Council tax for second and empty homes, and thresholds for non-domestic rates: consultation analysis

3: Empty homes

Council Tax premiums

Councils currently have the discretion to charge up to 100% premium on Council Tax on homes that are empty for longer than 12 months. The consultation paper sets out both the current discretionary powers for councils to change Council Tax liability for empty homes, and lists current exemptions from Council Tax. Potential factors that could be taken into account by councils when deciding whether to introduce a premium on Council Tax for second homes include:

• numbers, percentages and distribution of long-term empty homes throughout a local area
• potential impact on local economies and the community
• patterns of demand for, and availability of, affordable homes
• potential impact on local public services; and impact on neighbours and local residents

Councils may adopt a policy to not use these powers or to disapply a premium for a specific period of time. This could be where there are reasons why a home could not be sold or let, where a sale is in progress but has not been completed, where the home has been recently purchased by a new owner that is actively taking steps to bring the home back into use, where a planning application or appeal is preventing work to bring the home back into use, or where charging a premium might cause hardship or act as a disincentive to bringing the home back into use.

Question 7 – Do you think councils should be able to charge a higher premium than the current 100% (double the full rate) of council tax on homes empty for longer than 12 months?

Responses to Question 7 by respondent type are set out in Table 10 below.

Table 10: Responses to Question 7 by respondent type

Organisations	Yes	No	Don't know	Total
Campaign group or union	4	1	-	5
Community or Development Trust	6	-	-	6
Housing	4	-	-	4
Local authority	19	7	-	26
Public body or agency	4	-	-	4
Representative or professional body	5	2	-	7
Tourism, including accommodation provider	3	5	1	9
Other	1	-	-	1
Total organisations	46	15	1	62
% of organisations	74%	24%	2%
Individuals	513	285	72	870
% of individuals	59%	33%	8%
All respondents	559	300	73	932
% of all respondents	60%	32%	8%

Percentages may not sum to 100% due to rounding

A majority of respondents – 60% of those answering the question – thought councils should be able to charge a higher premium than the current 100% (of Council Tax on homes empty for longer than 12 months. Of the remaining respondents, 32% did not think so and 8% did not know.

Organisations were more likely to support being able to charge a higher premium, with 74% of those answering the question thinking it should be an option. Tourism organisation respondents were the only group in which a majority did not support councils being able to change a higher premium.

Please give reasons for your answer

Around 710 respondents provided a comment at Question 7.

Why councils should be able to charge a higher premium

Support for a power for councils to charge a higher Council Tax premium for empty homes was most likely to be linked to a view that tackling long-term empty homes should be a national priority. Respondents referred to the potential for empty homes to have a significant negative impact on local communities, neighbourhoods and adjoining properties. It was reported that this as a particular issue for rural and island communities, with the suggestion that empty homes are a more significant issue than second homes in parts of Scotland.

Discussion of the potential adverse impact of empty homes generally focused on the loss of accommodation required to meet local housing need. It was suggested that empty homes are a wasted resource with potential to help alleviate unmet housing need, and that income from higher premiums should be used to further support access to affordable housing.

“In the middle of a housing crisis, councils should be able to incentivise use rather than houses remaining empty. It’s crucial that Scotland's housing stock is brought into use and higher council tax rates can act as one of these incentives.” Individual

The increasing number of empty homes was seen as evidence that the current 100% premium is insufficient, and that some owners are prepared to pay the current premium rather than bringing their property back into use. There was support for a higher Council Tax premium as a more effective incentive for owners of empty homes.

Responding to local needs and circumstances

Support for higher Council Tax premiums was also linked to a view that greater flexibility is required as part of a more place-based approach. It was suggested that the option of higher premiums would allow Councils more discretion in how they respond to local needs and circumstances, with higher premiums used when there are local issues around housing need and sustainable communities that need to be addressed. There was also a view that higher premiums would enable councils to target persistent long-term empty homes, while taking account of factors that may constrain the scope for homes to be brought back into use.

