Legislations and laws to consider with unoccupied properties
Buying property can sometimes be fraught with complications and unexpected hurdles, whether it be a first-time home, plot of land, second home or a vacant property. However, when it comes to purchasing an unoccupied property, there can be additional complexities that buyers should be aware of, before even making an offer.
We have highlighted just some of the obstacle’s buyers could face when looking to purchase an unoccupied property.
Council exemptions and premiums
Every local council will have slightly different rules in place when it comes to charging Council Tax on unoccupied properties. A May 2020 briefing paper from the House of Commons Library, states that local authorities in England, Scotland and Wales have discretionary powers as to what level of Council Tax they can implement on unoccupied properties, whether it be a full Council Tax payment, Council Tax charged at a premium or a discounted Council Tax rate, all of which can depend on the type of property and how long it has been vacant for. Since 2013, local authorities in England have been able to charge a maximum premium of 50% on properties that have been unoccupied for at least two years. The new Empty Dwellings Bill which was enacted in 2018, now allows councils to charge a maximum level of 100%.
In some instances, certain councils will allow for a short grace period before charging Council Tax, after a buyer has purchased an unoccupied property. It is advised that before purchasing an unoccupied property, you contact your local council to find out what Council Tax band your unoccupied property will come under, and if you are eligible for a discounted rate.
If you currently own an unoccupied property, you may be aware of an EDMO (Empty Dwelling Management Order). EDMO’s can give local councils across England and Wales the legal power to possess a private unoccupied property that has been vacant for at least two years (according to the latest briefing paper by the House of Commons Library). The council do not have the right of ownership to the property, but they are entitled to enter, make any necessary upgrades, manage the property and prevent the owners from having access to the property once the EDMO is in force.
EDMO’s are rare and are usually only enforced when a property has been vacant for a long period of time, and when the council and the property owner cannot reach an agreement. By the time an EDMO has been implemented, the council has to have had approval by the First-tier Tribunal (Property Chamber) which is the first stage of the process, and attempted to work alongside the property owner before any legal proceedings can start, in order to encourage the owner to make the property habitable again.
A CPO, otherwise known as a Compulsory Purchase Order, allows local authorities or bodies with statutory powers, to apply to the government for a CPO approval, that would allow them to force homeowners to sell their property if the property obstructs any major project or upgrade that is deemed for the ‘greater good of the public’.
Local authorities could apply for a CPO due to a variety of scenarios, such as large developments including railways, public buildings or space, or new roads or even if your property is deemed unsafe for the public.
A CPO is usually the last resort if the property owner and the local authorities cannot negotiate a value for the property (which is usually set at the market value). In addition to the market value of the property, owners could be eligible for additional payment depending on the circumstances or if the property value has been directly affected from the CPO.
Before purchasing any property, whether it be unoccupied or not, you can contact your local council to find out if the property is subject to a CPO and who is trying to issue it. It may not be possible to find out before purchasing the property if it is subject to a CPO, as developments and local authority plans change over time.