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Chaotic Council Tax changes may mean rents rise

A leading lettings agent has branded council tax changes which came into effect this week “chaotic and confusing” and warned “rents may rise as a result”.

Ajay Jagota of North East agency KIS Lettings fears that the changes create “a postcode lottery which seemingly encourages landlords to raise rents or lower standards”.

From April 1 local councils have had the discretion to charge full Council Tax on empty properties – including properties which have until now received discounts and exemptions, including properties waiting for new tenants and properties undergoing building or renovation work.

The changes mean Council Tax regulations now differ widely from council to council, with authorities such as Newcastle, North Tyneside and South Tyneside allowing landlords with grace periods to fill empty properties, but others such as Sunderlandcharging them the full Council Tax from day one.

Ajay, the Managing Director of KIS Lettings, who manage properties for some 700 landlords across the North East from branches in Sunderland, North Tyneside and South Tyneside said: “These changes create a postcode lottery when landlords are seemingly being encouraged to raise rents or lower standards.

“I don’t blame councils for taking difficult decisions, many of which have been forced upon them, but my concern is that these changes leave us with a chaotic and confusing system where one side of street could have an entirely different council tax regime to the other.

“More than half of North East landlords have experienced empty properties in the last three months, and the risk is that their costs will rise, costs which may have to be passed on to tenants, meaning rents may rise as a result.

“In extreme cases, landlords may feel compelled to dispose of properties in council areas where they find the Council Tax regimes uncompetitive or unhelpful – lowering the local available housing stock at the exact time when local authorities are relying on the private rented sector to pick up the slack of the impact of changes like the Bedroom Tax.

“What is more, this system seems to actively encourage landlords to fill their properties at all costs by penalising them for carrying out home improvements and focusing on securing stable long-term tenancies – I thought the government wanted to encourage responsible landlords!

“I would advise landlords to talk this matter through thoroughly with their agents as it is now more crucial than ever to get soon-to-be-vacant properties marketed as soon as possible, and about the potential steps they can take to minimise their exposure – for example by declassifying their properties.”

This was posted in Bdaily's Members' News section by Ajay Jagota .