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Council Tax premium for long-term empty properties and second homes: have your say

We are seeking views on proposed changes to Council Tax charges for owners of long-term empty properties and second homes in the city.

There are currently around 2,200 empty properties in Swansea at a time when there are 4,000 families and individuals seeking good quality accommodation. There are also around 1,800 second homes in Swansea. One of the ways to address this problem is for the council to introduce a
premium on Council Tax for such properties, the proceeds can be used to help privately-owned property owners bring empty homes back into use and meet local housing needs.

At present the council has used its discretion to award all long-term empty domestic properties a 50% discount on Council Tax. If the new proposals are introduced, this will change and there are details of how this would look below. The changes being proposed should not affect people who own more than one property if the house is occupied by a tenant, as the tenant would normally be liable to pay the Council Tax. Nor does it affect those who offer homes for holiday let where the holiday home is subject to business rates.

Complete the survey online now

Closing date: 5.00pm, 9 August 2019

Hard copies of the survey are available in all libraries and in Civic Centre.

 

Further information

Long-term empty properties

A long-term empty domestic property is defined as a property which is both unoccupied and substantially unfurnished for a continuous period of at least one year. There are approximately 1,400 long-term empty domestic properties in Swansea. However, some of the empty properties that you may see in Swansea are not covered by this definition. This may be because they are classified as commercial premises (eg a vacant hotel) or because there is a specific exemption (eg if the home-owner is in hospital or long-term care).

Details of all exemptions from Council Tax that apply to unoccupied properties

What are the current Council Tax arrangements for long-term empty properties in Swansea?

At present, we have used our discretion to award all long-term empty domestic properties a 50% discount on the annual Council Tax due. The discount is applied from the end of any statutory period of exemption from Council Tax (how long a statutory exemption applies for will vary depending on the specific exemption class). 

What changes are being looked at?

  • Removal of the 50% discretionary discount currently allowed after any period of statutory exemption. We have the discretion to remove the ongoing 50% discount on empty properties. A discretionary discount would not be allowed after any period of statutory exemption has expired.
  • Introduction of a Council Tax premium on long-term empty properties (which do not fall within the exception classes listed below).

We have the discretion to charge a premium of up to 100% of the standard rate of Council Tax on long-term empty properties. A premium would mean that an extra amount of Council Tax would be added to the annual amount due for a property. The extra amount added is the 'premium' and it could be up to 100% of the standard annual charge.

We may specify different levels of premium (up to 100%) and the criteria to determine when those premiums apply.

The introduction of a premium would be subject to a decision to remove the 50% discretionary discount (above) as the law does not allow the council to apply a premium unless the 50% discount has been removed first.

Why are we looking at these changes?

Long-term empty properties have a negative impact on the availability of housing, and on the attractiveness and sustainability of local communities. 

The potential removal of the current discount and the introduction of a premium could encourage the release of long-term empty properties back into the local housing supply. Having more houses occupied could also help improve the appearance and viability of local communities. 

There are currently 4000 households on the waiting list for council accommodation. Although the authority has recently started to build new homes for the first time in in many years, it wishes to become a general fund housing developer and additional revenue generated from Council Tax premiums could be used to build more homes which are sustainable and energy efficient. 

Welsh Government's intention in giving local authorities the discretion to charge a premium is that it be used as a tool to help local authorities to bring long-term empty homes back into use to provide safe, secure and affordable homes. Also to support local authorities in increasing the supply of affordable housing as well as a further indirect benefit of making local communities more sustainable, viable and visually amenable for present and future generations.   

What specific proposals are we consulting on?

  1. The removal of the current ongoing 50% Council Tax discount on long-term empty properties
  2. The introduction of a Council Tax premium on long-term empty properties

A premium for long-term empty properties cannot be introduced until 1 April 2020, so why are you asking about it now?

Under the Act, City and County of Swansea will need to decide whether to introduce a Council Tax premium on long-term empty properties, and at what level, before the end of this financial year (31 March 2020) in order to introduce the new charges from 1 April 2020 onwards. 

As an example, if the discretionary discount of 50% was removed and we decide to charge a 100% premium on long-term empty properties. 

  • Initially, there would be a 6 month statutory exemption period during which there would be no Council Tax to pay.
  • For the next 6 months, the owner would have to pay 100% of the normal charge. 
  • From the 13th month, a 100% premium would be added to the normal charge. For an average Band D property in Swansea, based on 2019/2020 charges, this would mean that the Council Tax due for the property for a whole year would be approximately £3,200.

 

Second homes 

What is a second home?

