Consultation outcome

Consultation on proposals to exempt categories of dwellings from the council tax premiums in England

Updated 11 March 2024

Applies to England

Scope of the consultation

Topic of this consultation:

This consultation seeks views on possible categories of dwellings which should be exceptions to the council tax premiums. It covers the empty homes premium, and also the second homes premium, provisions for which are included within the Levelling Up and Regeneration Bill.

Scope of this consultation:

This consultation sets out the government’s proposals on the range of possible circumstances where dwellings will not be liable for either the long-term empty homes premium, the second homes premium, or both.

Geographical scope:

These proposals relate to England only.

Impact assessment:

No impact assessment has been prepared for this consultation as it concerns a local taxation regime.

Basic information

Body/bodies responsible for the consultation:

Department for Levelling Up, Housing and Communities.

Duration:

This consultation will last for 8 weeks until 31 August 2023.

Enquiries:

For any enquiries about this consultation, please contact: council.tax@levellingup.gov.uk

How to respond:

Email your response to the consultation to council.tax@levellingup.gov.uk.

If you are responding in writing, please make it clear to which questions you are responding.

Written responses should be sent to:

Department for Levelling Up, Housing and Communities
Local Tax Team, Local Government Finance
SE Quarter - 2nd Floor Fry Building
2 Marsham Street
London
SW1P 4DF

When you reply, it would be very useful if you could confirm whether you are replying as an individual or submitting an official response on behalf of an organisation, and include:

• your name
• your position (if applicable)
• the name of organisation (if applicable)
• an address (including postcode)
• an email address
• a contact telephone number

1. Introduction

1.1 The government recognises that a significant prevalence of empty and second homes can have impacts in some communities, particularly in areas where a significant proportion of the properties are not occupied all year round.

1.2 People have the right both to decide how to live and how to spend their capital; freedom of choice is hugely important in making significant decisions such as purchasing property. For example, second homes can provide flexibility to enable people to work in and contribute to the local community, whilst being able to return to a family home in another part of the country on a regular basis. However, as with all policies, there is always a balance to be struck, and there may be occasions where a disproportionate number of second homes can pose challenges for local areas.

1.3 Large concentrations of empty and second homes in particular areas can impact on the vitality and viability of local communities. For example, the existence of large numbers of empty homes can contribute to housing supply pressures, whilst also reducing the desirability of local areas. Concentrations of second homes reduce the size of the permanent population, thus reducing demand for local services. This in turn could lead to the permanent closure of local services relied upon by the local population. The government has given local authorities a range of powers and incentives to tackle empty homes. Through programme such as the Affordable Homes Programme, local authorities can access funding to bring empty homes back into use. And through the New Homes Bonus, they receive the same amount for bringing an empty home back into use as building a new one.

1.4 The government is taking steps to strengthen the existing long-term empty homes premium and introducing a new second homes premium through the Levelling Up and Regeneration Bill. However, government recognises that there will be circumstances where it would not be appropriate for the premiums to apply. In this context, the Bill and existing legislation gives the Secretary of State the power to prescribe classes of dwelling for which a billing authority may not apply a premium. These categories may be related to the characteristics of the building, or to the circumstances of the person liable to council tax, or in relation to such other factors that the Secretary of State considers appropriate^{[footnote 1]}. For the purposes of the consultation, this will be referred to as a “exception” to the council tax premiums. This consultation seeks views on a range of circumstances where it may not be appropriate for a council tax premium to apply.

2. Background

Long-term empty homes

2.1 Long-term empty homes are dwellings that have been unoccupied and substantially unfurnished for a defined period. In 2013, as part of its policy of encouraging owners of empty dwellings to bring them back into use, the government introduced powers for local authorities to charge a discretionary council tax premium of up to 50% on homes empty for at least 2 years. These powers were subsequently strengthened in 2018, whereby the maximum premium that could be applied was increased with the maximum level of the premium increasing depending on the length of time the property has been empty^{[footnote 2]}.

