Local authorities have the power to charge council tax on all rental properties as soon as they become empty, a critical point that will hit landlords hard and give lettings and property managing agents a massive administrative headache.

It used to be that when a residential property became vacant, the owner was automatically granted a period of six months exemption before council tax was payable.

Some local authorities, such as Durham Council, have already implemented this action and have been collecting council tax on empty rental properties as well as privately owned empty residential properties for a number of months.

With the Class C exemption still under debate, have Durham council jumped the gun?

A spokesperson for Durham County Council reckons not: “We have been applying full council tax liability on all empty properties within the 7 boroughs of our region since April and landlords must understand that revenue is due from all residential properties regardless of whether or not they are lived in.”

Now MP’s want to abolish the mandatory 6 month class C exemption period, for all local authorities across the UK, using the Localism Act.

The Government reckon that there is no compelling reason why the first six months should be treated so generously, so their proposal is to abolish the Class C exemption for council tax purposes and replace the exemption with a clause that would let local authorities charge whatever they wanted on all empty properties for the first six months.

Class C dwellings are empty properties that are largely unfurnished. Other classes, which would appear to remain untouched by the latest moves, include homes left empty after someone has become ill or because the property is subject to probate.

The proposal will impact hardest on landlords with void periods, as well as property vendors who may need to relocate quickly for a variety of reasons such as for work or, in the case of older people, to be closer to family.

Meanwhile, the Local Government Finance Bill, currently going through Parliament, will allow local councils to charge higher amounts for residential property that has been empty for two years or more, as well doubling rates for second homes.

A spokesman for the Local Government Association said “The proposals could have unintended consequences, but it would be nothing like as complicated as the proposal to abolish Class C”.

In the official consultation earlier this year, 169 local authorities voted in favour of the Class C exemption being abolished with only 25 councils voting against the plan.

Only five property-related businesses responded during the official consultation, with 3 businesses voting against the proposal and 2 for it.

70 members of the public were also consulted, although the proportion of landlords remains unclear. Of these, 11 were in favour of the idea and 59 were against it. Only 1 MP responded, favouring the abolition of the exemption.

With so many local authorities under a great deal of financial pressure during the recession it is hoped that councils will choose not to grant council tax-free periods, because of the major financial implications it will have for landlords and struggling property vendors.

Additionally, there will be an increased administrative burden for letting and property management agents in that they will have to continually revise information of vacant rental properties to local authorities, most of which are often only empty for a few days.

It is also likely that it will cost local authorities more to collect the small amounts of council tax owed than the additional revenue they hope to achieve.

Durham council do appear to have acted independently of all other local authorities in the UK by implementing the abolition of the Class C exemption well before everyone else.

As a landlord with properties within the Durham council area I for one remain unhappy and will be talking to the RLA (Residential Landlords Association) about lobbying the Government to review this ridiculous way of thinking and because the abolition of the Class C exemption is not approved by Government at the present time I will be demanding repayment of unfairly levied Council Tax payments already made.

3 Responses to Empty Buy-To-Let Properties Not Exempt From Council Tax

  1. Sue Massey says:

    Cheshire West and Chester Council may allow there tenents to live in hovels. I however would have to make sure that my properties are of a decent standard for my tenants to live in. Does this mean that while I am cleaning and revamping a house for a new tenant that I have to pay council tax while in the process of making it habitable for them

  2. Richard says:

    sorry re: previous post, Barratts should have been paying from August 2012, following the 6-month Class C exemption period, if they are classified as an owner!

  3. Richard says:

    Hi,
    Bought a new house in Dec 2012 & have just been preparing it for rent – the local council want me to pay for the council tax from the purchase date to the end of the council tax year (April). I don’t think I should be paying council tax but when the property is let then I would expect the tenants to pay. What the council are saying to me is that as the property was completed in Feb 2012 that the 6 months vacancy period has already been exceeded, which does give me a problem as Barratts the house-builder presumably have been paying council tax from Feb 2012 to the date I bought it – the council rules state the exemption relates to the house, not the owner so I guess they are saying that the house builder is the owner which is technically true but I am the first person to buy the property.
    Any advice?
    Regards,
    Richard

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