Report of the Deputy Chief Executive and City Treasurer.

This report considers the impact of adopting the further discretionary powers that the Government is planning to introduce, which would enable councils to charge the 100% long term empty premium on empty and unfurnished homes after one year instead of two from 1 April 2024 and to charge a higher rate of Council Tax for empty, furnished properties (including second homes) from 1 April 2024.

The committee considered a report of the Deputy Chief Executive and City Treasurer which considered the impact of the Government’s plan to introduce further discretionary powers for Councils to charge the 100% long term empty premium on empty and unfurnished homes after one year instead of two from 1 April 2024 and to charge a higher rate of Council Tax for empty, furnished properties (including second homes) from 1 April 2024.

Key points and themes within the report included:

• The proposal to introduce a 100% premium on empty, furnished properties (including second homes) from the date they become empty could provide an increase of up to £4,611,438 in Council Tax and charging the Long-Term Empty premium after one year instead of two could provide an additional increase up to £1,227,198;
• Since 2019, a 100% premium had been charged on properties left empty and unfurnished for over two years; a 200% premium on those empty for between five and ten years; and a 300% premium on those empty for more than ten years;
• There were 733 properties in Manchester that had been empty and unfurnished for 1-2 years, 2,846 properties that were classed as empty and furnished for twelve months with no change to the liable person and a further 2,525 properties that had been empty for less than 12 months;
• Charging the Long-Term Empty premium would encourage owners to bring properties back into use and the Council would also benefit from the New Homes Bonus as a result of this;
• Empty, unfurnished properties owned by Registered Social Landlords (RSLs) would not be affected by the addition of this premium as they qualify for a separate 100% discount due to their charitable status;
• These proposals would be open to public consultation as part of the wider budget consultation exercise; and
• The Council was proposing to adopt the power to increase the charge on empty, furnished properties, but defer a final decision to use it until the consultation exercise was complete and there was a better understanding of the effect of the changes and how the new powers may impact on the Council’s wider housing strategy.

Key points and queries that arose from the committee’s discussions included:

• Welcoming the proposed changes;
• Concerns that social tenants would have increased liability for council tax which would not be eligible for Council Tax Support where tenancies overlap;
• Whether council tax would continue to be charged where a resident has had to vacate their property due to ongoing cladding and fire safety remediation works;
• Issues around ‘phantom tenancies’, where a landlord claims that a tenancy was in place to refute council tax liability but there is no record of such;
• Whether the Council was still able to issue Empty Dwelling Management Orders, to assume control of long-term unoccupied properties and bring them back into use;
• Noting the significant number of properties in Manchester where the Council Taxpayer is deceased, and what influence the Council to encourage beneficiaries to bring these properties back into use;
• Issues around short-term and holiday lets such as Air BnB; and
• The Council’s relationship and influence with Registered Providers to address long-term voids.

The Head of Corporate Revenues explained that the proposed legislation change would allow local authorities to charge a higher rate of council tax on different categories of empty properties. This would include second homes and those empty between tenancies.

The Head of Corporate Revenues explained that the Council had a discretionary hardship fund for residents struggling to pay their council tax and that the Council could address the habit of Registered Social Landlords allowing overlapping tenancies, which caused issues with residents being liable for additional council tax and ineligible for council tax support at one property. 

In response to a query regarding whether council tax would continue to be charged where a resident has had to vacate their property due to ongoing cladding and fire safety remediation works, it was confirmed that council tax exemption was applied where a property was deemed unfit to occupy by an official body or organisation, such as the fire service, and a resident would only be liable for council tax at the property which they temporarily occupy. There was no exemption class for properties which the resident chose to vacate the property of their own volition, although the Council had the power to make local variations through the Executive.

The Head of Corporate Revenues explained that anecdotal evidence suggested that ‘phantom tenancies’ operated in Manchester. This was addressed by requesting proof of tenancy, such as an energy bill, and checking Experian to identify if the landlord was liable for council tax during a specific period. Some difficulties in this were acknowledged due to Manchester’s status as a national and international destination.

The Deputy Chief Executive and City Treasurer also highlighted that the proposed changes would come into effect from April 2024 and some questions around this had been factored into the second phase of the budget consultation, which was underway. This would ensure that there were no unintended consequences as a result of implementing the policy and would enable any issues like those raised by committee members to be addressed prior to implementation.

In response to a question from the Chair regarding the Council’s influence to encourage beneficiaries to bring properties back into use where the Council Taxpayer was deceased, the Head of Corporate Revenues confirmed that the Council monitored whether probate had been awarded where a Council Taxpayer had passed away. Further information on the impact of probate applications on council tax exemptions would be provided following the meeting.

The Head of Corporate Revenues explained that upon the introduction of the long-term empty council tax premium in 2013, residents who contacted the council to complain about an empty property were signposted to the Council’s Empty Properties Team, who were able to advise on available grants to bring empty properties back into use, although it was noted that austerity measures had impacted this. 

The Executive Member for Housing and Development advised that Empty Dwelling Management Orders (EDMO) were still in operation, although restricted under the Conservative-Lib Dem coalition government, and used where a property had been empty for a minimum of two years and met other criteria. He explained that Compulsory Purchase Orders (CPO) could also be utilised in certain situations, and he reflected that there were 6000 empty properties in 2017 compared to less than 2000 currently. 

Much of the discussion focused on short-term and holiday lets, such as those advertised by Air BnB. The Head of Corporate Revenues explained that the Council did not have information on how many empty properties in Manchester were being advertised on Air BnB as addresses were not displayed on the Air BnB website and officers had contacted the company to no avail.

Members were also advised that some holiday homes would be liable to pay business rates where they were let or advertised to let for over 140 days a year. This would be beneficial to the Council where a company had several properties to let but it was acknowledged that an individual leasing out one property would be eligible for business rates relief.

In response to a suggestion that members could provide information on suspected Air BnB properties within their wards, members were encouraged to contact an officer in the Strategic Housing team who was leading on this work. The Executive Member for Housing and Development explained that there was no mandatory registration system for Air BnB which made it difficult for the Council to know which properties were being used as short-term lets. He also advised that some work to collate a database had been undertaken with residents in Moss Side and that information was cross-referenced with House in Multiple Occupancy (HMO) Licensing and planning applications for changes of use.

The Council also responded to a national consultation undertaken by the government last year on short-term lets and requested that the government introduce mandatory registration.

The Head of Corporate Revenues explained that empty social housing properties were exempt from paying council tax. The Executive Member for Housing and Development also stated that the Council worked closely with the registered providers in Manchester and would be concerned if social housing properties remained empty in the long-term, given the number of people on the Housing Register, although he noted that many registered social landlords also aimed to get stock back into use quickly. He also explained that the Council had an agreement in place with larger registered providers to ensure that isolated stock would not be sold into the private market and would be sold to other providers to maintain.

Decision:

That the report be noted.