Housebuilders’ body says council tax charges are affecting 88% of small firms
The Home Builders Federation (HBF) has complained of inconsistent application of council tax, saying that it threatens development.
Almost half (45%) of local authorities charge developers full council tax on newly built homes awaiting sale or occupation, according to a new report published by the body, which represents the housebuilding sector.
The ‘Licence to Bill’ report, published in partnership with Paragon Development Finance, argues that taxing homes that have yet to be sold ignores the reality of bringing new homes to market and adds upfront costs for smaller builders.
The HBF says that factors outside of a developer’s control, such as delays in utility connections, labour availability or materials shortages can mean homes remain fundamentally unfinished despite being deemed “substantially complete” for tax purposes.
In some instances, this means council tax being levied on homes that remain uninhabitable, lacking utilities, fixtures or fittings.
The HBF says that 88% of SME housebuilders report that council tax charges are affecting their cash flow.
It urged the government to introduce a clear and consistent national framework for the application of council tax to new homes, suggesting that properties should only be judged substantially complete when a building control completion certificate is issued.
It also suggested the government should re-instate a time-limited Class C council tax exemption for newly built dwellings that are unoccupied and substantially unfurnished, and exempt new builds from the empty homes premium and second homes premium for two years from the date of completion.
“Government attempts to increase housing supply are being thwarted by huge increases in taxes and policy costs that are making many sites unviable while a lack of affordable mortgage continues to suppress demand,” said Neil Jefferson, chief executive of the Home Builders Federation.
He said the additional burden of council tax can “make the difference between a site being viable or not”, insisting that these properties were “not long-term empty homes, second homes or homes deliberately withheld from occupation” but “new homes being brought to market in challenging circumstances, often by the smaller businesses Government has repeatedly said it wants to support.”
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