Council tax policy for empty homes and second homes premium
1. Introduction and background
1.1. The following policy outline’s Leicester City Council’s approach to the levying of the empty homes premium and second homes premium.
1.2. Premiums were introduced by the Government from 1st April 2013 with a view to encouraging homeowners to occupy homes and not leave them vacant in the long term.
1.3. The legislation which introduced premiums is S11B of the Local Government Finance Act 1992 (inserted by the Local Government Finance Act 2012). Premiums could only be charged on long-term empty dwellings (empty homes premiums). For Council Tax purposes, long-term empty homes are dwellings which have been unoccupied and substantially
1.4 In April 2024, the empty homes premium was strengthened so that councils can charge the premium on homes that have been empty for more than one year (previously this was chargeable after two years).
1.5. From April 2025 councils will now be able to use new powers to charge a premium of up to 100% additional council tax on second homes within their area. For Council Tax purposes second homes are dwellings which are substantially unfurnished but have no resident (i.e. it is not someone’s sole or main residence).
1.6. The powers to change the empty homes or second homes premium (or both) is discretionary, and it is for each council to decide whether to charge the premiums in their local area and at what rate to the statutory maximum.
1.7. Certain classes of dwellings cannot be charged a premium, namely:
- A dwelling which would be the sole or main residence of a person, but which is empty while that person resides in accommodation provided by the Ministry of Defence by reason of their employment i.e. Service personnel posted away from home; and
- Dwellings which form annexes in a property which are being used as part of the main residence of dwelling in that property.
1.8. In 2018 the Rating of Property in Common Occupation and Council Tax (Empty Dwellings) Act allowed authorities to increase the levels of premiums on empty dwellings with effect from 1st April 2019 as follows:
- Dwellings left unoccupied and substantially unfurnished for 2 years or more, - from 1st April 2019 a premium can be levied up to 100%.
- Dwellings left unoccupied and substantially unfurnished for 5 years or more, - from 1st April 2020 a premium can be levied up to 200%; and
- Dwellings left unoccupied and substantially unfurnished for 10 years or more, - from 1st April 2021 a premium can be levied up to 300%.
1.9. Premiums are charged in addition to the 100% Council Tax payable on empty
1.10. The Government alongside local authorities have seen a rise in the number of empty homes together with a growth in second homes.
1.11. Inconsistencies in the legislation have also been identified whereby a premium can be avoided by the taxpayer merely furnishing an empty premises, when it would be a ‘second home’ which currently has a maximum charge of 100% with no premium.
1.12. In order to address these inconsistencies, and also to bring more dwellings into use, government has introduced sections within the Levelling Up and Regeneration Act 2023 (the Act).
1.13. This policy details the Council’s approach in the charging of premiums as allowed within new legislation.
1.14. The Council is hoping to achieve the following outcomes from this
- Taxpayers will be encouraged, through the implementation of the premium, to bring empty properties into use and revert the use of second homes to primary residences.
- The reduction of empty homes and second homes within the Council’s area in line with the Council’s Empty Home Strategy.
2. Empty Homes Premiums (from 1 April 2024)
2.1. Section 79 (1)(b) of the Levelling Up and Regeneration Act 2023 permits the Council to apply an empty homes premium after one year instead of two Section 80 of the Act provides that from 1st April 2024, a property can be charged an empty homes premium at 100% after one year, even if it became empty before 1st April 2024.
2.2. The Council implemented this with effect from 1st April 2024, and the premium levels are:
- Dwellings left unoccupied and substantially unfurnished for 1 year or more, - a 100% premium is charged.
- Dwellings left unoccupied and substantially unfurnished for 5 years or more, - a 200% premium is charged.
- Dwellings left unoccupied and substantially unfurnished for 10 years or more, - a 300% premium is charged.
The premiums are in addition to the normal charge on the property.
2.3 The legislation requires the Council to be mindful of any guidance or further regulation in relation to the implementation of the premiums and this is detailed in Section 4 of this policy.
3. Introduction of premiums for second homes (from 1 April 2025)
3.1. The definition of a second home for council tax purposes is a dwelling which has ‘no resident’ and is substantially furnished.’
3.2. Section 80 (2) of the Act inserts a new section 11C into the Local Government Finance Act 1992. This permits the Council to apply a premium on second The maximum council tax charge in these cases is a standard 100% charge plus a premium of 100% making a total council tax charge of 200%.
3.3. Unlike empty dwellings, there is no requirement for a property to have been used as a second home for a fixed period of time before the premium can apply.
3.4. The Council has determined to charge second home premiums from 1st April 2025 and has given the required 12-month notice was published.
3.5. The Act provides that a dwelling cannot be subject to both a second homes premium and an empty homes premium imposed under section 11B of the 1992 Act, and that an existing empty homes premium would cease to apply to a property which became subject to a second homes premium.
4. Exemptions from the premiums (empty homes premiums and second home premiums)
4.1. The Council Tax (Prescribed Classes of Dwellings and Consequential Amendments) (England) Regulations 2024 prescribes additional classes of dwellings in relation to which a billing authority may not decide to apply a higher amount of council tax on long-term empty homes and/or dwellings occupied periodically (second homes).
