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

Baroness Pinnock Excerpts

2nd reading (Hansard): House of Lords
Monday 4th June 2018 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, I refer to my register of interests as a councillor on Kirklees Council in West Yorkshire and as a vice-president of the Local Government Association.

This short Bill will make two important changes to local taxation. First, there is the proposed change to the definitions of the qualification for business rates. As the Minister said, this is in response to a legal judgment. It is a pity that the Government have not used the opportunity of this minor reform to grasp the bigger nettle of a radical overhaul of business rates. This has been raised several times in your Lordships’ House over the last few years. Each time we are told that the Government agree that reform is needed but we are not getting a proposal for such radical change. The longer the Government delay, the more likely it becomes that high streets up and down the country will see more empty retail properties. What is desperately needed is a level playing field for retail businesses. Global online retailers currently enjoy a significant advantage over high-street retailers. This injustice urgently needs to be addressed and I wonder whether the Minister will be able to say when the Government intend to tackle this problem.

In a more direct response to the Bill, I acknowledge that it seeks to be crystal clear about the definition of “property in common occupation”. However, it may be that further anomalies will result from this definition. Is the Valuation Office Agency satisfied that the proposals will work in practice? Obviously, local authorities now rely on income from business rates in a way that they have not previously. Have the Government assessed the financial changes that might result, and are any individual local authorities significantly affected? Perhaps the Minister will be able to give some indication of the consequences for local authorities. For instance, he has said that about 1,000 businesses are affected. However, if these are all clustered in a couple of areas, that might have a significant impact on those local authorities.

Turning to the second element of the Bill, the proposal for a potential 100% premium on council tax for long-term empty properties is welcome. The huge need for more housing justifies this change. However, tackling the problem of empty homes effectively is more difficult than just making an additional charge on properties. There are too many empty homes, and that applies not just to the well-publicised issue of the buy-to-invest market in London. In some parts of the country—mainly former industrial heartlands—housing is not at a premium, and in these towns and cities additional council tax might not help the problem. In such a case, we seek further remedies which this proposal will not address.

Tackling the problem of homes left empty for more than two years needs more than this single approach. The empty homes development orders have not proved an effective tool for many councils because they are complex and costly to invoke. For example, in my own council area there were—I hope it is “were”— 2,113 empty properties recorded at the beginning of this year out of a total of nearly 200,000 properties. Of those, 722 have been empty for more than two years and 117 for more than 10 years. So the change proposed in the Bill, although an important measure, is applicable for Kirklees in only one-third of the empty homes, and I have seen no evidence that the proportion across the country is not similar. Therefore, the Bill will address the difficulty of tackling the problem of empty homes in relation to probably just one-third of homes that are indeed empty.

The next issue that requires a bit more clarification is the definition of an “empty home”. The Bill describes it as one that is unoccupied and substantially unfurnished for two years or more. Perhaps the Minister can describe in more detail what is meant by “substantially unfurnished” and “unoccupied”. For instance, there is a property in my council ward where the owner stays for the weekend perhaps once or twice a year. Throughout the rest of the year it remains unoccupied and totally unvisited, but furniture has been left in the property. I am told that this has been the case for more than nine years. There needs to be a recognition that, even with this additional council tax premium, it is probably financially beneficial for some properties to be kept empty because of property value increases. If your property is going to increase by more than, say, £2,000 or £3,000 a year, it is beneficial for you to leave it empty and pay the council tax premium.

There is broad support for both elements of this Bill but a feeling that, in both cases, it is a missed opportunity for more significant reform.