These were classed as long-term empty properties. 

The Finance Bill introduces the power for billing authorities to charge an additional premium, above the 100% charge, for properties that have been empty for a long time (for example two years).

The underlying policy of the new measures aimed to encourage owners to bring empty properties back into use more quickly.  As has been outlined previously to Cabinet, it remained the case that a number of dwellings were left empty, at a time when there is an overall housing shortage.  As well as being an unused resource, long-term empty properties could attract squatters, vandalism and anti-social behaviour, and could be a blight on the local community.

The Council had always allowed a 50% discount on such properties, although the Finance Bill now provided a good opportunity to review the position.  Appendix A to the report assumed an additional levy of 50% as an “Empty Homes Premium” for those properties considered to be long term empty in excess of two years, and detailed numbers and financial details. 

Consultation

A consultation exercise with relevant stakeholders was planned over the next few months in readiness for decision-making later this calendar year.  Timescales and resources would be tight, particularly given the legislative position and other workloads, including welfare reforms.  It was intended that the form of consultation would be discussed and agreed with the Cabinet Portfolio holder.

Generally council tax related decisions were a matter for full Council, following recommendations from Cabinet.  The budget timetable was now scheduled for October Cabinet and this would factor in the consultation and decision-making arrangements in respect of council tax discretionary powers.  In summary, however, the final decision would need to be made no later than at December Council, to feed into council tax base setting for 2013/14.

There was the potential for the Council to raise extra revenue from the proposals included in the Finance Bill.  However, it should be noted with caution that income relating to empty properties generally proves difficult to collect and bad debt provisions will need to be reviewed, should the Council choose to adopt any proposals in future.

Any “Empty Homes Premium” must be seen to operate fairly, and must make sense in the context of the broader local strategy for dealing with empty homes.  Issues of collection and avoidance would need to be carefully considered as part of any adoption plan.

Councillor Bryning proposed, seconded by Councillor Hamilton-Cox:-

“(1)      That the recommendation, as set out in the report, be approved.”

Councillors then voted:-

Resolved unanimously:

(1)               That the report be noted and the plans regarding future consultation and decision-making for any new discretionary powers be endorsed.

Officers responsible for effecting the decision:

Head of Resources

Reasons for making the decision:

The proposals link to Corporate Plan provisions regarding health and welling (bringing empty homes back in to use) whilst also supporting the Council’s budget and council tax targets.  Through noting the report and endorsing the proposals a consultation exercise can be undertaken in readiness for decision-making.