Why taxing empty properties does not work!

One argument used to encourage the use of empty properties is to increase council tax rates. But as the following extract shows this does not always work!

There is something odd about Kensington and Chelsea. Across England, the number of homes left empty for six months or more fell by more than a third between 2006 and 2016, and in London it was down by a half, but in the west London borough it increased.

Rising house prices and rents, combined with changes to council tax rules, have made it unappealing for most people to keep a property empty. But even the prospect of collecting £10,000 a month from a tenant is not enough to encourage some of the country’s richest owners of empty homes to let people in.

In the face of such wealth, attempts to penalise owners of unoccupied properties lack teeth. Since April 2013, councils in England have been allowed to charge a premium of up to 50% on council tax after properties have been left empty for two or more years.
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In Kensington and Chelsea it means the owner of a band H property – any home that was worth more than £320,000 in 1991 – would face a surcharge of just over £1,000 this year. Since April, councils in Wales have been allowed to levy a 100% surcharge, but a doubling of the bill is unlikely to move a millionaire to action.

https://www.theguardian.com/society/2017/aug/01/empty-homes-normal-rules-do-not-apply-to-super-rich-in-london

Of course to get around any extra charges we imagine that wealthy owners would stay there for a while or of course they could let them out to other wealthy individuals as holiday accommodation. So its pretty well impossible to use the tax system to stop homes from being left empty or not used for residential purposes.

Far better to bring in strict rules on who can purchase properties and for what purpose! But that would interfere with the free movement of capital and we cannot have that!

Holiday lets in Cornwall – how many?

One of the factors pushing up house prices in Cornwall is that using a residential property for a holiday let can result in a good return on the investment. Very often purchasers of homes for holiday lets have more resources than those looking for a house to live in, making it more difficult for them to afford a property.

But how many holiday lets are there in Cornwall?

Luckily ‘Hometogo’ states how many properties there are listed. Now we cannot know if all holiday lets are included but the figures give an idea.

We have: 10,462 houses and 2,464 apartments, a total of 12,926 properties. Thats about 5% of the housing stock.

Now some of these could also be holiday homes let out for part of the year, so simply adding on second homes might exaggerate the total, but we will come to that later!

Increase in pensioner households pushing up demand for housing – where is the evidence?

A couple of weeks ago we examined a claim made by Professor Danny Dorling to the HOUSE OF LORDS Select Committee on Economic Affairs, when they were obtaining evidence for their report Building more homes. Professor Rowthorn made a similar assertion.

27. Professor Danny Dorling from the University of Oxford argued the fact people were living longer was having the biggest effect on housing demand.27 Professor Robert Rowthorn from the University of Cambridge said longevity may affect demand for housing more than immigration: “longevity may mean more people living on their own, for example, and more single-person households. Immigration might not mean that in the same way.”

HOUSE OF LORDS Select Committee on Economic Affairs, 1st Report of Session 2016–17, HL Paper 20, Building more homes

We looked at the data for Cornwall to see if there was any evidence to back up the claim and in fact found none.

Now it is always a good idea to check evidence, so we thought we would look at the figures for England.

What did we find?

In 2001 there were 20.45 million households broken down as follows:

Pensioner 4.85 million (of which 2.94 were single person)
families 9.17 million
Single person 3.21 million
Lone parent 1.93 million
Others 1.29 million

The 2011 census revealed 22.06 households, an increase of 1.61 million.
Now if professor Dorlings claim was correct we would expect a significant part of that increase due to more single person pensioner households.

But in fact the number of pensioner households actually fell to 4.58 million and single pensioner households fell to 2.73 million!

So rather than changes in pensioner households being a significant factor in housing demand, it turns out that an increase in population (some due to natural change some due to immigration) was the cause of an increase in housing demand.

As always when you see a claim from anyone – check the stats!

The broken housing market – houses for income potential not for housing need!

An advert caught our eye!

Large detached barn conversion with income potential. Set in beautiful landscaped gardens of approximately one third of an acre
Part reverse layout with large kitchen family room on the first floor. Two driveways, both with off road parking for many vehicles

LOCATION
The Granary is located in the heart of the hamlet of Helland, just a short distance from Hellandbridge and the Camel Trail. The main A30 trunk road is only a short drive away giving easy access to the west of the county and Exeter to the east is only an hour’s drive. The larger towns of Bodmin and Wadebridge and their large range of amenities are only a few miles away and both the north and south coasts are only approximately 20 minutes away.

https://homes.trovit.co.uk/listing/helland-bodmin-cornwall.j4TQ1tt0p

Reports on the housing market invariable focus on supply rather than demand. The use of housing for income potential seems not to be recognised as an issue. Is this a reflection on the fact that many of those producing the reports are themselves beneficiaries of such use!

Electric cars – good news and also bad news!

The news that the Government intends to ban the sale of diesel and petrol cars by 2040 was greeted in some quarters as good news, moving away from unsustainable fossil fuels to more sustainable fuel sources.

On the surface this sounds like a good idea but and there are some big buts!

Tailpipe emissions will be reduced but not non-tailpipe emissions, where particulate matter is a problem;

Will there be sufficient renewable energy to maintain the fleet of vehicles?

The rare metals in lithium batteries are produced only in inconvenient places. More than 85% of the world’s supply comes from China. How dependent will that make us upon them? Mining these materials is far from environmentally friendly. Each tonne processed produces 2,000 tonnes of toxic waste, laced with ammonia and hydrochloric acid. Much is dumped into landfill, decimating agriculture and poisoning drinking water. The very manufacture of an electric vehicle can create a large carbon footprint, offsetting global warming benefits. Then there is the issue of safe disposal of obsolete batteries.. https://www.theguardian.com/technology/2017/jul/27/switch-to-electric-cars-clean-air-uk

Congestion will still be a problem, indeed if motoring costs were to fall, traffic levels would probably increase;

We already have significant land areas used for roads, the likelihood is that more land would end up being used for road space.

The fundamental problem is that we are too dependent on car use which has a range of negative impacts. Transferring to electric cars in itself will not resolve this. Indeed it could give the false impression that we can proceed with business as usual.

What we need to recognise is that using electricity from renewable sources is only part of the policy suite needed to create a more sustainable transport system. We need to reduce overall car use at the same time. Only then will we get the full benefits of electric cars!

We need to conserve land – its a scare resource – not built on it!

Land for sale in Tresavean, Lanner TR16, Guide price £60,000

Tucked away in a very quiet position, this presents an interesting chance to obtain a piece of land that should offer much potential.

Ideal as building land, we would strongly stress that no permissions have been granted and neither have the local authority been contacted regarding this.

Ideal for speculation, it would provide a lovely setting and we are given to understand that some services are nearby. We are in the process of obtaining a photograph and dimensions of this piece of ground.

Read more at https://www.primelocation.com/for-sale/details/44450992#AUCLjDjiqd6ymmcW.99

Land speculation – just carry on building!

Land for sale in Tresavean, Lanner TR16, Guide price £60,000

Tucked away in a very quiet position, this presents an interesting chance to obtain a piece of land that should offer much potential.

Ideal as building land, we would strongly stress that no permissions have been granted and neither have the local authority been contacted regarding this.

Ideal for speculation, it would provide a lovely setting and we are given to understand that some services are nearby. We are in the process of obtaining a photograph and dimensions of this piece of ground.

Read more at https://www.primelocation.com/for-sale/details/44450992#AUCLjDjiqd6ymmcW.99

Just what we need a bit of speculation in land!