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Baroness Maddock: I have sympathy—

Lord Hanningfield: I beg to move.

Baroness Maddock: I apologise. It must be the quality of the air in this room. It can get a bit soporific after a while, and one is desperately trying to keep awake to do whatever one is going to do.

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I have a certain amount of sympathy with the amendment. I had assumed that the Government would deal with the classes under regulations. It is important that we are flexible on the matter, because one wants the ability to adjust what one is charging for according to what is happening in the housing market in particular. Years ago, we would not have thought that we would have so many elderly people going into rest homes and so forth. It is right that the matter is handled under regulations.

Like the noble Lord, Lord Hanningfield, I should like the Minister to give us some reassurance that the classes of people will be included in regulations. As we are, in effect, discussing empty homes, I declare an interest as patron of the Empty Homes Agency, which I am quite sure will not let the Government get away with awful regulations that do not include the people whom we are not in the business of penalising.

Lord Bassam of Brighton: I agree with the noble Baroness; it is quite easy to be sympathetic to the amendment. However, it ignores the fact that we need a rational scheme that works nationally. I hope that the noble Lord will accept that we are not trying to disadvantage people advantaged by how the scheme works as it is.

The amendment appears to attempt to prevent the nationally set second-homes and long-term-empty discounts from being changed in relation to property owned or, in the case of second homes, that would be occupied by sick or disabled people but is unoccupied, either because the relevant person is sick or disabled and in residential care or hospital, or because the relevant person is mentally or physically disabled and has a long-term illness or infirmity.

As the law stands, no council tax discount is available on a person's property because an owner or occupier is in hospital for a short period. If the person goes into long-term care and has no intention of returning to their old home, there is a council tax exemption if that property was their sole or main residence and is now unoccupied. However, that does not apply to second homes or to vacant property which was not the person's sole or main residence, although they would be entitled to the nationally set discounts.

As I said, we sympathise with those who cannot live in their own homes because of illness or disablement but, if someone is in hospital for only a short period, plainly it would be an administrative nightmare for the billing authority to keep track of when there was a council tax liability and when there was not. I remember when my mother had some residential care and then came back to her council bungalow. One can see such situations replicating themselves all over the place. Trying to keep account of them, particularly when the short term is involved, is quite difficult.

The amendment has cast its net very wide. Sympathetic though we are to it, it would create a layer of complexity and we cannot go with it, despite

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understanding the point that the noble Lord is getting at. The amendment requires more thought from him, and we are not minded to accept it.

Lord Hanningfield: I thank the noble Lord for that answer. Care for the elderly changes rapidly the whole time. As time moves on, there is much more reason to get people back in their own homes. People can be out of their home for quite a while, but an effort is made by the hospital services, health services and social services to get people back eventually in their own homes with all sorts of assistance. That will happen more and more. People will not be so much in residential care, so quite a lot of homes will be empty for quite a while, waiting for people to come back to them.

All sorts of other matters are relevant. I am going through the process with my elderly father at present. When people are in hospital or some sort of residential care, the stopping and starting of all sorts of things has to be organised. I am sure that my suggestion would not be too much extra to organise, from the points of view of both the local authority and the family during that time.

The Minister said that he had sympathy for the amendment. As we move on and more and more people are in this situation, regulations will have to change to accommodate them. The Minister may have some sympathy for the amendment, but I—and, I believe, the noble Baroness, Lady Maddock—believe that we cannot simply ignore the issue these days. We must pursue the issue and ensure that regulations cope with that group of people.

6.30 p.m.

Baroness Maddock: Is it the Government's intention to stipulate in regulation some period of time whereby property can remain empty when people are in long-term care or are ill? That is what we are talking about. Will the Government consider that in regulations? If not, we may need to return to it later on.

Lord Bassam of Brighton: That is not a commitment that I want to give. In tabling the amendment, the noble Lord may have missed the essential point. The clause is primarily about second homes and long-term empty homes, not people's sole or main residence. We are talking about empty properties and, in those situations, there will be shared family responsibility. One would expect that efforts would be made to ensure that those long-term empty properties were brought back into use, and that is part of the purpose behind the clause.