4.2. The Government has introduced the exemptions to the premiums which will apply from 1st April Further information details on how to apply can be found at Unoccupied homes. The Government guidance can be found at Guidance on the implementation of the council tax premiums on long-term empty homes and second homes - GOV.UK.
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Classes of Dwellings |
Applies to |
Definition |
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Class E |
Already applies to long term empty homes but extended to second homes from 1 April 2025 |
Dwelling which is or would be someone’s sole or main residence if they were not residing in job-related armed forces accommodation |
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Class F |
Already applies to long term empty homes but extended to second homes from 1 April 2025 |
Annexes forming part of, or being treated as part of, the main dwelling |
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Class G |
Long term empty homes and second homes |
Dwellings being actively marketed for sale (12 months limit) |
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Class H |
Long term empty homes and second homes |
Dwellings being actively marketed for let (12 months limit) |
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Class I |
Long term empty homes and second homes |
Unoccupied dwellings which fell within exempt Class F and where probate has recently been granted (12 months from grant of probate/letters of administration) |
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Class J |
Second homes only |
Job related dwellings. |
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Class K |
Second homes only |
Occupied caravan pitches and boat moorings |
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Class L |
Second homes only |
Seasonal homes where year-round, permanent occupation is prohibited, specified for use as holiday accommodation or planning condition preventing occupancy for more than 28 days continuously. |
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Class M |
Long term empty homes |
Empty dwellings requiring or undergoing major repairs or structural alterations (12 months limit) |
4.2.1 Class E and Class F – Annexes and Military Accommodation
Two mandatory exemptions from the empty home premium already exist:
- A dwelling which is or would be the sole or main residence of a member of the armed services, who has been provided with a dwelling as a result of such service.
- A dwelling which forms part of a single property with one or more other dwellings that is being used by a resident of one of the other dwellings as part of their sole or main
These exemptions will continue to apply for empty homes and, where relevant will also be applied in the case of second home premium.
4.2.2 Class G and Class H – Dwellings Being Actively Marketed for Sale or Let These exemptions apply to both Empty and Second Home Premiums.
The government has been clear that it is not the intention to penalise those who are genuinely trying to bring their dwelling back into use as a sole/main residence.
This exemption can apply for up to 12 months from the point from which the dwelling has first been marketed for sale or let. The exemption will end either when the 12-month period has ended, when the dwelling has been sold or let or when the dwelling is no longer actively marketed for sale or let. The following conditions will apply to this exemption:
- The same owner may only make use of the exemption for a particular dwelling marketed for sale once.
- The exemption may be used again for the same dwelling if it has been sold and has a new owner.
- The same owner may make use of the exemption for dwellings marketed for let multiple times, however, only after the dwellings has been let for a continuous period of at least six months since the exemption last applied.
There are several factors which the Council will take into consideration when assessing whether a dwelling is being actively marketed for sale or let. These include whether:
- The dwelling is clearly advertised for sale or
- The dwelling is being marketed at a fair market
- There are any artificial barriers on the dwelling preventing sale/let.
- The dwelling has an Energy Performance Certificate (EPC)
- The owner is taking any other reasonable steps to market the dwelling for sale or
When considering whether a second home or empty home is actively marketed, factors will be considered holistically. Whether a home may not meet one of the described factors it may still overall be considered to be actively marketed. Further factors may be considered in determining whether a dwelling is actively marketed for sale or let.
4.2.3. Class I – Probate
There is an existing council tax exemption for dwellings undergoing probate when a dwelling has been left empty following the death of its owner or occupant, it is exempt from council tax for as long as it remains unoccupied and until probate is granted. Following a grant of probate (or the issue of letters of administration), a further six months exemption is possible, so long as the dwelling remains unoccupied and has not been transferred by the executors or administrators to the beneficiaries or sold to anyone else.
Following a grant of probate the owners of the dwelling may require further time to decide how they will manage the home or sell it. The Regulations provide for a 12-month exemption to the premium for both second and empty homes. The 12-month period begins from the point probate is granted or letters of administration have been issued. This runs concurrently with the six-month exemption.
This exemption will run for 12 months or until the dwelling has changed owner by being sold.
4.2.4. Class J and Class K– Job Related Dwellings and Caravan Pitches/Boat Moorings
Generally, a dwelling would be classed as a job-related dwelling where it is a dwelling provided by a person’s employer for the purposes of performing their work. Examples include headteachers for boarding schools who are required to live in school accommodation, or certain care workers who need to live on site to carry out their role.
Class J exemption will not apply to cases where someone chooses to have an additional property to be closer to work while having a family home elsewhere or where an individual is posted to a new location but maintains their previous address.
There are already provisions which ensure that in certain circumstances these dwellings receive a 50% council tax discount. The government does not intend to change the discounts which these dwellings receive. The exemptions mirror the provisions of these discounts to ensure these dwellings continue to receive these discounts.
