黑洞社区

Roy Billingham has managed Billingham & Kite, the 50-year-old contractor set up by his father, through four recessions so far. The Dudley-based businessman thought he鈥檇 seen everything a downturn could throw at him 鈥� but then he came up against Bromsgrove council.

Already struggling to find enough work going to keep his 25 employees in a job, last autumn Billingham received notice that, within six months, he was to be charged council tax on a property that the council judged would be 鈥渃omplete鈥�, despite the fact that it lacked a bathroom, kitchen, hot water and electricity. Similar notices followed on other projects, piling costs of 拢2,000 a month onto the five properties he is working on.

鈥淚鈥檝e never seen it before,鈥� he says. 鈥淎s soon as you screw on the front door of a property, you get a notice from the council. It鈥檚 like Big Brother. As soon as the structure is secure and there鈥檚 plaster on the walls, they start the clock ticking, even though the houses are just empty shells 鈥� completely uninhabitable.鈥�

The ability of councils to certify houses as 鈥渃omplete鈥� for tax purposes is yet another unwanted pressure on housebuilders 鈥� particularly the smaller firms 鈥� as they struggle to survive the collapse of the market.

But the added irony for those like Billingham is that, had they been building in a neighbouring region, the stage of building at which they would have been hit with the tax might well have been different. Here, 黑洞社区 examines how the government鈥檚 policy of allowing every local authority to determine its own definition of completion is creating a postcode lottery, or rather a game of Russian roulette that, for some firms, could mean the difference between collapse and survival.

The lottery

The Home Builders Federation (HBF) is compiling a report for the communities department on the issue of tax on new homes, at the department鈥檚 request.

A spokesperson for the organisation said it was against any charges at all, but added: 鈥淭he inconsistency of the charging is of huge frustration to the industry, as how the charge is levied varies from local authority to local authority, creating in effect a postcode lottery that poses obvious problems for national companies.鈥�

The heart of the problem lies in the fact that the term 鈥渃ompletion鈥� has no statutory definition, meaning that councils are free to decide their own terms.

The extent of the discrepancies that result from this is apparent in the example of three neighbouring councils in Lincolnshire. North East Lincolnshire starts taxing properties when the plastering has been finished, but a spokesperson says it operates a six-month exemption period if the property 鈥渋sn鈥檛 fully finished and isn鈥檛 being used鈥�.

As soon as you screw on the front door of a property, you get a notice from the council. It鈥檚 like Big Brother

Roy Billingham, Billingham & Kite

Neighbouring East Lindsey district council, however, offers no such leeway; it sends out completion notices before the plastering has even been finished (provided there鈥檚 a roof on the property). Guidance sent out with completion notices states: 鈥淭he consensus of opinion is that when the property is ready for 鈥榮econd fixing鈥� it can easily be completed within three months, whether by a large building firm or a one-man band. 鈥楽econd-fixing鈥� generally means that the property is fully secure and has a roof, glazed windows, external doors, and plastering has commenced.鈥�

Companies should just hope they happen to be building a few miles to the north-west, under the auspices of North Lincolnshire. 鈥淲e normally issue completion notices at the stage of plastering out,鈥� says a spokesperson. 鈥淏ut since April, owing to the recession, we have relaxed that attitude and inspectors are looking at when a property could actually be finished before we issue a completion notice. So it鈥檚 a lot later now. Once the economic situation improves we may go back to issuing completion notices at the plastering stage, but of course we don鈥檛 know when that will be.鈥�

To tax or not to tax

The variations have always been there, but the issue has become more pressing now that recession means homes are standing empty, and often incomplete, for longer.

Harold Rackham, chairman of the housebuilders group within the Federation of Master Builders (FMB), says: 鈥淭his happened in the last recession 鈥� we were forced to pay rates on unoccupied homes, including new homes that hadn鈥檛 been finished. We really started noticing it in autumn last year when our members around the country began reporting it to the committee. It鈥檚 squeezing our members 鈥� it鈥檚 just another expense they really don鈥檛 need in a time of hardship.鈥�

Some builders allege that councils have only started using their powers to levy council tax on unfinished homes since the recession started to hit their coffers. Billingham says: 鈥淲e鈥檝e never paid anything until a property鈥檚 been occupied before. If you have a motor car, you don鈥檛 pay tax when it鈥檚 not on the road, and we鈥檝e never paid on a house if it鈥檚 been in an unfinished state. We鈥檝e never had a notice issued before.鈥�

The FMB and HBF argue that in the current economic climate such rates should be abolished entirely, levelling the playing field and providing a boost to builders that are unable to complete properties. The HBF spokesperson says: 鈥淐learly, in the current climate especially, paying council tax on new-build properties is an issue for our members, and we believe an unfair taxation on an industry that has been hit hard by the wider economic climate.鈥�

He says that the communities department seems prepared to consider the option: 鈥淚t is now aware this is a problem for the industry and in our recent discussion with them they have seemed sympathetic.鈥�

But if the government does intervene, it will need to do so quickly to help Billingham鈥檚 workers. 鈥淚鈥檓 trying to keep the work going, keep the men on, but we鈥檙e getting kicked in the teeth by the local authority. It鈥檚 ironic. They鈥檙e the ones who should be helping us survive 鈥� it鈥檚 all local men that we employ 鈥� yet it鈥檚 the local authority that鈥檚 making it worse.鈥