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Nottingham City Council (20 004 817)

Category : Benefits and tax > Council tax

Decision : Not upheld

Decision date : 06 Dec 2021

The Ombudsman's final decision:

Summary: Mr X complained about the Council adding a premium to his council tax bill on a property it sold him. We found the Council did not act with fault in either selling the property or later billing and taking council tax recovery action against Mr X.

The complaint

  1. Mr X said the Council acted wrongly in applying its empty property 100% premium to the council tax bill for his property. Mr X said the Council, being the former owner of the property, was responsible for it being empty for two years before he bought it. And the property could not be occupied before completion of the renovation work the Council had set out as a condition of sale. Mr X wanted the Council to accept his payment of council tax at the ‘standard rate’ and refund the 100% premium charge he had paid to prevent further recovery action.

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The Ombudsman’s role and powers

  1. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
  2. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
  3. The law says we cannot normally investigate a complaint when someone can appeal to a tribunal. However, we may decide to investigate if we consider it would be unreasonable to expect the person to appeal. (Local Government Act 1974, section 26(6)(a), as amended)
  4. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

  1. I:
  • Considered Mr X’s written complaint and supporting papers.
  • Talked to Mr X about the complaint.
  • Asked for and considered the Council’s comments and supporting papers about the complaint.
  • Shared the Council’s comments and supporting papers with Mr X.
  • Shared draft decision statements with Mr X and the Council. I considered any comments received before making a final decision.

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What I found

Background

  1. The law gives councils the power to charge extra council tax where a property is empty and unfurnished for two or more years. The Government later increased, from 50% to 100%, the maximum amount a council could add to council tax payable on properties empty for two to five years. In doing this, the Government said the increase allowed councils “…to strengthen the incentive for owners of empty homes to bring them back into use”.
  2. The Council used the power to add a 50% premium on properties empty for between two and five years. It also immediately applied the increased 100% premium in council tax years 2019/2020 and 2020/2021. This meant that after 1 April 2019 the owner of a property that had by then been empty and unfurnished for two or more years was billed to pay 200% of the full council tax. The premium applies to the property and not the owner. So, the sale of an empty and unfurnished property does not restart the two-year period.
  3. The Council is also a local housing authority and provides housing services through a company called Nottingham City Homes (NCH). The Council owned a building that contained two homes (‘the Building’). One home was occupied under a long lease. The other home became empty and unfurnished after the death of an NCH tenant (‘the Flat’). The Council then started to bill and NCH, as owner of the Building, paid council tax on the empty Flat.
  4. The Council has an asset management plan that sets its strategy for managing the buildings it owns. The plan sets out when and why the Council might want to sell its residential buildings. For example, the plan said it might sell homes needing much investment while encouraging their refurbishment and reoccupation. A survey found the Building, including the empty Flat, needed significant repair and renovation work. The Council decided to sell the Building at auction.
  5. The Council prepared an ‘information pack’ for people interested in buying the Building. The pack included details from the Land Registry; property related searches; energy performance certificates; and a draft sales agreement. The draft agreement included a list of works the Council wanted completed to the Building and the Flat. The draft agreement required the buyer to complete those works and then secure occupation of the Flat within 12 months of the sale. The sale of the Building had to be completed within three weeks of the auction, which completion date was just before the start of council tax year 2019/2020. The information pack did not include information about the council tax banding or amount payable for the two homes in the Building. The Building appeared in an auctioneer’s catalogue with other residential and commercial properties. When the auction took place, the Flat had been empty and unfurnished for over three years.
  6. Mr X bought the Building at auction. Mr X was living abroad and used that address to complete the sale agreement. Mr X arranged for completion of the repair and renovation work to the Building and Flat. Mr X said he got information about the banding and council tax before the auction as he expected to pay the ‘standard’ council tax for the Flat.
  7. The Council said a relative of Mr X contacted its council tax team about six months after the auction and said Mr X was the owner of the Building. The Council needed Mr X’s consent before it could discuss council tax for the Building with another person. Mr X provided the necessary consent, and the Council created a council tax account for Mr X. The Council then asked Mr X if he wanted council tax bills emailed to him or sent to his relative, in which case it needed a postal address for the relative. The Council said, as it received no reply, it followed standard practice and posted the council tax bill to the Flat.
  8. About a month later, not receiving the first payment due under the council tax bill, the Council sent a payment reminder to the Flat. A month later, Mr X’s relative paid the first council tax instalment. The Council said the receipt of the exact amount of the first instalment provided evidence Mr X’s relative, having his authority to deal with council tax matters, knew about the council tax bill. (Mr X’s recollection was he had paid the Council 50% of the standard council tax he understood was payable on the Flat.)
  9. The Council then sent a payment reminder to the Flat for the second billed council tax instalment. About six weeks later, the Council started legal action to recover the unpaid council tax. The Council added its court costs to the bill. Mr X said he did not receive the court summons or other information about the legal action.
  10. Meanwhile, and about nine months after he bought the Building, Mr X said his tenant moved into the Flat.
  11. A new council tax year started. Mr X said he then received a council tax bill from the Council at his overseas address for a property he did not own. Mr X said he contacted the Council about the bill. The Council then sent a bill to Mr X’s overseas address for council tax payable on the Flat. The bill sought payment of council tax for the current council tax year. Mr X again contacted the Council as his tenant was liable to pay that council tax. The Council said this contact was when it first became aware someone was living in the Flat.
  12. The Council sent Mr X a further council tax bill for the Flat to his overseas address. The bill covered the nine months during which Mr X owned and was renovating the Building and Flat (see paragraphs 12 and 16). The bill said the unpaid council tax was “subject to an existing court order”. Mr X said he paid the remaining ‘standard rate’ council tax for the nine months but complained about the added 100% premium. (Mr X also told the Council he was moving home and so provided a contact address in England.)
  13. In his complaint, Mr X said the Council, in selling the Building, knew the Flat was uninhabitable and had set out the work needed before it was occupied. Adding the council tax 100% premium penalised him for getting the Flat back into use and could not be justified when it had left the Flat empty.
  14. In reply, the Council set out its powers to add a council tax premium and said it was the buyer’s responsibility to understand all costs when buying a property. Here, that included council tax costs while the Flat was empty during renovations. The Council said neither Mr X nor his solicitors had asked about the council tax position before buying the Building. If they had done so, it would have provided relevant information. The Council also said the auction guide price for the Building would have reflected its condition and the time it was empty. The Council confirmed the council tax bill was correct and asked Mr X to arrange payment of the arrears to prevent further recovery action and added costs.
  15. Meanwhile, Mr X said he received a copy of the Council’s earlier council tax court summons and decided to pay the 100% premium to avoid further legal action and costs.