Respondents also wished to see councils consider the specific needs and circumstances of the owners of empty homes, including the potential impact of a higher Council Tax premium. There were references to owners struggling to meet renovation costs to bring empty homes back into use, and suggestions that councils must base decisions on a careful assessment of owners’ circumstances. As noted below, those opposed to higher premiums raised concerns around potential for financial hardship; similar concerns were expressed by those who supported higher premiums, but who wished to see these applied in a way that is sensitive to potential adverse impacts.

Concerns and opposition to councils being able to charge a higher premium

The most commonly raised concerns around higher Council Tax premiums were linked to a view that this should take account of the range of reasons that can contribute to properties lying empty. This included a particular focus on the potential for significant time (i.e., more than 12 months) to be required to bring properties back into use. For example, it was noted that the limited supply chain in many rural and island areas can add delays to this process, and that housing market factors can limit owners’ ability to sell. There were also calls for any use of higher premiums to take account of owners’ specific circumstances with reference to potential for delays associated with ill health, bereavement and financial constraints.

Opposition to higher Council Tax premiums included scepticism around the extent to which an increased premium will incentivise more owners to bring empty properties back into use. There was a view that some may simply choose to pay a higher premium, while others may continue to refuse to pay any premium. It was also suggested that, in areas with limited housing demand, owners may not have any realistic prospect of bringing properties back into use.

“It cannot be assumed that large numbers of people who currently can afford a 100% premium will bring their house back to use [if premiums increase]. Many may simply choose to continue paying the money and leave their home empty.” Representative or professional body

Respondents also saw potential for higher premiums to discourage or limit the ability of owners to bring properties back into use. This was connected to feedback from owners of empty homes on the impact of inflation on renovation and other costs. There was also a view that higher premiums would be difficult to justify in the context of a cost-of-living crisis or that, in making decisions around the application of Council Tax premiums, councils must consider the ability of owners to pay.

In the context of the above concerns, it was suggested that the current 100% premium strikes the right balance between incentivising owners and ensuring that they are not financially constrained by additional premiums, but that any further increase in premiums for empty homes would be excessive and unfair.

There was also a view, that the existing 100% premium is already too high. This included suggestions that Council Tax should be used only to support the cost of local services, and that use of premiums to ‘penalise’ owners of empty homes is not an appropriate function for the Council Tax system. It was noted that empty homes do not increase the burden on local council services and it was suggested that an alternative or additional tax would be a more suitable approach to tackling empty homes.

Alternative or additional options

Alongside comments on the potential role of higher Council Tax premiums, a number of respondents recommended other approaches as a means of tackling empty homes. The following measures were proposed as alternatives or additions to higher premiums:

• compulsory purchase, including for use as social housing
• compulsory leasing, for example to local community organisations
• provision of finance to support refurbishment, including calls for reintroduction of Home Improvement Grants and reference to the Irish Government’s Vacant Property Refurbishment Grant

Question 8 – If you have answered yes to Question 7, what do you think the maximum premium councils could charge should be?

Responses to Question 8 by respondent type are set out in Table 11 below.

Table 11: Responses to Question 8 by respondent type

Organisations	150%	200%	250%	300%	Other	Total
Campaign group or union	-	-	-	3	-	3
Community or Development Trust	-	1	-	5	-	6
Housing	-	-	-	-	-	0
Local authority	-	3	-	9	1	13
Public body or agency	-	1	-	1	-	2
Representative or professional body	-	1	-	-	1	2
Tourism, including accommodation provider	-	2	-	-	-	2
Other	-	-	-	-	-	0
Total organisations	0	8	0	18	2	28
% of organisations	0%	29%	0%	64%	7%
Individuals	46	84	13	240	0	383
% of individuals	12%	22%	3%	63%	0%
All respondents	46	92	13	258	2	411
% of all respondents	11%	22%	3%	63%	0%

Percentages may not sum to 100% due to rounding

A majority of respondents – 63% of those answering the question – thought the maximum premium councils could charge should be 300%. Of the remaining respondents, 22% favoured 200%, 11% favoured 150% and 3% favoured 250%.

