Easy targets – Who is in the Chancellor’s crosshairs?
While Phillip Hammond lies back on his deckchair during his summer vacation, he is probably dreaming up revenue raising opportunities in the upcoming November budget. The pressure is on, given the recent disastrous election campaign and political considerations will certainly play a big role when setting budget policy especially given previous political mistakes such as the self employed National Insurance backtrack.
Whilst I prefer to remain firmly as a tax practitioner and do not align myself as a political commentator, there has been quite a lot of noise about empty properties in the press of late.
Research showed that last year there were some 19,845 empty homes in London with another estimated 180,000 houses sitting empty in the rest of the country. Whilst these numbers have fallen over the last 10 years, the number of idle houses in more affluent areas such as the west London borough of Kensington and Chelsea has doubled.
Whilst suggestions have been made to raise council tax for empty home owners, with the top band of local council tax at just over £2,100 it is unlikely that this would be a major disincentive to owners of empty houses with seven figure price tags.
The chancellor in a bid to capture the political centre ground and win back votes lost to Labour, may cast his eyes to two other commonwealth counties and consider introducing a new vacancy tax on empty homes similar to the one currently in use in Australia. To try and influence policy and battle rising house prices and rentals in Sydney and Melbourne, an annual 1 percent tax on the value of vacant properties has been levied. At these rates and given the values of some of these properties, it would make even very wealthy home owners think twice about not renting their properties.
If the new tax does come into force the government will need to look carefully into monitoring and enforcing the tax, to avoid empty home owners circumventing the system. The government will need to learn from the mistakes of the mis-implementation of this type of tax from countries such as France, where the amount of empty home owners paying vacancy tax dropped dramatically after the first year of implementation as empty home owners were able to find loopholes, leading experts to conclude the tax was ineffective.