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Owners of empty homes should be hit with extra tax, new research note suggests
Britain's housing crisis is being made worse by hundreds of thousands of homes left empty, according to a new report from the Institute of Public Policy Research. The report argues that giving local authorities power to increase tax on empty homes would ensure more become occupied and bring England into line with Scotland. The report shows that there are 635,000 empty homes across England, including 216,000 that have been empty for over six months. In London, where house prices and rents are especially high, over 60,000 homes are empty, including over 20,000 that have been empty for over six months. The report argues that local authorities should be offered an enhanced set of powers, including removing the 50% premium cap from council tax on empty homes. In effect, this would allow local authorities to determine their own banded council tax premiums on long term empty homes, the report explains. It also says that local authorities should have the discretion to define what a long term empty property is, including the ability to shorten the timeframe that defines eligibility for the discretionary tax to one year rather than two, and the freedom to determine what constitutes the inhabitation period that restarts the clock. The report argues that discretion over these two features would allow local government to account for differences in housing market dynamics, such as the common length for property voids and the scale of housing need in the local area. In Scotland long term empty homes are defined with a one year threshold rather than two years in England and the length of time a property would need to be inhabited to reset the starting gate is three months instead of the English standard of six weeks. The report argues that England should be brought into line with Scotland and that this would get more homes occupied, rather than act as a revenue raiser, but if there was no response from empty home owners, a premium of 70% of a Band D Council Tax payment would result in a charge of around £1,000 and draw in an additional £110 million nationally. This would be around £11 million across London, it claims. The report says that local authorities could then channel these extra funds into their local housing markets. The report also models a tougher approach that could raise as much as £215 million a year. ‘Long term empty homes are a luxury England cannot afford. With rising house prices, substantial levels of homelessness and lengthy housing waiting lists, empty homes are making the housing crisis worse,’ said Bill Davies, IPPR researcher. ‘Short term vacant properties are a natural part of the housing market. Properties will be without residents as estates are disposed of, as sellers await buyers, or as landlords await new tenants. But when properties are left empty over the long term it increases pressure on rents and house prices,’ he pointed out. ‘Local authorities should be allowed more discretion to tax long term… Continue reading
Average house prices in England and Wales down 0.1%, latest index shows
Average house prices in England and Wales have fallen by 0.1% since October, according to the November house price index from the Land Registry. It means that the average house price is now £176,581 compared with the peak of £181,191 in November 2007 with an annual growth of 7.1%. The region in England and Wales which experienced the greatest increase in its average property value over the last 12 months is London with an increase of 17.4%. The data also shows that the West Midlands experienced the greatest monthly rise with a rise of 1.7% while Wales saw the lowest annual price growth at 1.7% while the East of England saw the most significant monthly price fall of 1.4%. The most up to date figures available show that during September 2014 the number of completed house sales in England and Wales increased by 5% to 73,552 compared with 70,020 in September 2013. The number of properties sold in England and Wales for over £1 million in September 2014 increased by 8% to 1,172 from 1,088 in September 2013. The region with the greatest fall in repossession sales in September 2014 was London and there were 674 repossessions in England and Wales during September 2014. Continue reading
Continued talk of a mansion tax hitting sales at top end of UK market
The possibility of a mansion tax being introduced in the UK has not disappeared despite many in the industry believing that recent changes to Stamp Duty would rule out the need for it. The shadow chancellor Ed Balls has confirmed that the annual tax on homes worth more than £2 million would be introduced in Labour’s first budget if it win the May 2015 general election. The plan would mean that the Treasury would start collecting the money in the 2015/2016 financial year. People with homes worth between £2 million and £3 million would pay about £3,000 a year. Those in more expensive homes would pay more. He claimed that Treasury officials were working on the proposals, in line with the civil service’s normal practice of making plans to implement the policies of parties that could win the general election. The Labour party plans to use the money to boost the National Health Service. ‘I would like to see that revenue coming in in the first year of a Labour government, before the end of the financial year,’ Balls added. This is despite a general feeling that the changes introduced in early December to make the Stamp Duty tax more even would mean there would be no need for the so called mansion tax. Alex Newall, managing director at Hanover Private Office, had been among those who believed that reform to stamp duty would replace any need for a mansion tax which has been widely criticised as grossly unfair. He pointed out that the tax would be a blow to families who, by no fault of their own, have ended up owning houses which have risen in value and gone above £2 million. ‘In London, this may only be a two bedroom flat, where house prices have risen over 20% in the last year,’ he said. He also explained that sales volumes in the prime market in London have already fallen due to fears over a mansion tax being introduced. ‘Notting Hill has seen a decline of 48% in transaction volumes over the last 12 months following the fears of a mansion tax as people worry about the annual costs,’ he said. He added that while increasing stamp duty will make it more expensive to buy a house at the top of the market, he believes that the wide majority of existing owners will favour this approach. ‘Compare taxes in London to those in New York City, and London will still remain a global draw. Security, education, business, a completely multi-cultural society, and despite operating a tighter tax system, it is in fact one which is now more in line with other global cities, such as Hong Kong where stamp duty is as high as 8.5% and in Singapore where it reaches 15% for foreign buyers or 10% for Singapore buyers acquiring a second home,’ he said. Winkworth estate agents believes that the revival of talk of a mansion tax will hit sales in… Continue reading