Please give reasons for your answer

Around 410 respondents^[10] provided a comment at Question 8. These included respondents objecting to any increase in the existing premium for empty homes, or who did not think that any premium should be charged on top of regular Council Tax rates.

Support was most commonly linked to a view that a more robust approach is required as an effective incentive to encourage owners to bring empty homes back into use. Respondents saw higher Council Tax premiums as potentially effective and noted that any monies raised would also support wider policy priorities around poverty, housing and sustainable communities.

In terms of the effectiveness of the approach, it was suggested that a significantly higher premium may be required to achieve real change. The high monetary value of some empty homes was noted, and there was a view that a significant premium may be required to have an impact in these cases. There were also calls for premiums to be set at a level that can cover potential legal costs for councils, and compensate for the negative impact on communities, for example by funding community-led housing and infrastructure improvements.

However, it was also noted that care will be needed to ensure that higher premiums do not undermine owners’ ability to fund the necessary works. There were also concerns that excessively high premiums could unfairly penalise owners, reflecting a view that empty homes place less burden on Council services and that some of the proposed premiums (e.g., 300%) would be excessive.

It was suggested that the approach to tackling empty homes should give councils greater scope to respond to local pressures and circumstances whilst also considering the reasons that contribute to properties being empty, including owners’ individual financial circumstances.

“The tax premium must be impactful if it is to deliver the policy objective. We appreciate there are many reasons for homes being empty but consider local authorities should have discretion.” Community or Development Trust

There were also calls for councils to base their decisions on robust evidence (including assessment or modelling of potential outcomes), and for the Scottish Government to provide councils with the tools to enable this.

Reasons for supporting particular options

Relatively few respondents commented on why they had selected the particular option they had chosen. However, where specific comments were made, they are summarised below.

300% premium

Many of those selecting this option were focused on the potential impact of empty homes on housing supply, deprivation and sustainability of communities. These respondents saw higher premiums as being required to incentivise owners to bring empty homes back into use, and noted that a similar premium has proven effective in Wales. While it was suggested that a 300% premium may not be necessary in all cases, there was support for councils having the option available where it was deemed appropriate.

Support for a 300% premium was also linked to a view that Council Tax premiums should be set at a level that can compensate for negative impacts on local communities. This included specific reference to investment of funds raised through a premium to support social housing supply, local infrastructure and services.

There were also calls for the maximum premium to be higher still, or that there should be no maximum premium. These comments are considered further under ‘Other’ options.

200% premium

200% was described as sufficient to incentivise owners to bring empty homes back into use, and to raise additional funds for local authorities and communities, while ensuring that owners still have sufficient funds to undertake required improvement works. There was also reference to use of higher 300% premiums in Wales as being excessive.

100% premium

Retaining the current 100% premium was supported by those who felt that higher premiums would unfairly penalise owners of empty homes, with potential to cause significant financial hardship. It was suggested that such premiums cannot be justified in the context of a cost-of-living crisis, and that higher premiums would be unfair as empty homes reduce the burden on councils as owners do not use local services.

Support for the existing premium was also linked to a view that this balances the need to incentivise use of empty homes with ensuring that owners are still able to fund necessary repairs. These respondents also felt that a more ‘reasonable’ premium would recognise the range of factors that can contribute to homes remaining empty, again to ensure that owners are not unfairly penalised.

‘Other’ options

As noted earlier, those selecting the 300% option at Question 8 included respondents who thought that there should actually be no maximum rate in place or that the maximum should be significantly higher than 300%. Again, this was primarily linked to a view that very significant premiums may be required in some cases to incentivise owners and/or compensate communities, and that councils should have these options available. Most of those suggesting rates of more than 300% proposed a maximum in the range 400-500%.

