Balancing the budget on homes

David Brownsey-Joyce examines Eric Pickles proposals to reduce tax exemptions for second homes.
The UK Communities Secretary Eric Pickles is about to become very unpopular with those who have a second home as he will announce a consultation to give power to local authorities to reduce the level of tax exemption that they offer to individuals who own a second home or a derelict property within their area.Hurrah, I hear from all those currently striving to even get a toe hold onto the property ladders, those pesky individuals who have the audacity to have more than one home will get their comeuppance and we the poor individuals who did not have the foresight, nerve or perhaps even the cash to take advantage of the housing market before it ballooned to unsustainable levels that are frankly ridiculous will be reaping the benefit of this clamping down on the middle class, buy-to-let,  holiday homers by having this funding used to reduce the council tax bill for the rest of us. Hooray for us.

Oh wait, this is only going to consultation and then even if it happens to get through the various stages of Parliament and the House of Lords it will only be a power for local authorities to use at their discretion. This is where it could get a tad tricky, so say you have a region that has a large number of holiday homes, are you going to increase the tax levels on those individuals who only turn up during their own unique holiday session and then spend their hard earned money on local business?

What you might get are a few more houses going on the market at prices locals can’t afford and the owners staying away hitting the local economy. This is purely a hypothetical but still it would be interesting to see what happens. Could this be a way of bringing houses onto the market and forcing prices down by making them less appealing to anyone but local families? I doubt it.

The big part on this plan is to hit the derelict properties that currently blight the country by keeping valuable property stock off the market for families and thus raising market values. These properties get a nice little exemption on council tax and there are other tax benefits which I’m not smart enough to know about, but that’s why I’m not an accountant.

Reports in the media suggest there are up to half a million derelict properties at the moment in the UK, so if all of these are paying full council tax that would create a rather large pot with which to fund all of our council tax reductions, and for all of those that worry about selling up and being taken over by squatters whilst moving out to sell up (thank you London Evening Standard for your recent scare stories) you don’t need to worry because technically when a scatter breaks into, sorry, occupies your property they become responsible for paying the council tax bill. That just leaves you with the court costs, repair costs, and emotional trauma, so much better (bring on making squatting illegal).

If early reports are to be believed (press releases are always released in advance, when are we going to have a policy just announced for a change?) those experiencing “special circumstances” so those that move out of their home for reasons of medical care or their untimely demise, will not need to worry about their property being derelict they will still get their exemption. There is however no mention of students. Overlooked by the media or a prelude to removing their exemption status?

This potential policy will be formally announced after I have popped this to the editors at The Grapevine so whether it is better or worse than I think will have to wait till I get a look at the formal proposal, the one thing that is clear prior to the announcement is that it relies upon all local authorities playing by the same rules and taking the same steps and for a Conservative that believes in localising decisions and moving away from Big Government towards localism this does sound a tad like a centre down policy, as that is the only way it would work.