Currently, Welsh local authorities can, at their discretion, apply a premium of up to 100 per cent on second homes and properties that have been unoccupied and substantially unfurnished for at least a year.
Propertymark believes the policy’s implementation is inconsistent, with only half of local authorities charging a premium on either kind of property and just 11.4 per cent of second homes are charged the maximum council tax premium of 100 per cent, while 36.4 per cent of chargeable second homes are unencumbered by any premium at all.
Powers to levy such premiums were granted with the intention that the revenue generated would be used to encourage long-term empty property to be brought back into optimal use and to provide affordable housing and sustain local community services. Our response highlights the fact that the number of long-term empty properties has increased while affordable housing delivery has consistently fallen short of the Welsh Government’s lower estimate of need.
We suggest that funds might be ring-fenced to ensure that they are fully allocated to achieve the intended objectives of the policy, as although Welsh Government funding to local authorities has increased in recent years, historic funding gaps persist, particularly in relation to education and social care costs. As such, we cannot be certain that revenue is being used as envisioned.
We also propose that long-term empty property should be subject to an increasing premium dependent on the length of time left vacant to encourage owners to bring it back into use or dispose of it through sale. Just 28.6 per cent of vacant property is subject to a council tax premium, and we outline the ways in which revenue raised could be used to promote its use within the private rented sector through upfront loans for refurbishment costs or to fund schemes designed to elevate standards in private rented sector stock, such as energy efficiency improvements.
We also urge the Welsh Government to consider an amendment to Small Business Rates Relief (SBRR) to exclude short-term let business from claiming the exemption. This would help to level the playing field and make an investment in the private rented sector relatively more attractive.