Desperate councils are forcing families to pay double council tax on homes they are trying to sell as part of a crackdown on second homeowners, The Telegraph can reveal.
Since April, local authorities have been allowed to charge a 100pc council tax premium on unoccupied homes after just one year, instead of two. The higher tax has been introduced to drive second homeowners to sell up – but in reality, the shortened window is landing ordinary families with huge tax bills.
Critics said a lack of clarity in the new powers means councils are not required to refund households who have been unfairly dragged into the tax trap.
In one case The Telegraph spoke to a full time carer who was ordered to pay £3,000 after inheriting her late father-in-law’s property and struggling to sell up.
John Webber, of investment firm Colliers, said: “Clearly if someone is going to move house then it can take some time to do that.
“I don’t think it has been particularly well thought out given it was aimed at genuinely wealthy second homeowners.
Ms Webber added: “It’s unlikely that any of these councils are going to be better off. The reality is it’s like VAT on private schools. You will end up with less; people will find a way to dodge it; there will be less money coming into the public purse. All it will do is damage the local economy.”
Jill Veal, 66, from Southampton, saw the council tax bill on her property jump from £206 to £453 a month. The house was run as a buy-to-let, but Ms Veal said her last set of tenants had left the house in “squalor”.
She said: “All of the walls were black. It was like they had walked over them with boots covered in grease.”
Ms Veal and her husband Peter decided to refurbish and sell the property rather than continue as landlords – a process that took three months – but the slow housing market means she is paying double tax until the home sells.
She said: “I’m angry they’re doing this so underhandedly. We’re easy targets. I can understand holiday homes but we’re not trying to do anyone out of any money. It’s not our fault the council is bankrupt.
“I pay £3,500 a year but I have no streetlights, my green bin hasn’t been emptied in six weeks, and I have no kids in school.”
A Southampton City Council spokesman said 82pc of respondents to a public consultation held last year supported the move to charge empty double council tax after one year.
A senior source within the housing department said the change to the tax system would help plug the funding gap and keep council tax down.
Since 2021, six councils have issued section 114 notices, effectively meaning they have declared bankruptcy. Four in 10 local councils are at risk of going bust in the next five years amid a spiralling funding crisis, according to consultancy firm Grant Thornton.
“We have heard from homeowners that properties may need to be left empty for renovation projects, and others cannot be used all year round due to planning restrictions,” the government source said.
Michelle Bunyan, a 39-year-old investor from Stevenage, bought a property from a housing association before the pandemic with the intention of renovating and selling it.
At the time, the double tax would only kick in after two years. But Ms Bunyan found herself paying the premium after a matter of months because the property had been left unoccupied by its previous owners.
She said: “We were charged a higher rate than had we been living there. It was in such a state of disrepair – we had to do damp work on it and put in new bathrooms and a new kitchen. The garden was a jungle.
“Even without Covid it probably would have taken nine months. You couldn’t have put a tenant in there, it was so poorly kept. The housing association decided it would cost them too much to refurb it themselves.”
Scores of Telegraph readers have written to this newspaper claiming that councils have refused to waive the charge for houses that have been renovated and then sold.
Robert Salter, of Blick Rothenberg, a tax advisory firm, warned that many more homeowners would be caught out by the tax, despite not being the intended targets.
He said: “Councils are under real financial pressure. They don’t have to charge these premiums but if they can use it they will overwhelmingly look to do it.
“I do genuinely think with the state of the housing market a lot of people will be caught by this. It can often take 12 to 18 months to sell a property if, for example, you are trying to sell a house after a relative dies.”
Lucy George, 62, cares full-time for her husband, who is disabled. As a result, she pays 50pc council tax in her home local authority.
But when the couple inherited a property last year, they became liable for some £3,000 in council tax to Leeds City Council – despite putting it on the market immediately.
Fortunately the house was sold in May, so Ms George, who spoke using a pseudonym, only paid one month’s worth of extra tax.
She said: “Had the sale fallen through again and we had put the house back on the market we’d have had to find an extra £300 a month. It would have broken us financially.
“Leeds City Council were totally inflexible. We pay 50pc on our own property, so they should have considered it a write-off.
“The council said it would be discretionary and we would have to prove financial hardship, which we can’t really argue if we’re benefitting from the sale of the house.”
Stevie Heafford, of accountancy firm HW Fisher, said its clients were already being caught out in the same way. He said: “I am dealing with one property where probate came through in February, so six months have already gone by. The estate will end up paying the extra council tax.”
Mr Heafford said that the tax trap could also affect couples trying to move in together, where one party is unable to sell their house before the premium kicks in.
He added: “These people are not the intended targets of this legislation, it’s the fact it’s so rigidly written that’s catching people out.”
A spokesman for Leeds City Council said: “The council collects council tax from all empty and unoccupied properties to try and ensure they are brought back into use as soon as possible and help us meet the city’s significant and increasing housing demand.
“Homes which remain empty for significant periods can also waste important resources and in some cases attract crime and anti-social behaviour.
“We do recognise that circumstances can vary and we would invite anyone with any concerns about their council tax to get in touch to discuss any available options.”
The Department for Levelling Up, Housing and Communities was approached for comment.
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