2.2 For the purposes of council tax, a ‘long-term empty home’ is currently defined as a dwelling which has been unoccupied and substantially unfurnished for a continuous period of at least 2 years. The maximum council tax premium that billing authorities can apply is:

• up to 100% for properties empty for 2-5 years
• up to 200% for properties empty for 5-10 years
• up to 300% for properties empty for 10+ years

2.3 The Levelling Up and Regeneration Bill contains a provision^{[footnote 3]} to amend the definition of ‘long term empty homes’ so that, for financial years from 2024-25 onwards, dwellings unoccupied and substantially unfurnished for a continuous period of at least one year are liable to the council tax premium.

Dwellings which are periodically occupied

2.4 The Levelling Up and Regeneration Bill (when enacted) will provide powers to billing authorities to charge a discretionary council tax premium of up to 100% for dwellings which are periodically occupied (for the purposes of the consultation, this will be referred to as a “second homes”)^{[footnote 4]}. This is defined as a dwelling that is substantially furnished and has no resident (i.e., it is not someone’s sole or main residence). Billing authorities determine whether a property is a second home rather than a sole or main residence. It will be for local authorities to reflect on the circumstances of their area in deciding whether to apply either premium and, if so, what level of premium that they consider to be appropriate.

Existing council tax exemptions

2.5 Where a dwelling is exempt from council tax, it will also be exempt from both council tax premiums. The Council Tax (Exempt Dwellings) Order 1992 (as amended) sets out the classes of dwellings that are exempt from council tax. A summary of the Order can be found in Annex A.

2.6 Under the existing legislation, two classes of property are already exceptions to the long-term empty homes premium:

a) homes that are empty where the occupant is living in armed forces accommodation for job-related purposes; or

b) annexes being used as part of a main property.

The government does not propose to remove any of the existing exemptions. If the council taxpayer is eligible for either of the current exemptions, they will not be subject to the premiums.

3. Proposed circumstances in which the empty homes and second homes premiums should not be applied

Properties undergoing probate

3.1 The government recognises that the period after someone passes away is very challenging for their relatives and friends, especially for those managing the estate.

3.2 Unoccupied properties which have become vacant due to the death of the owner or tenant and where no one is liable for council tax except an executor or administrator, are exempt from council tax until probate is granted. Following a grant of probate (or the issue of letters of administration) a further period of exemption of up to 6 months is possible (Class F exemption), so long as the property remains unoccupied and has not been sold or transferred to someone else.

3.3 If the property remains unoccupied following the end of the Class F exemption period, normal rules on the application of council tax to empty properties apply. This means that where a property has been unoccupied and substantially unfurnished for at least one year, it may become liable for the long-term empty homes council tax premium immediately. The liability for the empty homes premium is determined by the length of time that the property has been empty. Depending on the circumstances, this one-year period could start prior to the passing of the previous owner.

3.4 Alternatively, if such a property has been unoccupied since the passing of the previous owner and is substantially furnished, it could become liable for the council tax second homes premium immediately after the Class F exemption period has ended.

3.5 The government recognises that it may take some time to determine the future use of a property that has been left unoccupied or has no resident following the death of its owner or tenant. The government does not consider it appropriate that such properties should become subject to either the second homes or long-term empty property premiums immediately following the grant of probate.

3.6 The government therefore proposes that these properties should be exceptions to both the second homes and empty homes premiums for 12 months. The exception would start once probate or letters of administration is granted. This does not affect the Class F exemption or the ability for billing authorities to charge the normal rate of council tax following the expiry of the Class F exemption.

3.7 If the property is then put on the market for sale or let, the owner of the property would be able to apply for the ‘sales or let’ exception. This would provide the owner an additional 6 months exception period. As such, where both exceptions are granted, the maximum exception period would be up to 18 months.

Question 1 – Do you agree that properties that are unoccupied or have no resident following the death of the owner should be an exception to either or both of the council tax premiums following the grant of probate or letters of administration?

Question 2 – Do you agree that a period of 12 months after probate, or letters of administration have been granted, is an appropriate period?

Properties being actively marketed for sale or let

3.8 The long-term empty homes premium provides a positive incentive to encourage property owners to take steps to make more effective use of dwellings that have otherwise been left unoccupied. This will be reinforced by enabling councils to apply the premium to properties that have been empty and unfurnished for at least one year, rather than 2 years as is currently the case. The second homes premium will provide councils with additional resources to help manage the impact of second homes, particularly where there may be large concentrations in an area.

