Our housing correspondent BARRATT HOLMES on the slow introduction of increased local taxes in an effort to deter the borough’s ‘executive apartments’ being used as investment vehicles and not as homes
Innova House, an office-to-residential development next to the Croydon Flyover, has been marketed to Chinese investors
Absentee landlords with homes deliberately left vacant could face punitive annual Council Tax bills of nearly £7,000 under proposals to be rubber-stamped at next week’s Croydon Town Hall cabinet meeting.
The Labour council wants to deter investors from buying up flats in the borough and then leaving them empty, while hundreds struggle to put a roof over their families’ heads.
Using London’s soaring property market as a get-rich-quick scheme has been a popular and tax-efficient option for wealthy Chinese and Middle East speculators for more than a decade, but it has seen hundreds of new flats in the capital left vacant for years at a time, while the owners count their profits in the ever-rising value of their property investment.
Croydon’s burgeoning market in office-to-residential developments has also seen properties here marketed to the Far East.
But with new laws being introduced to deter landlords from leaving their properties empty, Croydon proposes charging them up to four times the usual Council Tax bill.
Local authorities can charge residents 100 per cent of a Council Tax bill if the property is occupied, with an additional 50 per cent if it is left empty for more than two years.
But from April, councils will have stronger legal powers to charge higher rates for long-term empty properties to encourage an increase local housing supply.
Each council can decide how much to charge, depending on the local housing market. The proposals going before the council cabinet on Monday include:
• An immediate additional 100 per cent Council Tax on homes empty between two and five years
• An additional 200 per cent Council Tax on homes empty between five and 10 years – from April 2020
• And an additional 300 per cent Council Tax on properties empty for more than 10 years – from April 2021.
A typical Band C Croydon property pays £1,636.96 annual Council Tax at present (although this is set to rise by 5 per cent from April). Under these proposals, in a couple of years any owner who has allowed such a home to go unlived in since 2011 could be hit with a bill from the Town Hall for £6,875.
In a statement issued this morning, the council said, “The proposals going before Croydon Council’s cabinet meeting next week would not apply to homeowners with legitimate reasons for having an empty property, including members of the armed forces serving overseas or a home genuinely on the market for sale.”
Alison Butler: threatening big Council Tax bills for empty flats
The council did not explain how it would implement or police the Council Tax penalty system. The council has had a landlord licensing scheme in place since 2015 to uphold acceptable standards of homes in the private rental sector, although it has brought very few prosecutions.
It also has an empty homes team which they say has “worked with local homeowners and developers to refurbish over 350 empty and unused properties back into use over the last three years”.
“Croydon Council has already provided advice, grants and loans so hundreds of private homeowners could refurbish empty and disused houses – so this proposal is about doing even more to get them to turn abandoned buildings into homes for people who need one,” is what Alison Butler, the council cabinet member for empty flats and no council homes, is supposed to have said.
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Now, for once in its history, the Council has come up with an absolutely brilliant scheme. Its now clear how it works:
* encourage and assist in the building of an unfeasible number of flats in central Croydon in the secure knowledge that it is beyond credible that they will all be sold or rented and that many, if not the majority, will remain empty and unsold.
* charge higher rates on all the deliberately created empty properties.
Results:
*hugely increased rates income with no need to provide services, infrastructure, schools, doctors etc in return.
*a cheerful, uncrowded ghost town with low population, high rateable income, wonderful facilities for the few new owner, renters and residents.
Paradise….with the same sort of logic that devoted Brexiteers are offering.
Brilliant idea! For once the council have got it right! We have had a large detached house,closeby, empty for over 10 years. It looks terrible, and has been the subject of a break-in, yet squatters have not yet taken over
A thought, do squatters count as tenants to avoid this tax?
Probably not.
But sticking up a For Sale sign and seeking an unachievable price could be enough to avoid the additional CTax charge. In any case, as with many council initiatives, it is just hot air unless it is properly implemented, which will require staff taking enforcement action.
Aren’t you overplaying this? These additional charges arise after at least 2 years of non occupation. Would suggest that a much smaller frame would need to be imposed to deter the type of investor who can purchase and off load such properties as an investment vehicle and who also will be ruthless enough to manipulate the meaning of occupation to evade such a residence tax.
No: this is based entirely on the council’s press release issued yesterday.
It is another policy, such as the “crackdown” on flytipping, 20mph zones, or the landlord licensing scheme, which sounds radical and positive, with which no one can take issue, yet when you drill down into it, amounts to the council doing nothing (again).
Unless it is properly staffed and enforcement teams deployed, it will amount to a paper exercise which deters no landbanking property owners from sitting on vacant homes for as long as they wish. As previously observed, all someone has to do is place a For Sale board up outside the property, and the owner is “trying” to sell it…
This is nowhere near enough a deterrent, or disincentive, or proportionate taxation. The US hedge fund entrepreneur [ a french word meaning literally, ‘entering to take’, ie burglary….] Ken Griffin pays $280,000 pa local property tax on his New York penthouse [sorry to intrude a quote from your competitor, the grauniad] :- https://www.theguardian.com/commentisfree/2019/feb/08/london-mansion-new-york-local-council-tax-billionaires. The amount of council tax he pays on one of his comparable Westminster properties is £1421….