FINANCE chiefs will have their work cut out to see if hiking up council tax rates for empty houses and second homes will boost income.
That’s what councillors have been told after a consultation run by Monmouthshire County Council during January and February showed a majority of those who took part were in favour of making people with more than one home pay a premium.
Following the consultation it is proposed Monmouthshire introduce a maximum 300 per cent premium on empty homes on a sliding scale, starting at 100 per cent for first year a house is empty and increse by same amount every year the property sits unusued.
For holiday homes a 100 per cent premium would apply but the council’s ruling cabinet has said it will review the charge before its introduction if it’s felt it would adversely impact local tourism.
There are some 400 properties registered as long term empty homes on the council’s database and 190 listed as second homes which could generate an additional £1.6m and £365,000, respectively, for the council.
But assistant head of finance, Ruth Donovan, told a council scrutiny committee it is too early to say how much extra cash council tax premiums could bring in.
She said: “Other councils are telling us they’ve needed extra resources for revenue teams dealing with correspondence and appeals. We will need to do some extra modelling on this.”
She said the council is likely to have to purchase additional IT to support payments and during the consultation some owners responded to say their homes aren’t empty.
Councillor Rachel Garrick, the cabinet member for finance, said the intention would be to introduce additional charges from April 1, next year – with the law requiring that owners of second homes are given 12 months notice of any premium.
The Labour councillor said: “That would be subject to further consideration during the year and a full understanding of the impact on the local economy.”
Phil Murphy, Conservative councillor for Caerwent, said when the council had previously considered second home premiums people had “swapped” homes over to being holiday lets, which are instead subject to business rates, reducing potential revenues.
He asked: “Have colleagues in other authorities, that have got high incidents of second homes, found any new dodge people are looking at?”
Ms Donovan said rules around holiday lettings and the threshold for the number of days a home must be available for letting to qualify for business rates will increase from April to 252 days and they must be occupied by paying guests for 182 days.
“The threshold is much higher and due to the announcement a number of properties have come back the other way and it isn’t a borderline decision for the council now because of this change.”
She said it was “totally legitimate” for owners meeting the previous threshold to switch to business rates but said: “Whether we’ve seen any new dodge? No we haven’t.”
Members of the performance scrutiny committee also raised concerns whether sufficient exeptions to the premiums had been identified and whether a discretionary exemption would be needed.
Of the 276 responses to the council’s four week consultation 67 per cent were in favour of a premium for long-term empty homes and 58 per cent supported an additional charge on second homes.
The council had suggested premiums of 100, 200 or 300 per cent, and asked for other suggestions, and said the 300 per cent charge was the most popular with 43 per cent supporting it for empty homes and 47 per cent on second homes.