Approaches to setting a premium

Respondents also addressed how any premium should be set, with Local authority and Public body or agency respondents amongst those suggesting that councils should be given discretion to respond to local circumstances. However, there were also calls for clear restrictions or guidance on how councils apply higher Council Tax premiums, including appropriate exemptions, to ensure that owners are not unfairly penalised.

Other comments around specific approaches to Council Tax premiums included calls for implementation of premiums to ensure consistency with the approach to second homes.

Question 9 – Do you think there should be a stepped approach to charging higher rates of council tax on long-term empty homes?^[11]

Responses to Question 9 by respondent type are set out in Table 12 below.

Table 12: Responses to Question 9 by respondent type

Organisations	Yes	No	Don't know	Total
Campaign group or union	2	2	-	4
Community or Development Trust	5	1	-	6
Housing	3	-	-	3
Local authority	20	6	2	28
Public body or agency	4	-	-	4
Representative or professional body	5	1	-	6
Tourism, including accommodation provider	4	2	1	7
Other	-	-	1	1
Total organisations	43	12	4	59
% of organisations	73%	20%	7%
Individuals	462	288	105	855
% of individuals	54%	34%	12%
All respondents	505	300	109	914
% of all respondents	55%	33%	12%

A small majority of respondents – 55% of those answering the question – thought there should be a stepped approach to charging higher rates of Council Tax on long-term empty homes. Of the remaining respondents, 33% did not think so and 12% did not know.

Please give reasons for your answer

Around 640 respondents provided a comment at Question 9, including respondents who disagreed with a stepped approach on the grounds that they objected to any additional Council Tax premium, or who felt that any premium should be limited to the current 100%. Points made specifically in relation to a stepped approach to Council Tax premiums are considered below.

Reasons for supporting a stepped approach

The most frequently given reason for supporting a stepped approach was that this would be fairer and more effective than immediate Council Tax increases. This reflected concerns around ‘cliff edge’ increases and the potential for an immediate application of a higher premium to cause significant financial hardship. It was suggested that a stepped approach would allow a balance between incentivising owners without unfairly penalising those who lack the resources to bring a property back into use.

“A stepped approach to charging higher rates would be sensible, as we believe the aim of these measures should be to disincentivise empty properties and not to punish owners who may be struggling financially to maintain their property or to bring it back into use.” Housing

Giving owners the time to make these decisions was also seen as a more effective approach. For example, it was noted that the process can be especially challenging for smaller landlords, individuals who find themselves responsible for an empty home (e.g., due to inheritance), and those in rural and island communities.

In addition to its effectiveness in delivering policy objectives, a stepped approach was seen as more appropriate for persistent long-term empty properties specifically. Respondents also referred to the complexity of bringing long-term empty homes back into use. It was noted that these properties can be uninhabitable and unsafe, potentially requiring extensive and costly repair works, or may have stood empty for a long period due to local economic and housing market conditions.

A stepped approach was also seen as potentially avoiding causing owners significant financial hardship and/or as a good option where more time is required to deal with a property. However, there was also thought to be a need for councils to retain the option to charge the maximum premium after 12 months, or to apply increases more quickly where this is justified by specific circumstances.

In this context, respondents highlighted the importance that councils’ application of a stepped approach is based on a robust assessment of likely impact and supported by careful monitoring of impact. This was linked to concern that not all councils are using sufficient discretion in their use of existing powers.

Nationally set limits were proposed, within which any stepped approach should be applied.

Reasons for opposition to stepped approach

Reasons for opposing a stepped approach included not seeing any case for increasing premiums gradually over time, including because it would not reflect the urgency of the issues being addressed. It was suggested that 12 months is sufficient time for owners to take steps to sell or bring their property back into use.