Consideration

Application of the council tax premium

  1. There was no dispute the Flat had been empty and unfurnished for more than two years when Mr X bought the Building at auction. So, there was no dispute that, under the Council’s council tax policy, a 100% council tax premium was payable on the Flat. The Valuation Tribunal deals with appeals against council decisions on council tax liability and council tax support and reduction. This includes appeals about empty property premiums. And such an appeal may be against a council decision not to reduce a bill under the discretionary power given by section 13A(1)(c) of the Local Government Finance Act 1992. There was no evidence the Council told Mr X about this general discretion or exercised it for the Flat.
  2. As people have appeal rights to the Valuation Tribunal, we do not normally investigate complaints about such council tax decisions (see paragraph 4). But Mr X complains about how the Council acted in selling the Building, which led to him receiving a bill with the unexpected 100% council tax premium.

The sale of the Building

  1. Information about a property’s council tax band and the amount payable for a property in each band is accessible through Government and council websites. And, here, Mr X said he accessed council tax information online before buying the Building. Normally, such action would have been sufficient to give any potential buyer relevant information about liability for council tax on a property.
  2. However, the circumstances here were not routine. The Flat was empty and had been so for about three years. The Council was also using its powers to apply a council tax premium to empty homes. Mr X’s dissatisfaction with the Council not providing information about its policy for empty home council tax premiums with the auction pack was understandable. But I found no evidence to suggest that sellers, including the Council, must provide council tax information when selling a property. I also had no reason to doubt the Council when it said it did not include such information when selling property.
  3. However, the Council’s information pack and the auction catalogue put a buyer on notice the Flat was unoccupied. And council tax information on the Internet covers not only banding and charges but exemptions, discounts and premiums. On balance, given council tax information was not necessary in an auction pack but having stated the Flat was unoccupied, I did not find the Council acted with fault.

The legal council tax recovery action

  1. I saw no evidence Mr X responded to the Council’s request for confirmation about to whom and how it should send council tax bills for the Flat. Without receiving a response, the Council was not at fault in sending bills to the Flat. Payment of the correct first instalment of council tax provided evidence the bill sent to the Flat came to the attention of Mr X and or his authorised relative. That bill showed a 100% premium applied to the bill. The Council also received the payment before it started legal recovery action, which added costs to the bill. Mr X therefore had an opportunity to question the bill before the Council took recovery action. I did not therefore find the Council at fault in its council tax billing and recovery action.

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Final decision

  1. I completed my investigation, finding no fault by the Council.

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Investigator's decision on behalf of the Ombudsman

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