Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill - Committee

Part of the debate – in the House of Lords am 4:30 pm ar 19 Mehefin 2018.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government) 4:30, 19 Mehefin 2018

My Lords, I thank noble Lords who have participated in the debate. I am most grateful to those noble Lords and the noble Baroness, Lady Pinnock, who tabled the amendments on the level of the empty homes premium, as they allow us to discuss the factors we have to consider in deciding the maximum charge on empty homes in setting the framework for local authorities. I reiterate that, once we have set the framework, this a discretionary measure for local authorities: something we are giving local authorities discretion to administer, according to their local needs and personalised or very localised factors affecting particular properties.

I think we all agree that there is a clear case for increasing the cap on the premium that applies to long-term empty properties. The noble Lord, Lord Stunell, gave distinguished service in the coalition Government—I think in my current role—and rightly referred to the importance of the issue. We have borne down on it. My noble friend Lord Patten, who is not in his place, referred at Second Reading to how the number has reduced—we have squeezed it very effectively—but there is still more to do.

The debate is about the level to which we should take this charge and the circumstances in which it should apply. These are the difficult judgments we face. We propose through the Bill that owners of long-term empty homes should see their council tax bills double. This is a major step in allowing local authorities to incentivise such owners to bring their homes back into productive use.

One amendment tabled by the noble Lord, Lord Kennedy, would mean that owners of empty homes would be paying triple the level of council tax payable on occupied homes within two years, or within one year if his other amendment were to be enacted. In fairness, that is from the Labour Party manifesto. Perhaps it is all the more surprising that nothing happened in the other place on the Bill: no amendment was proposed, still less debated. That said, it is something we should discuss.

Under the amendments supported by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell, properties empty for between five and 10 years could face premiums of up to 200%, and those empty for more than 10 years could be subject to 300% premiums. I of course understand the rationale behind the amendments, and as homes are remaining empty for longer and longer, the logic of that is obvious: the figure goes up after five years and after 10 years. In addition, empty properties can be a nuisance to local residents, and potentially sites of crime or squatting. I share the concern about the need for robust measures to tackle what may become, and often are, blots on the landscape, to the benefit of those seeking a place to live as well as of local communities as a whole. I think we all understand that.

We have considered whether doubling the charge is enough, and we have to strike a balance in making this judgment. But I have concerns that increasing the cap even further for some or all cases may give rise to problems of principle. The noble Earl discussed whether we are being punitive or whether this fulfils some basic housing principle, and we have to look at that as well. However, as I say, I follow the logic of the argument. Noble Lords will know that the purpose of the council tax system is to generate revenue that councils need to fund local services, including adult social care, children’s services, refuse collection and leisure facilities. I recognise that the level of the premium is, therefore, ultimately a matter of judgment. But one issue that increasing the cap raises is whether we would then be moving, as I say, from the tax being a source of funding to a more punitive type of measure.

The noble Earl asked me how a particular premium being placed on a particular property could be challenged. Given that this is a matter for the discretion of the local authority, provided that it is within the parameters we are setting out in this legislation, it cannot be easily challenged. It cannot be challenged on any of the principles but only on the basis of judicial review where there is misapplication, somebody has shown bias in reaching the decision, or there has been failure to declare an interest where the council has reached such a decision in specific circumstances that would go towards the bona fides of the decision itself, rather than the principle behind it. Therefore, it would not be easily challenged, if at all, and only in those specific circumstances.

To move to a more punitive measure may have unintended consequences. For example, there may be cases where home owners struggle to sell or rent out a property within the two-year limit—although I accept that the longer escalator provision is unlikely to catch people in the same way. Others may face financial or other difficulties because of structural repairs. It is therefore important that we strike a careful balance between providing a strong incentive, which I think we are all in favour of, for bringing empty homes back into use and not disproportionately penalising struggling home owners. I am keen to get that right. The aim is to strengthen the incentive. A universal 100% cap will provide flexibility for local authorities to incentivise the reuse of long-term empty properties, and of course they have a discretion within that.

That brings me to the second major issue raised by this group of amendments and by the noble Lord, Lord Stunell: setting a lower premium cap of 75% within the framework for long-term empty dwellings that are undergoing works to increase their energy rating by two or more levels. Again, I can appreciate the sentiment underlying this amendment—particularly as I was previously in the Department of Energy and Climate Change, as it then was—and the desire to ensure that people making their empty properties more energy efficient receive a measure of relief. I am sure that many local authorities would, like me, see the merits in such considerations. But that is not to say that we should mandate it from the centre. As the noble Lord hinted, there are other admirable principles we could seek to address in the same way—perhaps enhancing in a sensible way the environment that surrounds the building if it has a public use, for example, such as being open to the public. There may be many localised reasons why a particular council might want to give some relief here, and it is best dealt with locally, although that is not to say that this is not a noble principle.

We have always been clear that it is for local authorities to decide whether to use the premium. Most do so—I think only 30 local authorities do not—but that is a matter for local authorities, as is the level of the premium under the maximum level we set. Imposing a rule on local authorities would also add complexity to the administration of the premium. We could undermine its effectiveness if we started to mandate reductions for particular circumstances, noble though those are. I see no reason to change our approach.

It may be helpful to the noble Lord and the noble Baroness to remind them that if an authority wishes to reduce the council tax liability of a property for any reason, including in support of energy efficiency, it has powers to do so under Section 13A of the Local Government Finance Act 1992, quite apart from the area of law that we are looking at today.

In addition, we recognise that home owners may renovate their homes for a wide range of reasons, including for energy efficiency purposes. The two-year period before the premium comes into effect provides an appropriate length of time for such works to be completed, whether they are for energy efficiency purposes or something else. This is one of the reasons why we oppose reducing the qualifying period to one year—if I may anticipate that point.

As I have said, I think we all recognise the benefits of a measured increase in the premium cap. We may not agree on the level of that charge. I understand the argument that has been put in relation to the escalator. Without committing us to adopting it, I am happy to consider it further and discuss it ahead of Report. We still have to consider the risk that we could disproportionately penalise those who might be struggling to bring their properties back into productive use.

I am certainly willing to discuss the escalator without prejudice to an ultimate decision, but the energy efficiency points are best left to local authorities. I can see the strength of the argument put by the noble Lord, Lord Stunell, but localised decision is best. With that, I urge noble Lords not to press their amendments.