B1592 – Renovation Incentivization Bill 2020

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Andrew97
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B1592 - Renovation Incentivization Bill 2020, TSR Labour Party



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Renovation Incentivization Bill 2019

An Act to increase the social housing supply by creating financial disincentives to leave a property empty long term, as well as create incentives to refurbish the empty property.



BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

1. Empty Dwelling disincentives
(1) Class C council tax reduction for empty properties must not last more than one month; and
(2) Council tax must rise to 150% of the regular amount for that property if the property has been empty more than 12 months; and
(3) Councils may charge up to 200% of the regular amount for that property if the property has been abandoned for 24 or more months.

2. Bona vacantia reclaimation
(1) Where ownership of a property is transferred to the Duchy of Cornwall or the Duchy of Lancaster, the local council shall have the right to claim the property without charge; where
(2) The council is reclaiming the property to use as social housing.

3. Incentivising renovation
(1) The New Homes Bonus grant will now apply to properties that have been unoccupied for longer than 5 years but have been suitable for dwelling again; and
(2) VAT Notice 708 will be amended to reduce the VAT reduction for building work to bring long-term abandoned homes back into a state of repair from 5% to 0%.

4. Commencement, Short Title and Extent
(1) This bill shall come into force on 6th April 2022; and
(2) This bill may be cited as Renovation Incentivization Act 2020; and
(3) This bill extends to the United Kingdom of Great Britain and Northern Ireland.

NotesMr Speaker, there are over 600,000 empty homes in Britain today, with over 200,000 classed as long term unoccupied, representing £50bn of unutilised potential. While Britain goes through a housing and cost of living crisis we believe that this is unacceptable.

With this bill, we will increase financial penalties for leaving properties empty and move the date to which they apply forwards from 24 months to 12 months. This bill will also give local councils to take ownership of Bona vacantia properties without a cost where they are to become social housing. Finally, it creates incentives to private developers as well as local authorities to refurbish abandoned and unoccupied properties

1) This firstly prevents empty homes council tax discounts. A discount is allowed for a month to facilitate people moving in or out of the property. At the moment councils have the option to increase the council tax of a property by 50% if the property has been empty for two years. This bill reduces that to one year and makes the 50% extra mandatory. It also allows councils the option to charge up to 200% for properties that have been left empty longer. This extra revenue is not only a deterrent for empty homes but also a revenue stream that will pay for the increased number of home reclamations that this bill would result in.

2) This section relates to properties that are abandoned due to the occupant(s) dying with nobody to pass the property onto. This gives councils the option to claim them for social housing use. This could cost up to 5.1m per year if every council claimed every property.

3) This creates some incentives for renovating abandoned properties, both for councils using the EDMO system or by private companies.

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Theloniouss
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Looks sensible
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Miss Maddie
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Massive nay!

The class C exemption exists for many cases. If you move out of a house and the people moving into your old house are delayed/cancel, you could be left with a house on your hands for longer than a month. It's unfair to force these people to pay council tax. The class C exemption needs to be longer. Two thirds of all empty homes being occupied within six months demonstrates that difficulties changing hands is commonplace. The long-term emptiness is the only problem worth trying to fix and this bill does not do that. This bill penalises 400,000 short-term empty houses and ignores the issues there are with the 200,000 long-term unoccupied houses.
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Miss Maddie
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(Original post by Theloniouss)
Looks sensible
Imagine a scenario where a family is moving house, the people taking their old house are delayed moving (20% of all house movings are delayed) is it fair to force a family to pay council tax on two houses? The current 6 month limit exists under a class C exemption to allow for situations like that. Shortening 6 months to 1 month imposes extra tax bills on people without reducing empty properties. The big story is 200,000 houses being left empty for years. This bill doesn't address that.
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04MR17
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PLEASE spell it with an S !
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Moonbow
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I am not sure on this one. I can see reasoning behind it but I’m not sure this is the best way to tackle the issue. It would be great in some cases, and be awful in others.
I’ll have to abstain.
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04MR17
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First of all there's quite a bit of terminology here that your average joe (me included) won't understand. The notes could have done a better job at explaining or linking to things that would help the house understand exactly what this bill does.