3.9 In May 2013, the government published guidance which stated that: “The government’s intention behind the decision to provide billing authorities with the power to charge a premium was not to penalise owners of property that is genuinely on the housing market for sale or rent.”

3.10 Since the introduction of the long-term empty homes premium, the government has been made aware of a number of cases where owners of long-term empty property are being charged the premium, even when they state they are taking steps to either sell the property or to rent it out. The government believes that where owners are using their best endeavours to bring a property back into productive use, then they should not be penalised through the imposition of the long-term empty homes premium. The government recognises that there may be difficult judgements to be made in determining whether steps taken to dispose of the dwelling are genuine. However, it does not consider that these challenges are sufficient to count against providing greater protections to those owners who are responding positively to the government’s effort to bring more empty properties back into use.

3.11 The government therefore proposes that empty properties that are being actively marketed for sale or to let should be an exception to the council tax premiums. This exception would apply for up to a maximum of 6 months from the date that active marketing commenced, or until the property has been sold or rented, whichever is the sooner.

3.12 Alternatively, there may be periods where second homes are unoccupied between lets or while they are in the process of being sold. The government wishes to ensure that owners of second homes should be able to benefit from an exception to the second homes premium where the property is being actively marketed for sale or rent.

3.13 In order to qualify for an exception to the premiums, the owner (of either a long-term empty home, or a second home) would be expected to demonstrate they are actively marketing the property for sale or let at a reasonable price on the open market (i.e., an offer to purchase at that price would be accepted by the owner or an offer to pay rent at that level would be accepted). Some examples of evidence could include:

• evidence that the property is being actively marketed by an agent
• evidence that the property is being actively marketed by a sale or letting website
• evidence that the property has recently been sold subject to contract or rented out subject to tenancy agreement but is still vacant because the sale or rental agreement is taking time to complete because it is part of a chain.

3.14 This would give owners of long-term empty properties and second homes an incentive to take steps to either sell or let out their property. It is proposed that the exception should be for a maximum period of 6 months once the exception has been applied.

3.15 With regard to the long-term empty homes premium, the exception will be available only once to the same owner of a property, but it is proposed that the exception may apply again if the property has new owners, and they begin the process of marketing for sale or rent.

Question 3 – Do you agree that properties actively being marketed for sale or let should be an exception to either or both of the council tax premiums?

Question 4 – Do you think an exception to the premiums for up to 6 months for properties being marketed for sale or let is a reasonable period?

Question 5 – Do you agree that the evidence requested above would be appropriate to demonstrate that the property is actively being marketed for sale or let?

4. Empty homes: proposed circumstances in which the long-term empty homes premium should not be applied

Empty properties undergoing major repairs – time limited to 6 months

4.1 Homes that have remained empty for long periods may require extensive repair work. In situations where an owner of an empty property is undertaking major repair work or structural alterations to make it habitable, the government believes that it is not appropriate for a premium to be charged as soon as the property has been empty for one year.

4.2 It proposes therefore that empty properties undergoing major repair works or structural alternations should be an exception to the premium for up to 6 months once the exception has been applied or when the work has been completed, whichever is the sooner. The exception could be applied at any time after the property has been empty for at least 12 months, so long as the billing authority is satisfied that the necessary repair work is being undertaken. This could mean, for example, that a premium is applied once a property has been empty for more than 12 months, but will be removed if and when the billing authority is satisfied that the conditions for the exception are met.

4.3 Owners using this exception could also potentially benefit from the proposed exception for properties being actively marketed for sale or rent, as set out in section 3. So long as the criteria for both exceptions are met, then a potential total exception of up to 12 months may be available in circumstances where an owner has carried out major repair works and is then carrying out active marketing of the property for sale or rent. It is proposed that the major repairs exception can only be applied again where the property has new owners or tenants, and extensive repair work is necessary to bring the property back into useable condition.

Question 6 – Do you agree that properties undergoing major repair work is appropriate should be an exception to the empty homes premium?

Question 7 – If so, do you agree that 6 months is a reasonable length of time for an exception to apply whilst major repairs or structural alterations are being undertaken?

Question 8 – do you agree that this exception should only be applied to the empty homes premium?

