Should empty properties pay full Council Tax?

Dec 12 2006

Liverpool aims to scrap discounted rates on vacant homes. Sam Lister reports

by Sam Lister, Liverpool Daily Post

PROPERTY owners who leave buildings empty for more than six months face a big hike in council tax bills.   As revealed yesterday, Liverpool City Council is planning to scrap the discounted rate of 50%, so the full amount will be payable.  Councillors insist they have called for the changes to put an end to "land-banking" by property speculators hoping to make big profits by selling their land on when market values rise.   But the proposals will also net the local authority an extra £3.6m a year without any cuts to services or big increases in staffing costs.   Critics claim it will be bad for business because it will discourage investors and hit the smallest developers hardest. But officials believe it would encourage quick renovation, clearance or re-letting.   More than 8,350 empty buildings in the city will be billed for the full amount for the first time but 1,600 of those are owned by the city council.   Cllr Frank Doran, assistant executive member for neighbourhoods and housing, said: "Derelict properties have an enormous impact on this city. Property speculators don't want to put people into them because they want to sell them on as vacant buildings."   The plans go before the council's executive board on Friday and, if approved, are expected to be in place by the end of January and come into effect in April.   So, should owners of empty properties be charged full council tax?

We need a policy which works for everyone

NO: The case against - Donna Cooney, director of KMC Residential

WHILE Liverpool will be following some other city councils in raising the council tax threshold to 100% after a property has been vacant for six months, I would question the timing of the decision.
 
Back in 2002, Liverpool's auction rooms began to fill with speculative investors who got word that Liverpool had to be the next place to invest.
 
Nearby Manchester was beginning to mature for the residential investor, yet many Liverpool buildings, both commercial and residential lay in disrepair.
 
The market reached its height in 2004 when the Capital of Culture prize was announced.
 
A plateau in line with national trends characterised much of 2005, and while early 2006 saw slow upward movement, the last quarter has seen strong demand from private buyers and investors. This has particularly been the case for apartments, with the first time buyer income bracket up to about £140,000.
 
Property professionals may take this on the chin because they acknowledge, albeit unhappily, that it is "part of the risk."
 
They may well be baffled though by the timing of the decision in view of the upward trend in the market, the number of applications that have passed planning or are in the planning system, and the multiplier effects the residential property market here has had on the economy. It won't detract them from their long-term goal, of course, and thankfully, as the evolution of the Liverpool residential market continues apace, the professional investor and developer who always have the bigger picture in mind, now dominate the field.
 
But we know they will be questioning the council over one of its policy decisions on property.
 
Of the many Irish developers and investor clients we have, most will point to Dublin's success over the last 30 years, and I know there is a great deal of confidence that Liverpool has plenty of growth to come yet. Of course it has.
 
Moreover, what about the private buyer who buys another property to move into while trying to sell their existing home? Why should they pay additional council tax at 100% when they will not be using any services in owning the property?
 
A more carefully thought-out plan to raise additional income might be a much better way forward, rather than a blanket tax rise to 100% across the board.
 
Let us maintain the momentum the city is building up. Look at the current levels of increased confidence and substantial new inward investment Liverpool is now experiencing.
 
Please, let's have a more discerning policy with regards to these council tax rises so there is a rationale that works for developers, professional investors, and private buyers, too.

We should go even further and tax vacant land YES: The case for - Cllr Steve Radford, Leader of Liverpool's Liberal Party group WE IN the Liberal Party have constantly lobbied for changes in the British property or council tax systems to penalise derelict and under-utilised land and property.   In many working class communities, like my own in Tuebrook, we have been blighted by absentee landlords leaving houses long term vacant. They are a magnet for vandalism, arson and dumping.   A shift in the council tax system which taxes owners of these properties at the full rate must be an incentive for modernisation and reletting.   Liverpool has currently record numbers of some 23,500 families on the waiting list of the council and housing associations. Across the city there are 8,357 empty buildings. By taxing vac- ant properties, we would create a real incentive for landlords to relet rather than leave vacant in an expectation of capital gain.   But it is not just private landlords who are a major source of derelict. In my Tuebrook and Stoneycroft Ward alone, we have over 120 long-term vacant properties out of some 7,500 homes. Of these, half are owned by the city council and housing associations like Riverside.   Many have been vacant for years. The city council it- self is responsible for 1,600 of Liverpool's un- occupied buildings. A shift in the tax system which would mean housing ass- ociations being penalised for leaving properties vacant would be welcome.   I recall with anger after two years writing to Riverside Housing over 6 and 6A Russian Drive to relet or sell it.   We were dismayed to see this substantial house set on fire be- fore the housing association agreed to sell it. This story, I be- lieve, could be reported by every councillor who represents any of our city's terraced districts.   Of the significant number of long-term vacant private properties, many of them are subject to probate disputes or in the hands of solicitors of estate agents. By charging the full rate of council tax we can give a real incentive for them to progress negotiations.   It would also give the city council an incentive to record charges in ownership and monitoring vacant properties.   The city council's vacant initiative is a shambolic farce.   By raising revenue from the vacant properties we could buffer council tax incentives for the majority of householders. More importantly, we would reduce the cost on public services for main- taining the vacants, we would r- duce the waiting lists and help regenerate communities at minimal cost. In fact, we should go even further and start taxing vacant land as well as housing, a policy espoused by the Liberal economist Henry George Trust.