Prevalence of empty homes was to be expected due to policy on tax - Yorkshire Post Letters

Martese Carton (Yorkshire Post, 21 January) joins Jayne Dowle in highlighting the scope for using empty properties rather than newbuild. She also draws to our attention the underutilisation even of property which is nominally occupied.

Puzzling though the prevalence of empty and half-empty houses may seem in a supposed housing shortage crisis, it is pretty much what one might expect given longstanding policy on tax.

We have a Council Tax discount for single occupancy, specifically to help people avoid downsizing. More damagingly, we have a high rate of Capital Gains Tax on residential property which isn’t classed as owner-occupied.

If we are to have such a tax, and it is to be discriminatory, shouldn’t the favoured category be ‘fully-occupied’ rather than ‘owner-occupied’?

As an owner with part of your house surplus to your basic requirements, the whole is exempt if the excess is used, say for occasional visitors, as a hobby area or your collection of memorabilia, but not if you sub-let it or run a business from there.

To make matters worse, your capital gain is notionally averaged over the whole of your period of ownership. All of your house price rise may have accrued while you were in occupation. But you will render part of this gain taxable if you then let, even though the value may now be flatlining or falling.

Martese puts the average cost of bringing an empty property back into commission at around £20,000. Say you invest such an amount in your property with a view to letting it. If you then decide instead to sell, you will simply have increased its value and so the gain on which you owe tax.

Is it any wonder if people who don’t consider themselves rich enough to employ tax consultants, accountants or lawyers default instead just to sit on their property? More constructive would be exemption for let property, with ‘forgiveness’ for previous empty periods after so many years of letting.