Updated 1st April 2016

Since this post was originally written on 12th January 2014, Liverpool City Council has now completely withdrawn the exemptions for empty properties.

Click here for more information.

The most important change is as follows:

Empty property discount

From 1st April 2016 discounts for empty homes that are either furnished or unfurnished have been withdrawn. Properties which remain empty and unfurnished for two years will be charged an additional 50 per cent Empty Property Premium.

Original post

Long gone are the days when a Landlord could simply call up the Council and tell them that the property was unfurnished and they would receive a 100% council tax exemption.

There was always confusion (mostly on the Council worker’s part) as to how long this exemption would last. I would often be told that, because a previous owner had used up the 6-month exemption, I couldn’t have it.

It was known that furnished properties would receive a 50% exemption for up to 6 months, but many Landlords would give me a knowing wink and ask “How will they find out?”. On this basis, I do agree with some of the changes, as it gives a blanket policy that liable parties cannot swerve quite so easily.

The Headlines

No reduction for second homes

Fair enough. If you’re able to have the luxury of a second home and you’re likely taking away the opportunity for a local person to own that home, then you should pay into the local coffers just as they would. This is why many popular holiday areas have had to enforce this as the local authorities weren’t generating any council tax income as they were all owned by rich out-of-towners!

Empty but FURNISHED properties entitled to 20% discount

This is a big jump from the previous 50% discount. This is quite clearly targeted at the student Landlord. 20% really isn’t much of a discount, is it? I originally heard that it was nil exemption, and this doesn’t feel much different. Most student properties are ‘Band A’, which is roughly £86 per month. A reduction of £17 doesn’t really matter does it?

On top of ever-increasing legislation denting student Landlords’ profit margins, this is another blow. If, for example, a student Landlord has their property empty over the summer for 3 months (as is usually the case), they will be paying out roughly £207 more than they were last year.

Empty UNFURNISHED properties are exempt for up to 2 months followed by zero reduction for 2 years

This one has a sting in the tail! As said above, you used to be able to get 6 months 100% exemption and even then you could probably charm the Council worker to give you more over the phone.

To be fair, if you’re a responsible landlord with a good, safe property and a proactive agent, you shouldn’t really be having a property vacant for any more than 2 months so this shouldn’t really come into your life (unless you’re being unrealistic!).

However, the jump between this and the next exemption is so great that many Landlords will get caught out. If you’re updating a property (redecorating, new kitchen, bathroom, etc.) which makes the property uninhabitable from the point of view of a prospective Tenant, you will still have to pay because…

Devil in the detail

The exception to that rule is that if, since you bought the property, it has been occupied again but then becomes vacant after this (i.e. a tenant moved in, then the tenant moved out) then you can apply for this 2 months’ full exemption. You will only be able to use this exemption once, but at least it resets and gives you a ‘free play’.

Properties undergoing structural/major repairs no longer exempt but will receive 20% discount for 12 months

So, the big question is: What constitutes structural/major repairs? I know what I think does, but there’s no information from Liverpool Council on this. I have first-hand experience of disputing this, and I had to go to great lengths to provide videos and photographs to prove that I had thoroughly renovated a property. The guy even wanted to visit the house to check! But that was a full refurbishment, with structural work that would clearly be exempt. But what constitutes ‘major repairs’? Is a new kitchen a ‘major repair’ or a ‘capital upgrade’?

Until they define the above, you should be able to argue the toss with the local authority as people’s perceptions of ‘major’ and ‘repairs’ will always differ.

Again though, 20% is really just a token gesture. So, all investors/Landlords need to factor into 80% Council Tax into their renovation costs from now. You have been warned!

Properties empty for over 2 years must pay extra 50% on top of the full Council Tax

Now this I do agree with! If you can afford to have a property empty for 2 years and you’re not allowing a Tenant in (taking a potential home away from someone) then fine – you should be punished.

If there is a reason other than sitting on an asset, you’ll probably be exempt.

I just hope that the revenue generated from these changes is spent wisely. I’m not holding my breath.