I like the initiative behind this bill and with some amendments I may support it in the lobby.

1.1 I don't like 1 month, I'd happily extend it to 3 though. Plenty of student landlords (for instance) will not have the property occupied over the summer period, but have tenants living there for the duration of the academic year. Nice idea, too extreme in implementation.

Why is there variance between 1.2 and 1.3?
What is the difference between a property being empty and abandoned? Why isn't this defined?
Why must the council tax be increased in 1.2 but may be increased in 1.3? I'd prefer to see may on both of these clauses.


Section 2 I like the look of, I'd prefer to have a central government override available here though. Something like the SoS will have the power to withhold the property from the local council if they see fit.

Section 3 - is "suitable for dwelling" decided by environmental health? There are a couple of vague terms in there which I think need defining. Also is there any evidence to say that these measures are likely to work?
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Theloniouss
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(Original post by Miss Maddie)
Imagine a scenario where a family is moving house, the people taking their old house are delayed moving (20% of all house movings are delayed) is it fair to force a family to pay council tax on two houses? The current 6 month limit exists under a class C exemption to allow for situations like that. Shortening 6 months to 1 month imposes extra tax bills on people without reducing empty properties. The big story is 200,000 houses being left empty for years. This bill doesn't address that.
Admittedly I have no idea how long it takes to move house.

We can just extend that to 3 months or something? Anyway, the rest of it seems sensible
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TheDefiniteArticle
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I like the principle - we should absolutely be taxing empty residential property, and I'd proposed a similar Bill prior to the last Great Repeal - but I'm not sure about the way this has been drafted. A few comments, then, about the drafting, and otherwise:

1) It's inappropriate to use "; and" formatting outside the context of a list of cumulative conditions to be met for a particular provision to apply. Change this in sections 1, 3 and 4.
2) Section 2 doesn't need subsections.
3) Having this as a standalone piece of legislation seems clearly worse than simply amending existing legislation on council tax (in England, Wales and Scotland, that's the Local Government Finance Act 1992; I'm afraid I know nothing about council tax rules in Northern Ireland so the authors would have to research that themselves). With that in mind, has the impact on the different rules in the devolved legislatures been considered? Would the Labour Party be able to explain this?
4) Miss Maddie also has a reasonable point regarding the Class C exemption. It would be ideal to have the impact assessed on an annualised basis.
5) From my own previous research, my understanding is that the proceeds of any change of this nature would be minimal (well under £1bn/year nationwide). Has the Labour Party reached the same conclusion, and is that the reason for the lack of costing?
6) Given s1(3) is written as a power rather than an automatic provision, would the authors be willing to offer any guidance on whether they consider there to be any circumstances under which that power ought not be exercised, and if not, why it isn't phrased equivalently to s1(2)?
7) 'Property' should be defined for the purposes of s2. I'm assuming it's not intended in a broad sense, to extend to anything legally capable of being owned, but is it intended to extend to commercial property? Is it only freehold interests, or does it extend to leasehold/commonhold interests in England and Wales, and feuhold in Scotland?

Thanks.
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El Salvador
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It seems there are multiple issues with the bill which others have raised.
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CatusStarbright
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Initial thoughts: that American spelling pains me.
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CatusStarbright
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I can't really back this. If you want to deter people from having second homes then this won't work as they can probably afford the increase without too much trouble. It will be the people who have empty homes more temporarily or for legitimate reasons (e.g. difficulty selling it) that will suffer.

I'm also confused about s1(1) since as I understand it the discount (if any) for an empty home is decided by local councils. We must also not forget that council tax is supposed to be to give councils money to provide services to residents, e.g. bin collection, library services etc., so the logic of a discount for empty homes is sound.

If you want to tax the rich, just do it a better way is probably what I'm saying.
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TheDefiniteArticle
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(Original post by CatusStarbright)
I can't really back this. If you want to deter people from having second homes then this won't work as they can probably afford the increase without too much trouble. It will be the people who have empty homes more temporarily or for legitimate reasons (e.g. difficulty selling it) that will suffer.

