Council proposes ’empty homes tax’ via council tax premiums

Anthony Lewis, local democracy reporter

A local authority is proposing an increase in council tax premiums for properties that have been empty for more than a year.

Proposals to change the levels of council tax premiums on long term empty homes in Merthyr Tydfil include a 150% premium for a property that has been empty for more than five years but less than 10 years and a 100% premium for a property that has been empty for more than one year but less than five years.

If agreed by full council, these changes would come into force from April 2025.

Premiums

On second homes, the council has previously decided that from April 2024 to char a council tax premium charge of 100% and the proposal is that this continues from April 2025.

The proposals also include exemptions for new owners or composite properties (properties used for domestic and non-domestic uses).

For new owners, this will only apply to new owners of long-term empty properties, where the statutory exemption has already been applied to the property and a council tax premium is chargeable.

A council tax premium will not be charged for a period of up to 12 months, instead a standard charge will be applicable, but when this period ends a council tax premium charge will apply.

There would also be an exemption for up to six months for those under renovation.

Empty

A report to full council said that currently within Merthyr Tydfil as of August 31, 2024, there are 1,080 empty and unfurnished properties of which 643 of them have been empty from in excess of six months to more than 20 years.

There are 158 properties that are classed as second homes with the county borough, it added.

The report said a public consultation has recently been done focusing on whether the council tax premium should be varied based on the length of time that a property remains vacant.

Of the 334 responses received, the report said there is “overwhelming support” to vary the council tax premium.

The consultation also alluded to the local authority taking direct action
to intervene to enable re-use, which may include charging orders and compulsory purchase orders (CPO).

Discretionary powers

Since April 2017, the Housing (Wales) Act 2014 has provided councils in Wales with discretionary powers to charge a premium of up to 100% on top of the standard rate of council tax on long term empty homes and second homes in the area from April 2023.

The Council Tax (Long-term Empty Dwellings and Dwellings Occupied Periodically) (Wales) Regulations 2022 will allow a council to set premium levels up to 300% for the 2023/2024 financial year and following years.

The council previously decided to charge a 100% premium for long term empty homes from April 2023.

In 2023/2024, figures show a collection rate of £362,632 from long term empty property premiums with £40,000 going towards a revenue inspector/premium officer role leading to a total revenue of £322,632.

In 2024/2025, figures show the collection rate would be £362,632 from long term empty properties, £199,444 from second homes with £40,692 going towards the revenue inspector role meaning a total revenue of £521,384.

And in 2025/2026, figures show the collection rate would be £450,132 from long term empty properties, £199,444 from second homes and £41,354 towards the revenue inspector role meaning a total revenue of £608,222.

These figures are based on an in year collection rate of 70%.

If agreed by council, there would be a further report on potentially taking direct action to intervene in respect of properties where it becomes clear that there is no realistic prospect of an owner taking any action to enable reuse.