Agenda item

To submit a report by the Director of Function (Resources)/Section 151 Officer.

The report of the Director of Function (Resources)/Section 151 Officer reviewing the operation of the Council Tax Premium on Second Homes and Long-Term Empty Properties was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that a decision was made to increase the higher amount of council tax (called a Council Tax premium) which would come into effect from 1 April 2019.  From this date, the full Council agreed to set the Council Tax premium at 100% of the standard rate of council tax for long-term empty dwellings and at 35% for dwellings occupied periodically, usually known as second homes.  He noted that during this year a number of properties has ‘flipped’ from being registered to pay council tax to business rates which results in the owners not having to pay any rates.  The Council has written to Welsh Government to review the existing regulations of taxation in order to reduce the number of homes being registered for business rates but WG has disregarded the request as they considers that this is not an issue.  The Portfolio Member for Finance also called for WG to use their powers and amend the land transaction tax to ensure that the level is higher for second homes and to consider a tourist tax as is in place in other parts of the world to draw funding to address the pressure on services within local authorities that sees their population increasing especially during the summer months.  He further noted that self-catering facilities being eligible for Small Business Rate Relief often results in no contribution into the local authorities.

The Portfolio Member for Finance said that the decision of the Executive is not to increase the Council Tax Premium for Second Homes and Long-Term Empty Properties for the next financial year 2021/2022 but it is an intention to increase the premium for second homes to 50% from April 2022.  He said that continued pressure needs to be put on Welsh Government to review the existing regulations and to introduce new methods of taxation in order to reduce the number of second homes on the Island and to provide additional funding to help support local projects aimed at helping the young people of Anglesey to be able to buy or rent their own home on the Island.

The Director of Function (Resources)/Section 151 Officer reported that the purpose of the report was to review the Council Tax premium since the full Council’s last decision of 27 February, 2019 and also having regard to the impact of the Covid-19 pandemic on the Council’s Council Tax base and movements from the Council Tax Valuation List to the Business Rating List and in particular for second homes/holiday lets.  He said that there has been an increase in empty homes during the pandemic but this is a result of people unable to renovate/sell their properties.  The number of second homes on the Island has stayed the same at a consistent level despite the fact that 221 properties have transferred to business rates and have been removed from the Council Tax Valuation List between April – October this year.  He further said that the number of properties paying the standard Council Tax had fallen.  Properties in Band C and above were becoming second homes but these loss in numbers were being partly offset by the Authority building social housing.  However, the new properties tended to be in Bands A and B and this has resulted in an erosion of the standard council tax taxbase. The movement of properties from Council Tax to Business Rates has resulted in an estimated reduction of £700,000 in Council Tax revenue, although part of this sum relates to refunds paid back to taxpayers for any Council Tax paid relating to period after the effective date of transfer of the property. It was also said that following the increase from 25% to 35% on the premium for second homes has not resulted in a large number of people refusing to pay the increase with only a few appeals been dealt with nor had it resulted in an increase in arrears. During the Covid-19 pandemic there has been an increase in owners of second homes appealing that they are unable to come to their second homes and requesting an exemption from the premium for the period of the lockdown.  The Council’s view was that being unable to travel to their property was not a valid reason to grant an exemption and all appeals have been refused.  This has been accepted by the vast majority and they have continued to pay the premium charged.

The Director of Function (Resources)/Section 151 Officer further reported that the Council approved a policy for implementation of two schemes to support first time buyers onto the housing ladder, to be funded from a proportion of the Council Tax Premium from both long term empty properties and second homes. 

The Portfolio Member for Housing Services said that the two schemes referred to is a grant to help first time buyers to purchase and renovate an empty home and an equity loan to help first time buyers to afford a property.  It is evident that the scheme has been successful as the demand surpassed the funding allocated by the Council and has seen young people being able to purchase a home in their local communities.

Members of the Executive reiterated the need to put pressure on Welsh Government to review the existing regulations and to introduce new methods of taxation to reduce the number of second homes on the Island which is causing the young people of Anglesey unable to afford a home in their own communities. 

·           To note the content of the report reviewing the operation of the Council Tax Premium since the Isle of Anglesey County Council’s decision on 27 February 2019 to increase the Council Tax premiums from 1 April, 2019 to 100% for long term empty property and 35% for second homes;

·           To note the impact of the Covid-19 pandemic on the Council Tax base and Council Tax premiums;

·           To continue to put pressure on Welsh Government to review the existing regulations and to introduce new methods of taxation in order to reduce the number of second homes on the Island and to provide additional funding to help support local projects aimed at helping the young people of Anglesey to be able to buy or rent their own home on the Island;

·           To announce the intention to increase the premium on second homes to at least 50% from April 2022;

·           That additional resources will be allocated to the Resources Function in order to ensure that all property owners who should pay the premium are identified and made to pay the tax in full;

·           That the balance of the additional funding generated from increasing the premium will be directed towards schemes that will help local people to be able to afford to buy or rent a property on the Island;

·           That the Council will undertake a full consultation on its intention to increase the premium on second homes to 50% and its additional schemes to help local people, with the residents of Anglesey, owners of second homes on the Island and operators of self-catering accommodation, between April and June 2021 with the final decision on the level of premium to be taken by the Executive in September 2021.