Decision details

Cabinet considered a report which sought approval to consult upon the introduction of a Council Tax premium for domestic properties that had been unoccupied and unfurnished for a period in excess of two years. 

In the November 2017 Budget, the Chancellor of the Exchequer had announced the government’s intention to legislate to bring the maximum charge for long term empty homes in England up to 200%.

Subsequently, changes in legislation enabled local authorities to increase Council Tax empty property premiums at the following rates: 

a)    From 1 April 2019, a 100% Council Tax Premium for properties that had been unoccupied and unfurnished for more than two years.

b)    From 1 April 2020, a 200% premium on properties that had been empty for five years or more.

c)    From 1 April 2021, a 300% premium on properties that had been empty for ten years or more.

In North Tyneside, as at 1 September 2019, the total number of properties that could attract the Council Tax premium stood at 460. Of those properties 305 had been empty for a period of between 2 and 5 years, 104 properties empty for a period of between 5 and 10 years with 51 properties empty for more than 10 years. The breakdown of these empty properties by Council Tax band was shown in Table 1 of the report.

If the Council chose to implement a 100% premium for properties that had been unoccupied and unfurnished for a period in excess of two but less than five years a debit would be created as detailed in Table 2 of the report.  If the Council also chose to implement a 200% premium for properties that had been unoccupied an unfurnished for a period in excess of five years a further additional debit would be created, as set out in Table 3 of the report. 

From Tables 2 and 3 the total debit initially created based on the situation as at 1 September 2019 would amount to £635,357.  As other local authorities had found some difficulty in collecting the premium, it was prudent to build in an allowance for non-collection.  Assuming a collection rate of 85%, this would reduce the collectable debit to £540,053. Of this debit collected 12.2% would be collected on behalf of Northumbria Police and the Tyne and Wear Fire and Rescue Service as part of their Council Tax precept. This would reduce the North Tyneside Council element of the additional debit to £474,167.

The concept behind the introduction of Council Tax premiums was to encourage owners to bring their long-term empty properties back in to use by providing a financial disincentive for absentee landlords or owners to retain on a long term basis empty properties. It was therefore anticipated that if the initiative was successful the amount of additional Council Tax debit created would diminish considerably.  

The majority of long-term empty properties in North Tyneside were in the lowest Council Tax band (A), often in the more deprived areas of the borough and if brought back in to occupation could be a useful source of more affordable housing.  However, the potential benefits of the proposals did need to be considered in the context that in some areas where there might currently be a lower demand for rental properties, some owners may feel forced into letting properties to avoid paying the premium. This in turn could result in property management problems if properties were let to unsuitable tenants.

The report suggested that Cabinet may wish to consider proposing that some of the additional Council Tax income gained from introducing the premiums was used to support the initiatives already in place to tackle empty homes in the Authority’s Housing and Regeneration Teams, as outlined in the report.

Cabinet considered the following decision options: to agree to carry out consultation on the introduction of Council Tax premiums and bring back results of the consultation to Cabinet for it to consider making proposals to full Council; or alternatively, to not approve the recommendations and ask that an alternative approach be considered.

Resolved that (1) the Authority carries out consultation on the introduction of Council Tax premiums and the results of the consultation be brought back to Cabinet for consideration; and

(2) it be noted that any decision to introduce Council Tax premiums is the responsibility of Full Council.

(Reason for decision: Consultation will provide an opportunity for residents, landlords and other key organisations to express an opinion on the use of Council Tax premiums to bring long term empty properties back into use.)