5. Second homes: proposed circumstances in which the second homes premium should not be applied

Annexes forming part of, or being treated as part of, the main dwelling

5.1 For the purposes of council tax, parts of a dwelling constructed or adapted for separate occupation (e.g., an annex) are generally treated as separate dwellings for the purposes of council tax. Each dwelling could, therefore, be potentially liable for the second homes premium.

5.2 Certain annexes are exempt from council tax altogether and will therefore be exempt from the premium. These are:

• an unoccupied annexe which forms part of a single property which includes another dwelling and may not be let separately from that dwelling without a breach of planning control (Class T); and
• an annexe which is the sole or main residence of a dependent relative (a relative who is aged 65 or older, or is severely mentally impaired, or is substantially and permanently disabled) (Class W^{[footnote 5]}).

5.3 Separately, a 50% council tax discount may be available if the annexe is being occupied as a sole or main residence by a relative of the council taxpayer of the main home^{[footnote 6]}. This discount will continue where the annexe meets the relevant criteria to be eligible for it. As the annexe will be a sole or main residence, it will not be subject to a second homes premium. Where the council has determined that such a discount is appropriate, then a second homes premium would not apply.

5.4 A 50% council tax discount is also available for an annexe that is being used as part of the sole or main residence^{[footnote 7]}. There will be no change to this discount, and it is proposed that such annexes should be an exception to the council tax premium on second homes.

Question 9 – Do you agree that furnished annexes which are being used as part of the sole or main residence should be an exception to the council tax premium on second homes?

Job-related dwellings

5.5 Currently, there is a council tax discount of up to 50% for properties which are unoccupied because the owner is required to live elsewhere for employment purposes^{[footnote 8]}.

5.6 In order to be considered as residing in a job-related accommodation, a job-related dwelling is prescribed as job-related if it is provided by reason of a person’s employment or for the person’s spouse or civil partner by reason of their employment including in any of the following cases (subject to some exceptions):

a) Where it is necessary for the proper performance of the duties of the employment

b) Where the dwelling is provided for the better performance of the duties of the employment, and it is one of the kinds of employment in the case of which it is customary for employers to provide dwellings for employees

c) where it is contractually obligated to be resident at that property and to carry on a trade or profession at that address,

It is for the local authority, in the first instance, to determine application of the job-related discount.

5.7 Where a job-related dwelling discount is in place, the government proposes that that dwelling should also be an exception to the second homes premium. The exception will not apply to cases where someone chooses to have an additional property to be closer to work while having a family home elsewhere or where an individual is posted to a new location but maintain their previous address.

Question 10 – Do you agree that the second homes premium should not apply to properties that are subject to the job-related dwelling discount?

Occupied caravan pitches and boat moorings

5.8 There is currently a mandatory 50% council tax discount for dwellings that consist of a pitch occupied by a caravan, or a mooring occupied by a boat where they are not a person’s sole or main residence. The government wants to ensure that caravans and boats that are currently eligible for this discount continue to receive the discount. As a result, the government proposes that these caravans and boats should be an exception to the council tax premium on second homes.

Question 11 – Do you agree that pitches occupied by caravans and moorings occupied by boats should be an exception to the second homes premium?

Seasonal homes where year-round or permanent occupation is prohibited or has been specified for use as holiday accommodation or prevents occupancy as a person’s sole or main residence

5.9 The government recognises that there are properties which may have a restriction on the use or occupation of the property. If the property has planning or other conditions which means that it cannot be occupied for part of the year, it may not be practical for those properties to be used as a “sole or main residence.”

5.10 The government proposes that properties that have restrictions or conditions preventing occupancy for a continuous period of at least 28 days in any 12-month period, or specifies its use as a holiday let, or prevents occupancy as a person’s sole or main residence should be an exception to the second homes premium. These types of properties tend to be classed as ‘seasonal homes’ and cover a broad range of properties but mainly comprise caravans, chalets and purpose-built holiday homes which cannot be lived in all year due to planning, licensing, or other restrictions.

Question 12 – Do you agree that seasonal homes, where year-round occupation is prohibited, should be an exception to the second homes premium?

Question 13 – Are there any other circumstances in which property should be an exception to either of the council tax premiums and if so, why?