I'm also confused about s1(1) since as I understand it the discount (if any) for an empty home is decided by local councils. We must also not forget that council tax is supposed to be to give councils money to provide services to residents, e.g. bin collection, library services etc., so the logic of a discount for empty homes is sound.

If you want to tax the rich, just do it a better way is probably what I'm saying.
What if the goal of the policy is not to prevent people from owning vacant property but rather to internalise the externality of them doing so?
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Aph
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This whole bill pains me in the way it has been drafted. But anyway.

You need to define “empty”, if I live there for a day is that not empty then?

You need to cost this. I’m also not sure if the council should get properties which are say £500,000 detached estates for free to use as social housing. That’s seems deeply stupid to me.

Otherwise, please, please, please write the bill as a bill and not as a motion. If you need help message me and I’ll show you how to write bills like this.
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Napp
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No because you put a 'z' where, by gods will, only an 's' may ever be.

On a slightly more serious note, whilst i fully agree that something needs to be done apropos the housing shortage i'm not sure de facto fining people for owning a house is the way to go about it. That combined with the legion issues raised by other members.

As a side note though, although please bear in mind local government is not quite my field of expertise, is this not entirely a problem of the councils making? Is it not on them for not building more homes...? This being the case should we not start by penalizing these authorities before robin hooding the middle classes?
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Rakas21
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Mr Speaker, sections 1 and 2 are of concern to me in their present form and if the cost/benefit exceeds £0.1bn the convention in the Mhoc is that it should be costed.

Primarily Maddie raises a good point regard section 1 (and indeed i actually have no issue with property being empty for as long as 12 months) however my main concern given the vague and poorly written nature and accompanying notes is clearly section 2 which makes it sounds like this bill gives license to theft by the state. It is actually extremely rare that no relative (even if it is a more distant niece ect..) exists.
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Unown Uzer
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(Original post by CatusStarbright)
I can't really back this. If you want to deter people from having second homes then this won't work as they can probably afford the increase without too much trouble. It will be the people who have empty homes more temporarily or for legitimate reasons (e.g. difficulty selling it) that will suffer.

I'm also confused about s1(1) since as I understand it the discount (if any) for an empty home is decided by local councils. We must also not forget that council tax is supposed to be to give councils money to provide services to residents, e.g. bin collection, library services etc., so the logic of a discount for empty homes is sound.

If you want to tax the rich, just do it a better way is probably what I'm saying.
It disincentivises people from buying multiple homes for investment, which is one major reason why people own multiple homes. Simply taxing the rich cannot deal with foreign homeowners who live outside the UK but own multiple UK homes.

I would support this bill if changes were made and it imposed a higher rate of tax on foreign buyers to discourage foreign buyers from buying homes for investment or as a means of storing money abroad and leaving these homes vacant.
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LiberOfLondon
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Nay!

Property👏rights👏are👏hum an👏rights!
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Miss Maddie
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(Original post by Theloniouss)
Admittedly I have no idea how long it takes to move house.

We can just extend that to 3 months or something? Anyway, the rest of it seems sensible
Out of the 600,000 empty homes, only 200,000 are empty for 6 months or more. Changing the exemption to 3 three months from the current 6 doesn't do anything. The class C exemption doesn't need to be changed. The bill should forget changing the exemptions and introduce a tax on houses being left dormant when not in the process of being sold, not lived in and not undergoing renovation/repair.
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Theloniouss
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(Original post by Miss Maddie)
Out of the 600,000 empty homes, only 200,000 are empty for 6 months or more. Changing the exemption to 3 three months from the current 6 doesn't do anything. The class C exemption doesn't need to be changed. The bill should forget changing the exemptions and introduce a tax on houses being left dormant when not in the process of being sold, not lived in and not undergoing renovation/repair.
That's a sensible idea, but aren't there obvious loopholes? People could just claim to be selling a house but not actually be selling it, for example.
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