New proposals that will allow local authorities to charge council tax on unoccupied properties as soon as they enter a void period could result in landlords facing severe administrative nightmares, according to some members of the industry.
At present, when a domestic property becomes empty, the owner is given a grace period of six months, before they must pay council tax. However, ministers are looking are abolishing this requirement.
Under the Localism Act, the Government is looking at proposing to replace the existing legislations with a clause that would permit authorities to charge whatever they see fit on empty homes for the initial six months empty period.
Following this six-month timeframe, the full amount of council tax would be applicable.
In more detail, proposals centre around the Class C exemption for council tax purposes. These types of homes are empty and largely unfurnished. Other classes, to be seemingly unaffected by the new proposals, include ones left uninhabited.
The Government feels that there is, ‘no compelling reason why the first six months should be treated so generously,’ for class C category homes.
It is feared that the new moves could be harmful for both landlords and sellers, with those needing to relocate quickly most at risk.
Earlier this year, cash-strapped local councils voted by 169 to 25 in favour of the abolishment of the Class C exemption.
Ian Sanford of Pennigton Homes, said, ‘ with local authority finances under pressure in the present recession it is more than likely that authorities will choose not to grant council tax-free periods, which will have major financial implications for landlords and vendors alike.’
‘In addition, it will provide an additional administrative burden for letting agents in that they will have to advise local authorities of all vacant periods, most of which are often only of a duration of a few days. It is also likely that, in these cases, it will cost the local authority more to collect the small amounts than the additional revenue achieved,’ Sanford added.