Concerns were also raised around administration of a stepped approach, including that it would add unnecessary complexity and confusion to the system. It was also noted that such an approach would require regular updating of information on the status of empty homes and there was concern that the additional resources required to administer the system could undermine the benefit of any additional funds generated by higher premiums.

In terms of empty home owners, it was suggested that the proposals do not take account of the differing reasons for properties remaining empty. For example, there were calls for any stepped increases to allow for cases where owners are constrained by external barriers. These comments were linked to a view that some councils are failing to apply sufficient discretion in their administration of current Council Tax premiums.

“While the current policy is well intentioned it has potential to be poorly executed. Councils are not using discretion when applying the existing policy and therefore it is felt to be unlikely that they might use discretion with any higher premium.” Representative or professional body

Considerations around implementing a stepped approach

Those expressing support for a stepped approach to higher premiums also highlighted a range of points around how any such approach should be implemented. Key points raised around the application of a stepped approach included:

• the importance of effective communication with owners around how premiums will increase through a stepped approach
• the need for a stepped approach to be supported by a wider package of interventions, such as information and advice services for owners
• that a council’s decision to apply a stepped approach is based on consideration of factors such as work already undertaken, any environmental health or antisocial behaviour issues, and costs incurred by the council

There was also reference to particular complexities in dealing with longer-term empty homes in rural areas, for example due to the limited local supply chain or the need for substantial energy efficiency improvement works. It was suggested that any higher premium should not apply until properties have been empty for 3 years in these areas.

Finally, a specific issue was raised for new owners being charged the higher premium immediately or after a short period, where the previous owner has used the 12-month allowance period. It was suggested that this could deter potential buyers, and that a stepped approach may be more effective in enabling new owners to bring properties back into use.

Question 10 – Are there any exceptions that are not already taken into account, that should be, when charging a premium of council tax on homes empty for longer than 12 months? Please tell us about exemptions that you feel should apply and give reasons for your answer. Do not include exemptions that are already provided for.

Around 445 respondents answered Question 10. Most of these respondents felt that additional exceptions are not required. There was opposition to any exemptions from higher premiums, but most were of the view that existing exceptions are sufficient to account for circumstances where a higher Council Tax premium would not be appropriate.

“The current list of exemptions is effective and provides a good range of flexibilities when levying premiums.” Local authority

It was also noted that councils are permitted to use discretion in applying premiums to take account of exceptional circumstances, and there were calls for councils make more use of this discretion to better tailor their approach to local needs and circumstances, for example where so doing would improve the prospect of a property being brought back into use. Updates to legislation and guidance were suggested to support councils in using their discretion.

Existing exemptions

There was thought to be a need for review of existing exemptions to ensure they support overall policy objectives around empty homes. This was linked to a view that the current exemptions add significant complexity to the system and a view that not all may be suitable. Those highlighted included:

• owners living or detained elsewhere
• owners declared bankrupt
• difficult to let properties, including a view that councils and other affordable housing providers should be exempt from increases in relation to hard to let properties
• ministers
• repossessed properties
• student accommodation
• agricultural buildings

Respondents questioned the rationale of these exemptions. For example, it was suggested that exemption for agricultural buildings is inconsistent with policies to support housing supply and sustainable communities in rural areas, and there were questions around how exemption for repossessed dwellings would help to reduce the number of empty homes. There were also concerns around the unlimited period for which some exemptions can apply.

Proposals for addition to existing exemptions

There was a view that the current set of exemptions does not take account of the range of potential challenges for owners seeking to bring empty homes back into use. It was noted that these can be related to factors that are outwith owners’ control, such as delays to planning processes, access to a local supply chain to support renovation works, or lack of housing market demand. There was concern that charging the maximum Council Tax premium in these cases could lead to unnecessary demolition of properties.