6. Next steps

6.1 This consultation will last for 8 weeks from 6 July, with all comments to be received by 31 August 2023. Once the consultation has closed, the government will analyse all the responses and publish a summary on our website.

6.2 The responses will be used to inform the Regulations put in place to prescribe exceptions to the council tax premiums and the guidance which will be issued to Billing Authorities.

Annex A: Dwellings exempt from council tax in England by virtue of the Council Tax (Exempt Dwellings) Order 1992 (as amended)

Class	Description
B	Unoccupied dwellings owned by a charity (up to 6 months).
D	Unoccupied dwelling, due to a person being in prison.
E	An unoccupied dwelling which was previously the sole or main residence of a person who has moved into a hospital or care home.
F	Dwellings left empty by deceased persons (6 months from date of probate).
G	An unoccupied dwelling where the occupation is prohibited by law.
H	Unoccupied dwelling which is held for the purpose of being available for a Minister of Religion.
I	An unoccupied dwelling which was previously the sole or main residence of a person who is the owner or tenant and who has moved to receive personal care.
J	An unoccupied dwelling which was previously the sole or main residence of a person who is the owner or tenant and who has moved in order to provide personal care to another person.
K	An unoccupied dwelling where the owner is a student who last lived in the dwelling as their main home.
L	An unoccupied dwelling which has been taken into possession by a mortgage lender.
M	A hall of residence provided predominately for the accommodation of students.
N	A dwelling occupied only by students, school, or college leavers or by certain spouses and dependants of students (including relevant Ukrainian persons).
O	Armed forces’ accommodation.
P	A dwelling where at least one person who would otherwise be liable has a relevant association with a Visiting Force.
Q	Unoccupied dwelling left empty by a bankrupt person.
R	Unoccupied caravan pitch or boat mooring.
S	Dwelling occupied only by persons under 18 and relevant Ukrainian persons.
T	Unoccupied annexe to an occupied dwelling, which may not be let separately.
U	Dwelling occupied only by people who are severely mentally impaired or those with students or relevant Ukrainian persons.
V	Main residence of a person with diplomatic privilege or immunity.
W	An occupied annexe to an occupied dwelling, where the annexe is occupied by a dependent relative.

About this consultation

This consultation document and consultation process have been planned to adhere to the Consultation Principles issued by the Cabinet Office.

Representative groups are asked to give a summary of the people and organisations they represent, and where relevant who else they have consulted in reaching their conclusions when they respond.

Information provided in response to this consultation may be published or disclosed in accordance with the access to information regimes (these are primarily the Freedom of Information Act 2000 (FOIA), the Environmental Information Regulations 2004 and UK data protection legislation. In certain circumstances this may therefore include personal data when required by law.

If you want the information that you provide to be treated as confidential, please be aware that, as a public authority, the Department is bound by the information access regimes and may therefore be obliged to disclose all or some of the information you provide. In view of this it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the Department.

The Department for Levelling Up, Housing and Communities will at all times process your personal data in accordance with UK data protection legislation and in the majority of circumstances this will mean that your personal data will not be disclosed to third parties. A full privacy notice is included below.

Individual responses will not be acknowledged unless specifically requested.

Your opinions are valuable to us. Thank you for taking the time to read this document and respond.

Are you satisfied that this consultation has followed the Consultation Principles? If not or you have any other observations about how we can improve the process please contact us via the complaints procedure.

Personal data

The following is to explain your rights and give you the information you are entitled to under UK data protection legislation.

Note that this section only refers to personal data (your name, contact details and any other information that relates to you or another identified or identifiable individual personally) not the content otherwise of your response to the consultation.

1. The identity of the data controller and contact details of our Data Protection Officer

The Department for Levelling Up, Housing and Communities (DLUHC) is the data controller. The Data Protection Officer can be contacted at dataprotection@levellingup.gov.uk or by writing to the following address:

Data Protection Officer
Department for Levelling Up, Housing and Communities
Fry Building
2 Marsham Street
London
SW1P 4DF

2. Why we are collecting your personal data

Your personal data is being collected as an essential part of the consultation process, so that we can contact you regarding your response and for statistical purposes. We may also use it to contact you about related matters.

We will collect your IP address if you complete a consultation online. We may use this to ensure that each person only completes a survey once. We will not use this data for any other purpose.

