Countdown to Council Tax changes for empty rental homes

Agents are reminded that as from Monday (April 1), local authorities will have the discretion to charge full Council Tax on empty properties.

The change will affect properties that have currently been given exemptions and discounts, including furnished and unfurnished properties for rent.

Owners of properties that are empty because of building work will also lose the automatic right to be let off Council Tax for up to a year. Many councils have decided to charge the full amount from day one.  

These are the exact changes:

    1.    Exemption class C (properties that are empty and unfurnished for up to six months) has been abolished and each council can decide whether to award a local discount in its place
    2.    Councils can decide to charge an additional premium of up to 50% on homes that have been empty and unfurnished for two years or more
    3.    Exemption class A (properties requiring or undergoing major repairs for up to 12 months) has been abolished and each council can decide whether to award a local discount in its place
    4.    The minimum discount that councils can give for furnished homes that are no one’s ‘sole or main residence’ – i.e. second homes and unoccupied furnished lets – has been reduced from 10% to 0%.

Local councils vary in their approach. For example, some are charging full Council Tax from day one, while others are allowing a short ‘grace’ period of perhaps a month and then either levying full Council Tax or a proportion of it for the next five months.

For example, Southwark Council in London is allowing empty, unfurnished properties to be exempt for two months, after which the full charge is applied. However, there is no exemption at all for empty, furnished rental properties. On properties empty for two years or more, it will charge a ‘premium’ of 50%.

Spelthorne Council is giving a one-month exemption to empty, unfurnished rental properties, and then giving a 50% discount in month two, followed by a 25% discount in month three, followed by no discount. It, too, will be charging 150% Council Tax on properties empty for over two years.

Information as to what each local council has decided should be on their websites. It should not be assumed that neighbouring councils will have adopted the same pricing policies – it is unlikely.  

The local authority in question will have to be notified promptly of empty periods – which could mean an agent having to notify the council of an empty rental property on the day that tenants move out, even if it is going to be vacant just a very short while.

There has been speculation that landlords will raise their rents as a result. But surely a landlord faced with having to pay, say, £150 a month on an empty rental property is going to be more likely to accept a lower rent if the tenants can move in immediately?

Letting agents will also have to grapple with the problem of what happens when a tenant who has given two months’ notice to leave actually quits before the end of their tenancy. Currently, most tenants would carry on paying rent until the official end of their tenancy or the property is re-let, but is let off Council Tax.

Landlords would almost certainly not be happy if they had to pick up the bill if their council is one of those charging Council Tax from day one. Equally, a landlord would not be happy for the tenant to have had, say, a month’s exemption from Council Tax, but then have to start paying if the property remains unlet.

At least one agent, Ian Sanford of Pennington Properties in Huntingdon, is looking at the legality of making the tenant liable for full Council Tax to the end of the tenancy.