Reflecting these concerns, respondents proposed a range of additional exceptions, including in relation to properties that are uninhabitable due to repair or renovation, in line with Schedule 1 Para 2 of the Council Tax (Exempt Dwellings) (Scotland) Order 1997. It was noted that 1997 Order and the Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013 together mean that properties undergoing work to make them habitable should be exempt for up to 12 months, and that a 50% discount applies from the date of any subsequent sale. Other proposed exceptions included where a property exceeds the exemption period:

• due to delays in the planning system
• due to environmental issues outwith the owner’s control, such as roosting bats
• due to unexpected property-related issues requiring remediation, such as dry rot
• due to a lack of suitable suppliers in the area
• following an unexpected occurrence such as flood or fire
• due to systemic housing demand issues, noted as a particular issue in remote rural areas
• due to delays in managing the estate following the death of the owner, including delays in securing probate

Exceptions were also suggested with respect to:

• properties in remote rural locations with poor access, in locations that make them unsuitable for occupation unless by individuals employed in the immediate vicinity, or which need to be kept available for future employees or succession planning
• properties located in flood risk areas, which are not appropriate for return to the housing stock
• properties in disrepair that are not suitable for assistance to be brought back into the housing stock, for example that do not meet the eligibility criteria for empty homes grants and loans
• properties in the process of being replaced by housing in a more appropriate location, as per National Planning Framework 4 Policy 17a(viii)
• properties that are empty due to owner’s caring duties
• circumstances where owners are working away from home for an extended period (including as armed forces personnel)
• circumstances where owners are living in tied accommodation and have nominated the empty home as their primary residence

Other suggestions were made with respect to:

• resetting the period of exemption for new owners intending to renovate a property, where the sale follows a period of the property being unoccupied
• allowing properties to remain furnished while being marketed, to avoid owners being forced to dispose of usable furniture
• allowing additional time for properties where a sharing owner dies
• allowing an exception or discount for homes not suitable for year-round occupation

It was noted that some of the exemptions listed above would effectively formalise discretion that owners may expect from councils in their decisions around whether to implement higher premiums, for example where factors outwith owners’ control lead to delays. Those raising this issue wished to see formal exemptions in place for these circumstances, rather than relying on council discretion.

Question 11 – What factors should be taken into account by councils when deciding whether to introduce a premium on council tax for homes empty for longer than 12 months? Please list factors and give reasons for your answer.

Around 570 respondents answered Question 11.

There was support for all of the factors listed in the consultation paper as relevant considerations for decisions around the introduction of premiums for empty homes. It was suggested that the listed factors would be sufficient to ensure that councils have scope to take account of local needs and circumstances. This was most commonly highlighted in relation to factors affecting the process of bringing empty homes back into use, such as planning delays and the time required for complex renovation works. Respondents also wished to see scope for councils to take account of variation across urban, rural and island locations.

“[We] believe that all these factors are relevant, but they should be set at a local level based on local circumstances.” Local authority

Support for the factors listed in the consultation paper also included calls for nationally agreed exceptions and factors that councils are expected to consider. This was seen as preferable to more extensive use of council discretion, providing certainty for owners and prospective buyers of empty homes. An opposing view was that councils should retain scope to use discretion in applying Council Tax premiums and should not be constrained by a specified list of exceptions and factors, although it was also argued that council decisions must be transparent and evidence based.

Views on specific factors listed in the consultation document

Respondents expressed specific support for a number of the factors listed in the consultation document, most frequently in relation to local housing markets. Most of those who commented saw factors such as housing need and supply, affordability and homelessness as relevant for decisions on Council Tax premiums. It was also suggested that councils should consider the extent to which individual empty homes are of the right type, size and location to meet local needs.

There was also reference to the distribution of empty homes and the adverse impact of high concentrations of empty homes, and it was suggested that councils should take account of risks to community sustainability associated with empty homes, potential impacts on local public services, and the contribution that an empty home could make to the local economy if brought back into use. However, an alternative perspective was that discretion should only be exercised in relation to the process of bringing an empty property back into use.