Lord Hanningfield: I thank the Minister. We shall have to consider what has been said on this subject. There is a group of people involved in this matter, as the noble Baroness, Lady Maddock, and I have outlined. We may have to return to the matter, but for the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 161 not moved.]

Lord Hanningfield moved Amendment No. 162:

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    Page 39, line 40, at end insert—

"( ) No dwelling may be prescribed by the Secretary of State under subsection (1) above and no discount may be removed or reduced under this section on the ground that a dwelling is unoccupied if the owner is actively marketing the property with the purpose of letting, lease or sale."

The noble Lord said: I did not move Amendment No. 161, because, having read the regulations, we decided that the issue had been covered. Therefore, I am now moving Amendment No. 162.

We are concerned that an exception should be made for properties when the owner is attempting to sell or lease. Some people move out of one property before finalising a sale, and would become liable for double taxation under the new legislation. We recognise that a system whereby property for sale was exempt from the clause could be abused. We therefore suggest, in accordance with a proposal put forward by the Royal Institution of Chartered Surveyors, that a property that has been actively marketed should continue to qualify for a council tax discount. We would support the Government in issuing local authorities with guidance and an appropriate definition of such properties.

The measures in the Bill may also have a negative impact on the housing market in some areas. Vacant property in certain areas actually reflects the collapsed property market, and a decrease in council tax discount in those areas could exacerbate the problem. I would be grateful for the Minister's views. I beg to move.

The Earl of Caithness: I support my noble friend's amendment. I am particularly concerned about property that is for sale. The Minister was right to draw attention to the fact that the clause relates to second homes. My noble friend's amendment would address that issue.

We must not forget that housing markets change rapidly. I shall put on my residential agent's hat. I have lived through at least three downmarkets when it has been very difficult to move property. Sometimes, people have to move jobs, and may have to move out of an area and find accommodation before their first property is sold. That becomes their second home. It seems wrong that the legislation should penalise those people if they are actively marketing that property.

The Minister said that he wanted a scheme that worked nationally, but the housing market does not work nationally—it works very locally. I can take the Minister to areas in London where the market did not move for months if not years at times. There are places in Britain now where property is on the market for months and months. We must not get brainwashed by the market in London, which has been remarkably strong for a long time and is still good at the moment. That is a false market, when one is considering the national picture. I support my noble friend strongly on this.

Lord Bassam of Brighton: The amendment would prevent the reduction or removal of the 50 per cent discount if the owner was actively marketing the property. Our main objection is that it would create a

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bureaucratic practical nightmare for local authorities in keeping track of where properties were entitled to a 50 per cent discount and where the local determined figure applied. For what purpose would it do that? Would it act as an incentive to owners of second homes and long-term empty property to sell or lease them? I do not know that it would. I question the workability of the proposal. At what point does a property become marketed? That is a question that might be asked.

We are endeavouring to get empty houses back into use, but council tax is not payable on a substantially unfurnished property for the first six months when it is unoccupied. If it is undergoing major repair or structural alteration, the exemption period is a year. Surely those exemption periods will give owners more than enough time to market their property, if that is their intention. But when it comes to second homes, I really do not see why the discount has to be kept at 50 per cent if the property is on the market. If the outcome were to be that the second home ceased to become a second home, that might help the local housing pressures in popular areas. However, the chances are that in such areas the property would be sold to another second-home owner. Why should we deny local authorities that income, as well as increasing their administration burdens and costs?

The point made by the noble Earl, Lord Caithness, about the property market is an argument in itself, but I do not believe it to be relevant to what we are trying to achieve through an instrument of national policy. I agree that we do not want to incentivise authorities to remove the empty homes discount in areas where there is little demand—I take that point. That is why authorities will not keep the benefit of the empty homes discount; there is no false incentive on them to end the discount in low demand areas.

I appreciate that the housing market goes through highs and lows, and I see that there may be a problem at certain times. However, by and large the scheme should work well nationally. There are differences in the housing market in different localities, but the anomalies and difficulties that the amendment might create for the billing authority outweigh the possible minor benefits that the noble Lord, Lord Hanningfield, sees in the amendment.

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