The automatic 50% council tax discount for owners of second homes is to be changed in the upcoming Local Government Bill, the government announced today.
Under legislation that will go through Parliament in 2003, councils in England and Wales will be allowed to set their own discount for owners of second homes, on a sliding scale of 10-50%.
This will result in a significant rise in council tax bills for some second home-owners. The Bill will also allow councils to offer no discount at all on second homes that are classed as “long-term empty homes”.
The Office of the Deputy Prime Minister estimates that the changes will harvest an extra £65m in council tax revenues.
Despite calls to scrap the discount altogether, the government has retained a 10% minimum discount, on the grounds that it provides an incentive for owners to tell a council that a property is a second home.
The full 50% discount will continue to apply for people who are obliged to have a second home, such as pub landlords, clergy and, occasionally, MPs.
If the Bill becomes law, councils will be able to create their own discounts and exemptions to address local crises such as flooding.
Councils will also be able to offer discounts or exemptions in individual cases – for example, to ease the council tax burden on people with disabilities.
The cost of such new discounts and exemptions will be met by councils themselves.
Local government minister Nick Raynsford said: “We are aware of the problems in both rural and urban areas, where there are many second homes and properties that are left empty for a long time.
“We believe it is only right that second homeowners pay a fair contribution to local services. Indeed, the fact that second home-owners currently enjoy a 50% discount is a cause of resentment in several areas.”
He added: “High demand for second homes may affect property prices, forcing local people to look for housing elsewhere.
“Councils in such areas have argued for the ability to charge full council tax on second homes and the proceeds to fund new affordable housing for local people in need.”
Conservative shadow housing minister Geoffrey Clifton-Brown said: “We want a cast-iron guarantee that every single pound will be invested back into the local communities from where the taxes were raised.
“The Exchequer must keep its hands off these funds. The government must not take any cynical steps to reduce grants to councils that gain extra council tax revenue from this measure.”
According to government estimates, there are around 180,000 second homes and 400,000 empty homes in England and Wales.
EGi News 19/11/02