In terms of specific circumstances where councils may choose not to apply higher premiums, respondents also referred to factors preventing the sale or let of empty homes, for example due to the owner’s ill health and/or being taken into care. It was suggested that any exemption must not allow owners to frustrate the sale process by setting an excessive asking price.

Respondents also wished to see councils take account of the risk that a higher premium would cause financial hardship for an owner, and/or prevent the owner from completing necessary repairs. It was noted that this may become a more significant issue in the context of ongoing inflationary pressures. However, there was also a concern that financial hardship is too subjective to justify an exemption from higher premiums.

Other relevant factors

Respondents highlighted a number of other considerations as relevant to council decisions on the application of Council Tax premiums, including a view that councils should be able to consider any factor that they believe to be relevant to the application of premiums.

“Councils should be at liberty to consider any factor that they believe to be relevant…The critical requirement is that they are transparent about how they have come to a decision and the outcomes they hope to achieve.” Local authority

In terms of specific factors, there were repeated calls for an exemption where owners can evidence ongoing repair works to bring the empty home back into use. Other considerations highlighted as relevant to application of Council Tax premiums included:

• where the property is empty due to long-term ill health and/or owners moving into care, following bereavement or family breakdown, including delays associated with legal processes
• where a property has been inherited and the new owner wishes to retain a connection to the local area
• whether the empty property is being well maintained
• where the owner is responsible for multiple empty homes
• where owners are actively engaged with empty homes officers
• the level and distribution of poverty in the local area, and how this might be affected by any Council Tax premium
• specific economic factors, such as the ability of owners to attract and retain staff
• local community views and experiences
• the potential for additional local authority revenue to be generated

Behaviours of owners of empty homes

At Question 12, owners of empty homes were asked what they would do if their local council decided to impose a Council Tax premium of greater than 100%. Questions 6, 19 and 20 asked second home owners (and potential owners) similar questions about their likely behaviours depending on changes in Council Tax premiums and non-domestic rates thresholds.

Question 12 – If you do, or were to, own a home that has been empty for longer than 12 months, please tell us what you would do if your council decided to increase the maximum council tax charge above 100% premium?

Responses to Question 12 are set out in Table 13 below.

Table 13: Responses to Question 12 by behaviour of empty home owners

Option	Number of respondents	% of all respondents
A: Leave the home empty and pay the higher Council Tax	55	10%
B: Sell the empty home	294	54%
C: Use the home as a PRT	102	19%
D: Use the home as a short-term let	89	16%
Total	540

A small majority of respondents – 54% of those answering the question – said they would sell the property if their council decided to increase the maximum Council Tax charge above 100% premium. Of the remaining respondents, 19% said they would rent the property using a PRT, 16% that they would use it for short-term letting and 10% that they would leave the property empty.

Please give reasons for your answer

Around 360 respondents^[12] provided a comment at Question 12.

The themes covered often reiterated points made at earlier questions, for example around general opposition to higher Council Tax premiums, the potential barriers to owners bringing empty homes back into use and concerns that higher premiums may cause financial hardship and undermine owners’ efforts to renovate their properties. It was also suggested that higher premiums:

• are unlikely to be effective in encouraging empty home owners to renovate or sell their property if they are not already planning to do so
• will result in more empty homes being demolished or becoming uninhabitable, for example if owners cannot justify or fund renovation costs without assistance

However, there was also support for higher premiums as a means of incentivising owners to make use of empty homes, whether by selling or using the home as a short-term let. It was suggested that, for most owners, higher premiums would mean that using the property is the most rational decision. A further view was that there is no good reason for an owner to keep an empty home if the property is not being used.

Finally, a Public body or agency respondent queried whether responses to this question are likely to be representative of ‘real world’ decisions by the wider population. It was suggested that reviewing the impact of similar legislative changes in other jurisdictions is likely to be of more value.

