Pre-decision scrutiny of the Council Tax Premiums Consultation: Long Term Empty Properties and Second Homes - To consider the findings of the public consultation exercise on introducing council tax premiums from 1st April 2024 (report to follow).
- Meeting of Performance and Overview Scrutiny Committee, Monday, 27th February, 2023 10.00 am (Item 3.)
Cabinet Member Rachel Garrick presented the report and answered the members’ questions with Ruth Donovan and Matthew Gatehouse.
Can the list of exceptions be reconsidered, particularly regarding empty homes which are listed buildings, given that renovations can take a long time?
Council Tax legislation and guidance must be followed, which is specific about a 12-month allowance for properties being empty before a premium can be charged. A property exempt from council tax isn’t liable for the premium. A 6-month exemption can be granted if substantial renovations are required, and that can be extended to 12 months. The exemptions can also apply to properties for sale, etc. – there is a list of other categories for exemptions.
Is it correct that those who already on the database as owning second homes voted for an increase?
It was an open, public consultation. There are 400 properties on the database classed as empty, and 190 registered as a second home. We wrote to those property owners advising that we were considering a premium and asking for their views in the consultation; we opened it up to the wider public subsequently. We therefore have a mixture of responses from those directly affected and the wider public.
The consultation was only available online?
Some without access contacted us and we took them through the consultation in the contact centres/hubs.
But if someone wasn’t online, they wouldn’t have known about it in the first place?
There was also a press release, so it wasn’t just on the website, and we encouraged people to contact us if they couldn’t complete the form online.
What is the relevance Q.s 11-15 here – are they not an infringement of privacy? Are they generic when a questionnaire is sent out?
Certain questions have to be asked in any public consultation, such as the potential impact on the Welsh language, for example, and others are good practice to be asked when policy changes are being considered, especially if there is a potential disproportionate impact on a particular group, even though they might not be legally required. And these questions are only optional.
Have colleagues in other authorities with high second homes rates found that there are means by which the legislation can be avoided?
No, we haven’t seen or heard of any. Previously, it was legitimate for council tax properties to move into business rates around the thresholds for self-catering, which meant a reduction in the council tax base – other authorities reported a significant shift in this regard, as a result of the premiums. The rules around self-catering have changed since then: businesses have to be available to let commercially for at least 252 days per year (previously 140), and must be let in the previous 12 months for 182 days (previously 70 days). We anticipate a number of properties will come back into the council tax list, as a result of this threshold changing.
What counts as a ‘derelict’ home, and what potential is there for a long-term empty property owner to declare it derelict to avoid council tax? How do we assess that?
We would need to refer to the Revenues team for a definitive answer. For any property to be removed from a council tax list, it would have to be reviewed and assessed by the valuation office agency which advises the local authority of the council tax band or rateable value of a property – they decide if it is rated or not. If the building is derelict, it would have to meet criteria in order to be removed from a list e.g. if it were completely uninhabitable. So, the owner would need to contact the VOA and ask that the property be removed from the list.
Is there any potential to have a sliding scale in terms of second home occupancy?
That would be difficult to administer – how we would know that the property was being used every weekend, for example. We wouldn’t be able to build that into our processes. We are clear that the intention is to review the impact on the local economy, in the coming year.
There are concerns about the questionnaire: the protected characteristics listed aren’t in the Equality Act. Not everyone was allowed to say what the premium was – only those who said ‘yes’ to there being a premium were asked what the percentage should be, and there was no ‘0%’ option.
The questionnaire is very clear and simple: if an individual has stated that they do not agree with the level of council tax, they have expressed a preference for 0%. They aren’t asked to reiterate that because they don’t need to.
If an elderly person has a home in one area they might need to get a small warden-assisted place somewhere else, to be near to relatives for help with their care. They might be selling their other house or they are in a warden-assisted property which is difficult to sell due to the large service charges. Should there not be exceptions in those circumstances? What about probate?
When a premium is awarded, it is down to whether there is already a council tax exemption on the property, or if it is in one of the 7 classes detailed in the guidance. In the case of someone going into a residential home, for example, if it is a permanent arrangement then there is an exemption in place for their property, under current legislation. A property is exempt for 6 months if it is empty because of probate, and can be exempted for up to 1 year because it is linked into the restriction for sale. Under the 7 classes, if the property is being marketed for sale, it is exempt for 1 year. So, there is scope in the legislation to allow for some of these circumstances.