Sensitive types of personal data

Please do not share special category personal data or criminal offence data  if we have not asked for this unless absolutely necessary for the purposes of your consultation response. By ‘special category personal data’, we mean information about a living individual’s:

• race
• ethnic origin
• political opinions
• religious or philosophical beliefs
• trade union membership
• genetics
• biometrics
• health (including disability-related information)
• sex life; or
• sexual orientation.

By ‘criminal offence data’, we mean information relating to a living individual’s criminal convictions or offences or related security measures.

3. Our legal basis for processing your personal data

The collection of your personal data is lawful under article 6(1)(e) of the UK General Data Protection Regulation as it is necessary for the performance by DLUHC of a task in the public interest/in the exercise of official authority vested in the data controller. Section 8(d) of the Data Protection Act 2018 states that this will include processing of personal data that is necessary for the exercise of a function of the Crown, a Minister of the Crown, or a government department i.e., in this case a consultation.

Where necessary for the purposes of this consultation, our lawful basis for the processing of any special category personal data or ‘criminal offence’ data (terms explained under ‘Sensitive Types of Data’) which you submit in response to this consultation is as follows. The relevant lawful basis for the processing of special category personal data is Article 9(2)(g) UK GDPR (‘substantial public interest’), and Schedule 1 paragraph 6 of the Data Protection Act 2018 (‘statutory etc and government purposes’). The relevant lawful basis in relation to personal data relating to criminal convictions and offences data is likewise provided by Schedule 1 paragraph 6 of the Data Protection Act 2018.

4. With whom we will be sharing your personal data

DLUHC may appoint a ‘data processor’, acting on behalf of the Department and under our instruction, to help analyse the responses to this consultation. Where we do, we will ensure that the processing of your personal data remains in strict accordance with the requirements of the data protection legislation.

5. For how long we will keep your personal data, or criteria used to determine the retention period

Your personal data will be held for 2 years from the closure of the consultation, unless we identify that its continued retention is unnecessary before that point

6. Your rights, e.g., access, rectification, restriction, objection

The data we are collecting is your personal data, and you have considerable say over what happens to it. You have the right:

a. to see what data we have about you

b. to ask us to stop using your data, but keep it on record

c. to ask to have your data corrected if it is incorrect or incomplete

d. to object to our use of your personal data in certain circumstances

e. to lodge a complaint with the independent Information Commissioner (ICO) if you think we are not handling your data fairly or in accordance with the law. You can contact the ICO at https://ico.org.uk/, or telephone 0303 123 1113.

Please contact us at the following address if you wish to exercise the rights listed above, except the right to lodge a complaint with the ICO: dataprotection@levellingup.gov.uk or

Knowledge and Information Access Team
Department for Levelling Up, Housing and Communities
Fry Building
2 Marsham Street
London
SW1P 4DF

7. Your personal data will not be sent overseas

8. Your personal data will not be used for any automated decision making

9. Your personal data will be stored in a secure government IT system

1. See section 11B (2)-(4) of the Local Government Finance Act 1992 for the empty homes premium and Clause 76 Dwellings occupied periodically: England 11D(1) and (2) of the Levelling Up and Regeneration Bill. ↩

2. Section 11B of the Local Government Finance Act 1992. ↩

3. Clause 75 Long-term empty dwellings: England of the Levelling Up and Regeneration Bill. ↩

4. Clause 76 Dwellings occupied periodically: England of the Levelling Up and Regeneration Bill. ↩

5. Council Tax (Exempt Dwellings) Order 1992 (as amended). ↩

6. Where the main home is someone’s sole or main residence. ↩

7. Council Tax (Reductions for Annexes) (England) Regulations 2013. ↩

8. The Council Tax (Prescribed Classes of Dwellings) Regulations 2003 (as amended) set out classes of property where the discount provided for by section 11(2)(a) of the Local Government Finance Act 1992 can be reduced. However, these regulations also make clear that those provisions do not apply to dwellings where the liable person is also a liable person for another dwelling which is job-related, or to dwellings which for the liable person is job-related, and where that person is a liable person in relation to another dwelling. In such cases, the 50% council tax discount provided by the Local Government Finance Act 1992 should be maintained. ↩