Considerations likely to influence decisions

Respondents identified a range of factors that were seen as likely to influence the decision of owners in response to higher Council Tax premiums for empty homes. Few of those providing comment had direct experience of this issue, and only a small number indicated that they currently owned an empty home. Respondents indicated that they would never wish to keep a property empty for an extended period, and suggested that owners have a ‘moral’ obligation to make their property available for use wherever possible.

There was reference to the diversity of empty homes and potential for owners’ decisions to be a based on a wide range of variables. This included discussion of financial circumstances, future plans for the property (especially planned future use by the owner or their family), planning restrictions, the suitability of the property to be returned to housing stock, and whether owners feel able to manage a private let or short-term holiday let. In this context, information and advice was seen as important in helping owners to select the most suitable route.

“This would depend on a lot of factors. It is unlikely we would have the home empty for long periods…if it were to be empty I am not entirely sure which avenue we would follow!” Individual

It was also noted that there may be good reasons for a property to remain empty for a period of time. Respondents cited examples of factors that may limit owners’ ability to sell or let the property, such as current private rented sector regulation, mortgage conditions, the administrative burden of short-term holiday lets, and adverse market conditions limiting scope for sale. Other potential reasons for properties remaining empty included disrepair and poor energy efficiency, the time and cost of renovation, ill health (including owners moving into care), and owners working away from home for long periods.

It was suggested that higher premiums are unlikely to overcome these issues, particularly where owners are refusing to pay the current premium, and may add to financial constraints on owners seeking to renovate their property. There was concern that proposals would unfairly penalise owners of empty homes, for example if they are forced to sell at a reduced price due to financial hardship created by higher premiums. It was argued that there must be sufficient exemptions or allowances to take account of extenuating circumstances that may limit owners’ ability to use their property.

Reasons for choosing specific options

A number of respondents commented specifically on their reasoning for choosing a particular option. These comments are summarised below.

Leave empty and pay the higher Council Tax

Reasons for owners choosing to pay the higher Council Tax included that appreciation in the value of the property is likely to justify paying a higher premium, and a view that owners are likely to be able to pay a higher premium if they can afford to leave a property empty for more than 12 months. It was also suggested that owners may choose to pay a premium for a short period while completing renovations. There was also a view that owners would rather pay the premium than allow government policy to ‘dictate’ how they use their property.

Sell the empty home

Respondents indicating that they would choose to sell an empty home included those in favour of higher premiums who saw no need for an owner to retain a property if it remains empty for a prolonged period. Those opposed to higher premiums also suggested that they would choose to sell, primarily due to financial considerations. This included if the premium is likely to outweigh any capital appreciation or paying would result in financial hardship. It was also noted that the regulatory and administrative burden means that private renting or short-term lets are not appealing prospects for some owners.

Use the home as a PRT

Reasons for choosing a PRT included that this may be a suitable option where other factors prevent owners from selling. There was also a view that renting is a more productive use of an empty property than short-term lets, with potential to deliver benefits to the local community, including a preference for properties being offered to a social landlord or for a fair rent. It was suggested that private renting may also be a financial prudent choice, securing an ongoing income and retaining the property as an investment (e.g., for future retirement). However, it was also suggested that private tenancy regulations could put owners off this option.

Use the home as a short-term let

This was seen as a preferred option where there is limited buyer or rental demand, or where owners wish to retain the property for future use. While there was a view that short-term let regulations would deter them from this course of action, it was also suggested that this option would be ‘worth the effort’ to retain the home and avoid paying a higher premium. Short-term lets were described as more financially beneficial than PRTs, and there was reference to the regulatory burden associated with PRTs.

Other possible responses referenced by respondents

There was also a small number of other suggestions for use of an empty home in response to higher Council Tax premiums. These included:

• making the property their permanent residence, or using as a second home
• passing the property to a family member for their use
• demolishing or making the property uninhabitable
• refusing to pay any Council Tax premium
• seeking an exemption or looking for ‘loophole’