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Council Tax Exemption For Landlords To Be Abolished in 2013

Council Tax Exemption For Landlords To Be Abolished in 2013

Thanks to the Government welfare reforms and austerity measures the rules for Council Tax exemption on empty rental properties will soon be abolished.

From the 1st April 2013 new legislation being proposed by the government means that landlords will become solely responsible for the Council Tax on all void rental properties.

Some local authorities, such as Durham, have already jumped the gun and have begun charging landlords the full Council Tax amount for any property that is currently untenanted, leaving many landlords confused and severley out of pocket.

If the new legislation is still at the proposal stage and is not yet law, why are some local authorities allowed to do this?

I happen to own several properties around the North East of England and have been billed for void periods over the last 6 months even if a property was empty for only a couple of weeks.

Durham are wrongly charging the full council tax on all empty rental properties despite the fact that no council run services are being used.

I have contacted Durham borough council and attemted to argue the toss and following lengthy discussions I was eventually told by an advisor to complete a form to apply for Council Tax exemption for any property that I had been charged for, however, the local authority in Durham flatly refused to post a form out to me and insisted that I get the managing agent to request one.

The only way that landlords can affect change is to use the current legislation set by Government against any greedy local authority and point blank refute any charge made against them especially if the charge is unwarranted.

Information taken from the Gov.uk website…

A full Council Tax bill is based on at least 2 adults living in a home.

If you count as an adult for Council Tax and live on your own, you’ll get 25% off your bill.

You’ll also get a discount if you live with people who don’t count as adults for Council Tax.

These people are not counted as adults for Council Tax purposes:

  • children under 18
  • people on apprentice schemes
  • 18 and 19-year-olds in full-time education
  • full-time college and university students
  • young people under 25 who get funding from the Skills Funding Agency or Young People’s Learning Agency
  • student nurses
  • foreign language assistants registered with the British Council
  • people with a severe mental disability
  • live-in carers who look after someone who isn’t their partner, spouse or child
  • diplomats

To work out if you should get a Council Tax discount:

  1. Count the number of adults who live in your home as their main home.
  2. Discount anyone in the list above.
  3. If you’re left with 1 person who counts as an adult, your Council Tax bill will be reduced by 25%.
  4. If you’re left with no-one who counts as an adult, your bill will be reduced by 50%.

If there’s no discount listed and you think you should get one, write to your council.

The council has 2 months to respond. If you disagree with the council’s decision or don’t hear back within this time, you can appeal to the Valuation Tribunal.

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.

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