Mayor calls for increase to council tax charges on empty homes

04 September 2017

Sadiq Khan has called on the Government to allow London’s boroughs to increase Council Tax bills for high-value homes that are left empty.

 

The Mayor’s action is in response to a report he commissioned last year – the most thorough of its kind ever undertaken in Britain – into the role of overseas investment in the capital’s property market. The research, carried out by the London School of Economics and the University of York, looked at the contribution of overseas investment to new housing supply, as well as public concerns over homes being sold to overseas buyers and kept empty.

 

In its findings, the research found the number of entirely empty homes to be very low overall, but suggested there were greater numbers of empty homes in prime and expensive locations.

 

The Mayor has written to Government asking that boroughs be able to boost the empty home Council Tax levy on high-value properties above the current 50 per cent of Council Tax allowed. 

 

In his letter the Mayor said councils should be able to charge this levy at a meaningful rate that would incentivise occupation, or at the very least generate a more substantial receipt that could support investment in new affordable homes and other measures to tackle the housing crisis. He cited the case of Westminster’s top Band H, where properties may be worth many millions of pounds but the empty homes levy would currently be no more than £688 a year.

 

The Mayor of London, Sadiq Khan, said: “The housing crisis is the biggest challenge facing our city today and I’ve been honest with Londoners from the start – we won’t turn things round overnight.  This is going to be a marathon, not a sprint and we need to be able to take robust action to tackle it.

 

“In the midst of a housing crisis, just one home left unoccupied is one too many. That is why I will be working closely with boroughs like Westminster City Council to fight Londoners’ corner by calling for the Government to allow boroughs to charge a higher Council Tax on empty properties at a rate that makes a difference.”

 

The Leader of Westminster Council, Cllr Nickie Aiken, said: “I support the Mayor’s proposal for greater flexibility to be afforded to local authorities around the amount that could be levied on empty homes. Not only is it an important message to send out, it would also generate additional funds to be invested in our areas for the benefit of local residents. Along with the Mayor I have made it my priority to ensure that we have genuinely affordable housing in the heart of the capital.”

 

Ian Fletcher, Director of Real Estate Policy for the British Property Federation, said: “The Mayor’s suggestion that there should be a higher council tax premium on empty homes is worthy of consideration from Government, within the wider context of what is and what is not currently working to prevent empty properties.”

 

Hugh Bullock, who chaired the Overseas Investment Sub-Group of the Homes for Londoners Board overseeing the LSE/York research, said: “The Sub-Group has made a number of recommendations. Although the research found that the overall number of empty properties in London is low, I welcome this response of the Mayor to the recommendation concerning Council Tax.”

Notes to editors

  • In September last year, the Mayor of London launched an in-depth and wide-ranging inquiry into the different roles overseas money plays in the capital’s housing market, which included understanding the proportion of new homes kept empty in London and how many are owned by foreign buyers.
  • LSE was asked to focus on four main areas:

What proportion of new homes is sold to buyers who are resident overseas?

What proportion of new homes is kept empty and how many of these are owned by foreign buyers?

How reliant is development viability on sales to overseas buyers?

How does overseas financing of development contribute to housing supply?

  • LSE’s research brought together evidence from market commentary, data from major estate agencies and industry research bodies, interviews with developers, financiers, managers of developments and data from the London group of the House Builders Federation.
  • York used a sample of 8,000 Land Registry titles of new build property sales for every London borough were obtained to provide figures for between April 2014 and March 2016.
  • A copy of the research summary is available here:
    https://www.london.gov.uk/moderngovmb/documents/s58606/08b2%20Consolidated%20reseach%20note.pdf

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