4.2.5. Class L – Seasonal Homes
The Council recognises in some cases that certain dwellings may have restrictions on them which means that the dwelling could not reasonably be occupied as a permanent residence. It is right that these dwellings should not be subject to a premium when these dwellings could not be used as a permanent residence.
In applying this exemption, planning restrictions need to be considered which explicitly set out that the dwelling cannot be used as a main residence. For example, where this is purpose-built holiday accommodation which can only be used as holiday accommodation.
In addition, this exemption provides for dwellings which have planning restrictions whereby they cannot be occupied for at least 28 continuous days in a year. In some cases, it may be decided that the dwelling with this restriction is the person’s sole or main residence. In this scenario the dwelling could not be subject to the premium as it cannot apply to a main residence.
4.2.6. Class M - Major Repairs
In some cases, a dwelling may require major repair work before it can be occupied. Class M applies for a vacant dwelling which requires or is undergoing major repair work to make it habitable, or structural alterations.
Where a dwelling requires or is undergoing major repairs or is undergoing structural alteration it may be exempt from the empty home premium for up to 12 months.
Where major repairs are completed in less than 12 months, the exemption will still apply to the dwelling for up to six months or until the end of the 12 months whichever is sooner.
This exemption only applies on empty homes and not second homes. This exemption cannot apply again unless the dwelling has been sold. If the dwelling is substantially furnished and becomes a second home without a resident, then this exemption will end.
The exemption will be applied at any time after the property has been empty for 12 months, so long as we are satisfied that the necessary repair work is being undertaken. As with other exemptions to the premiums, the Council will require the taxpayer to provide evidence as required to support their application.
4.2.7. Holiday lets/serviced accommodation Holiday lets are valued for Business Rates if:
- In the last 12 months the property has been available to let commercially for short periods of at least 140 nights; and
- The property will be available to let commercially for short periods of at least 140 nights in the next 12 months; and
- In the last 12 months the property has been let commercially as self-catering accommodation for short periods of 70 nights or more
Holiday lets will initially need to be charged council tax for at least 140 days. The property can only be assessed for business rates once all the above criteria are met.
The Valuation Office Agency (VOA) will decide whether your holiday let should be listed for business rates or council tax. This decision is not made by us.
If you meet the above criteria you can ask the VOA to move your holiday let from Council Tax to Business Rates.
Please note you will still have to pay the full council tax charge including a second home premium whilst your application is being processed by the VOA. The VOA may decide to backdate a decision to move a property into the business rating list.
5. Taxpayer circumstances
5.1. There may be circumstances where the implementation of these changes may cause exceptional hardship to a taxpayer. In such cases, the Council will consider application for a reduction under its Section 13a (1) (C) Local Government Finance Act 1992 Council Tax Discretionary Policy. Our policy can be found at Council tax discretionary relief policy
5.2. If a hardship application is received it will be considered on an individual case basis
6. Legislation
6.1. The legislation that covers this policy and the recommendations made is as follows:
- S11a and S11b of the Local Government Finance Act 1992
- S11c of the Local Government Finance Act 1992 (as introduced by the Levelling Up and Regeneration Act 2023).
- The Levelling UP and Regeneration Act 2023; and
- S13a (1) (C) Local Government Finance Act 1992 (reduction in liability)
- The Council Tax (Prescribed Classes of Dwellings and Consequential Amendments) (England) Regulations 2024
6.2. Due to changes in legislation, the Council will make changes to this policy should there be changes in legislation.
7. Finance
7.1. Any amount of premium received with be part of the Council’s Collection Fund and will be shared between the Council and Major Precepting authorities in line with their share of the Council Tax.
7.2. Any reduction granted under S13a (1) (c) will be financed through the Council’s general fund and do not form part of the Collection fund.
8. Notification
8.1. Where a taxpayer is granted an exemption, a revised demand notice will be issued. Where an exemption is applied for but not granted, the Council will provide a notification of its decision.
9. Appeals
9.1. Appeals against the billing authority’s decision may be made in accordance with Section 16 of the Local Government Finance Act 1992.
9.2. In the first instance the taxpayer must write to the Council outlining the reason for their appeal. Once received the council will then consider whether any additional information has been received which would justify a change to the original decision and notify the taxpayer
9.3. Where the taxpayer remains aggrieved, a further appeal can then be made to the Valuation Tribunal. This further appeal should be made within 2 months of the Council’s decision not to grant any reductions. Full details can be obtained from the Council’s website or the Valuation Tribunal Service website.
10. Fraud
10.1. The Council is committed to protecting public funds and ensuring that premiums are correctly charged.
10.2. A taxpayer who tries to reduce their Council Tax liability by falsely declaring their circumstances, providing a false statement or evidence in support of their application, may have committed an offence under the Fraud Act 2006.
10.3. Where the Council suspects that such a fraud may have been committed, this matter will be investigated as appropriate and may lead to criminal proceedings being instigated.
11. Complaints
11.1. The Council’s complaints procedure will be applied in the event of any complaint received about this policy (complaint procedure is available on the Council’s website).
Date: 6 February 2025