How to apply for Council Tax Exemption For Landlords
It’s always a tragic day when the Government conjures up a new and way of squeezing extra pennies out of landlords.
The current landlord news which landlords are moaning a little about is paying council tax when a tenant moves out and the property becomes vacant.
What’s the problem, you ask?
When council tax exemption existed way back in the days, during the pre April 2013 era, landlords were entitled to a beautiful thing known as Council Tax Exemption. Most landlords applied for the Class C Exemption, which meant landlords were entitled to an exemption for up to 6 months while their property remained vacant and unfurnished.
Does it sound familiar?
The exemption made sense because it was particularly useful for that tricky stage in between tenancies, which usually lasts up to a week or two
and longer for landlords doing renovation work in between tenancies, which is also very common. At a time when the government are pushing for higher improvements and standards
in private rented properties.
Unfortunately, landlords will now have to dig a little deeper into their pockets and pay for council tax during those periods.
There’s still an opportunity to make some savings going forward, so listen up!
The new “Council Tax Support” Scheme. From 1st April 2013, the Government abolished council tax benefit, and has asked Local Authorities to replace it with a local scheme called “Council Tax Support”. Is it a new, positive new programme (not really).
From now on, local authorities are allowed to set discounted rates according to their individual budget requirements. Basically, this means they are able to charge whatever they want (something already sounds very Government’ish about this), whether it be a complete exemption (which in theory is still possible), the full 100% council tax or anything in between.
From what I’ve heard, there is no consistency between boroughs and no rules. Some boroughs are actually offering a month’s grace before council tax is payable and others implementing it straight away.
It’s all a bit pie in the sky, but there is a clear objective to charge landlords 100% council tax.
As a letting agent my experience is you wouldn’t count on the full exemption, but more of a discounted rate, and perhaps a grace period.
A month’s grace period would suit most landlords, because it shouldn’t take a landlord/agent longer than a month to find replacement tenants. A problem with the new legislation, besides the added expense, is that it may cause confusion and extra work for landlords with mass portfolios that include properties spanning across different parts of the country.
How much are they expected to pay? Who knows. Each borough will need to be contacted individually to find out at the relevant time.
From what I understand, one of the main reasons for introducing this new scheme is to help minimise the thousands of empty properties in the UK. Unless, it actually is all about the money, and not so much the vacant properties.
My tips as a letting manager in order to save some money and Council Tax Support.
1. Contact your local council tax office before your property is going to be empty and unfurnished.
Contact your local council tax office and find out if you’re liable for council tax. If so, enquire about any discounted rates/grace periods. They will also instruct you on how to get everything arranged. It usually involves completing a form and/or answering a few questions over the phone. Different councils, different rules.
2. Minimise vacant periods
This should already be second nature to landlords, but in light of this added expense, there’s another reason to keep vacancy periods to a minimum. Keep your properties vacant for as little time as possible to keep your overall cost down, including your personal council tax fee
by using a letting agent to minimise the period as they have constant access to tenants.
3.Budget for council tax
Many landlords automatically relied on Council Tax Exemption between tenancies, so they had no need to budget for paying those fees.
With this new “Council Tax Support” in place, it is now important to budget for the extra cost. Keeping a property vacant for a month may cost £185 in council tax fees.