For those foreign property owners who leave their homes empty, they could find themselves paying more tax if the Mayor of London has his way.
The Mayor of London, Sadiq Khan as requested that the government agree to increase the council tax bill in those London boroughs where high valued properties are empty.
This request comes after a report was carried out last year to understand the role that overseas investment plays in the property market of London. The London School of Economics and the University of York carried out the research and they consider the how overseas investment contributes to the new housing supply along with any concerns that the public has about those homes that are being left empty after they are purchased by overseas buyers.
It was found that the number of empty properties was relatively low but there were more empty homes in those locations that are upmarket and considered to be prime areas.
Therefore, the Mayor has requested that the Government supports the proposed changes to increase council tax on empty homes above the current 5% level. He stated that councils should have the ability to increase council tax to a rate that is meaningful to the point where it would encourage owners to occupy their properties. It was also suggested that the increase could also help to enhance investment in affordable homes in an attempt to deal with the housing crisis. He made a point of mentioning the Westminsters top Band H, where properties can be worth millions of pounds but due to the empty homes levy would be no higher than 668 per annum.
London is facing a real housing crisis and this challenge alone will not be sorted out overnight. Therefore, a solid plan needs to be put in place in order to deal with the issue.
The Mayor believes that even one empty home is one too many and that is why he wants to form relationships with boroughs in an attempt to stand up for Londoners by asking the government to charge a higher rate of council tax at rate that really does help to make a change.
Many of the boroughs have made their support clear and are now asking for increased flexibility to be provided to local authorities so that they can have a greater control over the amount that can be levied on properties that are empty.
While this would send out a hard hitting message it would create extra money that can be re-invested so that it can benefit those residents who live in these areas. There is no a large push and an increase in support for affordable housing to become available in the capital.
This suggestion from the Mayor should be considered by the government. They certainly need to consider what is working and what is not working in order to reduce the number of empty properties currently located in the city.
Fletcher Day are commercial and residential property lawyers in London.