Council tax discount could be axed for empty home owners

Wakefield Council is considering removing the 50 per cent council tax discount given to owners of long-term empty properties.

The proposed change will affect 2,946 empty properties – mostly landlords, investors and relatives of deceased home owners.

A change is also being proposed that will affect the owners of second homes in Wakefield.

There are 140 who currently enjoy a 50 per cent council tax discount but this is expected to be reduced to 10 per cent.

Members of the council's cabinet committee are meeting today to discuss the proposals.

A report prepared for the meeting says that removing the council tax discount on long-term empty homes will raise just over 945,000 a year for the council, according to a report.

Slashing the second homes discount to 10 per cent will raise around 52,000 a year, it adds.

The report also mentions possible changes to the business rate relief that is awarded to charitable and non-profit making organisations.

But the report recommends that councillors do not make any changes to this.

The council report goes on to say proposals are about "increasing income and reducing expenditure" in time for next year's budget.

It adds: "Prior to 1st April 2004 empty properties were exempt from council tax for as long as six months but thereafter the owner was required to pay council tax at 50 per cent.

"Since 1st April 2004, councils were given the discretion to charge up to 100 per cent in respect of long-term empty properties.

"However, Wakefield Council continued to apply the 50 per cent discount as before."

Council officials have been looking at the discounts for council tax in other Yorkshire councils and concluded that the majority have reduced the discounts on both long-term empty properties and second homes.

The research showed that some authorities do not allow discounts for long term empty properties, including Barnsley, Bradford, Kirklees, Leeds and Sheffield.

Doncaster gives a 50 per cent discount, as does Rotherham. Calderdale grants a 25 per cent discount.

There are also differences when it comes to second home discounts. Barnsley gives 50 per cent, as does Doncaster and Rotherham. Sheffield, Bradford, Kirklees and Leeds allows 10 per cent.

The report suggests a number of options to "mitigate hardship" on taxpayers who will be affected by the tax changes.

These include extended payment terms, deferred payments, a charging order whereby the debt is charged against the property until it is sold.

The changes to council tax discounts for empty properties and second homes can be brought in without giving taxpayers advance notice, according to the council.

"However, the reasonable approach would be to contact those affected to make them aware of the date the change will take place. This could be 1st April 2011," the report says, before adding that the proposed changes together will bring in just short of 1m a year.

Retaining the level of business rate relief at current levels will not affect council income but "will forgo the opportunity to reduce costs by up to 376,052."

The report warns councillors that they must consider the effect their decision will have on those affected,

It says that those most likely to be affected will be relatives of people who have died, investors, and landlords, but the knock-on effect could benefit the homeless.

"Removal of reduction of the discount could benefit homeless people or those on low incomes by creating an incentive to landlords to reduce rents, with one council in Yorkshire reporting a significant reduction in empty properties since the removal of these discounts (from 4,000 to around 2,500)."