If a property is listed and an alteration is requested before it is let, planning can take a year – is there not a danger of some of these actions falling prey to the law of unintended consequences? Do the recommendations not need a third, discretionary category? What if something is not covered by the timescales allowed for by the list of exceptions?
The discretionary category is something that we will need to consider as we go into the 12-month period before charging residents will begin (assuming it is approved now), and an entire infrastructure dealing with how this is administered will need to be created. We know from other councils already operating a premium that they have lots of contacts, questions and appeals from residents – we need to be ready for that, and learn from other councils about these sorts of queries. Guidance will then be put together for the Revenues team to follow, along with an appeals process. We therefore don’t have all of the answers yet but will look to develop things in the coming months. We will reflect on what level of discretion can be applied.
Is it possible to have back-to-back exemptions?
Yes, a property can have back-to-back exemptions, for different reasons.
If the IIA is completed first – it should inform the questionnaire – so maybe questions around employed status/ income, would be more relevant. Also, if the other questions are optional, and differing numbers of respondents replied to each question, then are they helpful?
It's very important that we strive to complete the IIAs as early as possible in any process – the earlier we do so, the more likely that we can use the responses to inform the policy proposal.
There used to be an appeals panel – what happened to that?
We aren’t aware of this taking place, currently, nor having done in the last 7 years. We might need to put it in place, given the level of queries once the premium is implemented.
The consultation was in fact clear that there was an option to say there shouldn’t be an increase, i.e. 0%. Regarding equal opportunities, it’s important to collect that data, as we want to ensure that questionnaires reach a good cross-section. The equal opportunities data showed that greatest number of respondents were over-65, so in fact the elderly were included.
Yes, it is essential that we use the equal opportunities information to ensure that we are reaching all sections of our community.
Section 12, paragraph 16 of the legal guidance states that a dwelling being occupied for one or more periods of 6 weeks or less during the year will not alter the status of a long-term empty building. This means that, for example, if an individual were in a property for 12 4-week periods, the building would still be classed as long-term empty? What is the practicality of that?
This is seen particularly in business rates: furniture, for example, is moved into an ‘empty’ space for a period of time, to attract an exemption from paying business rates, and this is also seen with council tax. This is a particular point that the guidance is trying to address.
But what about actual occupation of the dwelling by an individual?
It is specific guidance from Welsh Government, to address someone, for example, moving in a token piece of furniture, to try to avoid the charges.
Has there been an estimate of the exceptions that would apply to the 190 second homes? What sort of costs would there be, or have already been, such that we could see what the net financial position would be as a result of this policy?
Figures have been calculated based on the number of second homes (190) and empty properties (400) listed on our database. Currently, we don’t know the extra resources that we might need to implement this. We will need to purchase an extra module on the system used for revenues and benefits. Anecdotally, other councils have had to engage extra resources within their revenues teams to deal with the numbers of correspondence and appeals. We will need to do detailed financial modelling nearer to the time to feed into the 24/25 financial plan, when we have a clearer picture of the exact number of properties and the amount of resource needed to deliver this safely.
Areas for follow-up include exceptions that appear not to be identified currently, and the potential therefore for a discretionary class for exceptions, and for appeals to be clarified as part of the plan. Also, if there is a flaw in the Welsh Government guidance it could unwind the policy if people spotted it, leading to judicial reviews, wasting time and money – so Section 12A, paragraph 16 should be considered, as it seems to be flawed. A response outside the meeting would be welcomed – ACTION
- Council Tax Premiums Consultation - report for Scrutiny, item 3. PDF 173 KB
- Appendix One - Guidance on the introduction of council tax premiums in Wales, item 3. PDF 281 KB
- Appendix Two - Consultation questions, item 3. PDF 117 KB
- Appendix Three - Consultation responses, item 3. PDF 855 KB
- Appendix Five - Second Home comments, item 3. PDF 370 KB
- Appendix Four - Long term empty comments, item 3. PDF 372 KB
- Appendix Six - Future Generations Evaluation Form, item 3. PDF 454 KB
- Updated Council Tax Premiums Consultation - report for Scrutiny, item 3. PDF 173 KB