100% Increase In Council Tax Proposed In New Controversial Bid

A controversial proposal has recently been made by Manchester City Council which proposes to increase council tax for PRS homes by 100% during any period when tenants are not living in these properties. In this article, we will explain how the proposed changes could result in a decline in housing standards.

As a result of budget cuts, rising interest rates, and the general volatility of the economy, Manchester City Council has proposed the scheme to balance their budgets. As part of its opposition to these plans, the National Residential Landlords Association (NRLA) is claiming that they unfairly penalize landlords who are forced to leave their homes vacant for renovations, upgrades, repairs, or energy efficiency upgrades due to the proposed plans.

Typically, the council tax for an empty property can be increased under certain circumstances if the property has been vacant for more than two years, but the increase does not generally take effect until after this period has passed.

As part of its response to the consultation, the NRLA stated that with the charges in place, it would penalize landlords in a difficult economic climate, just when they are in need of help the most – when there is no rent coming in.

There is also a possibility that landlords will decide to increase monthly rent in order to cover an increase in costs during voids, which will eventually result in tenants paying a higher rent. The administration of such a system is also likely to be costly, as some properties are likely to be billed multiple times during the course of a 12-month period. 

There are times when a void period is not in the landlord’s best interest, but it is still a fact of life, and it is often necessary if the next tenant is to have the kind of house that is clean and attractive to move into in the future. It is not uncommon for landlords to take advantage of such void periods by deep cleaning and redecorating the property, along with installing energy-efficient methods which can be beneficial to the property, such as adding extra insulation.

As tenants often have the right to ‘quiet enjoyment’ of their properties, it is not advisable for them to undergo these types of improvements while they are residing there.

As a result of city councils penalizing PRS landlords for making improvements, they are likely to carry out only absolutely essential improvements, forcing them to abandon plans for other improvements if they know they are going to be penalized financially.

Despite this, it is important to consider that these proposals are not only affecting Greater Manchester alone, as many other councils around the country are following suit with very similar types of plans:

There has been unanimous agreement among the full Council of South Hams to increase the share of Council Tax that second homeowners should be required to pay. According to the proposal that was recently approved, the second homeowners in the area will be required to pay twice as much council tax as they did before.

As of April 2024, a second homeowner in Swanage and across Dorset who is not renting out their property for more than 70 days a year in a given year will have to pay double the amount of council tax as opposed to previously.

In a similar way, Cornwall Council’s Cabinet committee approved the 100% Council Tax premium for second homes just a few weeks before the start of the year 2023 and this is expected to come into effect in April 2023.

As you can see from the above, updates such as these can have a significant impact on would-be landlords, so we encourage anyone who has any further questions to contact us on 01902 711370 or email enquiries@uklandlordtax.co.uk

If you found this article to be informative then you might wish to consider reading tax on rental income or a short guide to Landlord nudge letters next.

Thandi Nicholls Ltd
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Wolverhampton
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