Second homes are defined in the Local Government Finance Act 1992. The Act defines a second home as, "a dwelling which is not a person's sole or main home and is substantially furnished". They are also referred to in legislation as 'Dwellings occupied periodically". 

Although these dwellings are often referred to as second homes or holiday homes, they might not always be what is generally considered to be a holiday home and would include eg:

  • An inherited property is kept furnished so the owner living away (plus multiple relatives) can visit elderly relatives is Swansea at no cost.
  • Owners were born/bred in Swansea, currently working away, are keeping a property in readiness for retirement back to Swansea.

We estimate that there are around 1,800 second homes in Swansea. These are properties which are not a person's sole or main home and are substantially furnished. Just over half of all second homeowners live outside of Swansea.

What are the current Council Tax arrangements for second homes in Swansea?

At present Swansea has determined that second homes (those that are furnished and no one's sole or main residence) are subject to a full Council Tax charge at the standard amount. 

What changes are being looked at?

  • Introduction of a Council Tax premium for second homes

A proposal to introduce a Council Tax premium for second homes up to a maximum of 100%. A premium would mean that an extra amount of Council Tax would be added to the annual amount due for a property. The extra amount added is the 'premium' and could be up to 100% of the standard annual charge.

All dwellings, which are not a person's sole or main home and which are substantially furnished, (and which do not fall within the exception classes listed below or the business rate category) are eligible to be charged the agreed Council Tax premium, as second homes. 

Why are we looking at these changes?

Increasing the supply of affordable housing is both a local and a national priority.  Second homes can reduce the amount of housing available for local people.

The 2011 Census shows that 5% of homes in Swansea have no usual residents. This varies from 1.8% in Lower Loughor and Penderry to 25.7% of properties in Gower that are either empty or are second homes. The statistics reveal that as of Census day, there were a total of 6,146 persons with a
second address in Swansea who are usually resident outside of Swansea with 1,161 of them indicating that the second address was used as a holiday home.

A higher percentage of second homes tend to be in rural areas where there is often a shortage of affordable housing. There are fewer properties built in rural areas and therefore less overall delivery of affordable housing. Local communities can be less vibrant and sustainable if significant elements of the local housing stock are only periodically occupied and this can affect both current and future generations.

We value the contribution that the tourism industry makes to our local economy. Please note 234 properties used for holiday lettings are classified as businesses and therefore would not be affected by a decision to charge a Council Tax premium on second homes.

We wish to become a general fund housing developer and additional revenue generated from Council Tax premiums could be used to build more homes which are sustainable and energy efficient.

Welsh Government's intention in giving local authorities the discretion to charge a premium is that it be used as a tool to support local authorities in increasing the supply of affordable housing and enhancing the sustainability of local communities.

What specific proposals are we consulting on?

  1. The introduction of a Council Tax premium on second homes.

A premium for second homes cannot be introduced until 1 April 2021, so why are you asking about it now?

Under the Act, City and County of Swansea will need to decide whether to introduce a Council Tax premium on second homes, and at what level, before the end of this financial year (31 March 2020) in order to introduce the new charges from 1 April 2021 onwards. 

As an example, if we decide to charge a 100% premium on second homes, that do not qualify for an exemption from premiums, for an average Band D property in Swansea, based on 2019/2020 charges, this would mean that the Council Tax due for the property for a whole year would be approximately £3,200.

Can a Council Tax premium be charged for all long-term empty properties and second homes?

No

Properties which are exempt from Council Tax

There are a number of standard exemptions which mean that Council Tax does not have to be paid for any property that can be proved to satisfy the necessary criteria.

Details of all exemptions from Council Tax

Properties for which Council Tax Premiums cannot be charged

There are a number of exemption classes which specifically apply to second homes and/or long-term empty properties and where a property falls into one of these classes the council will not be able to charge a Council Tax premium.

Classes of dwellingsDefinitionApplies to
Class 1Dwellings being marketed for sale - time limited for 1 yearSecond homes and
long-term empty properties
Class 2Dwellings being marketed for let - time limited for 1 year
Class 3Annexes forming part of, or being treated as part of the main dwelling
Class 4Dwellings which would be someone's sole or main residence if they were not residing in armed forces accommodation
Class 5Occupied caravan pitches and boat mooringsSecond homes
Class 6Seasonal homes where year-round occupation is prohibited
Class 7Job-related dwellings

Discretionary powers to reduce liability

Under the Act, local authorities also have discretionary powers to reduce liability for Council Tax premiums on second homes. Some examples of where a local authority might consider using such powers include:

  • Where there are good reasons why a dwelling could not be sold or let.
  • Where an offer has been accepted on a property and a sale is imminent, but not yet completed, and the exemption period has run out.
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