The empty homes tax was meant to be a deterrent. It’s turned out to be little more than background noise.
Since 2013, owners of long-term vacant homes have faced sliding council tax penalties of up to 300%. But over a decade later, the number of empty homes in England has risen. It’s clear this policy hasn’t moved the needle, because it completely misunderstands the psychology and profile of those holding these homes.
Why the Super-Rich Aren’t Blinking
At the top end of the market, think luxury flats in Mayfair or investment units in Canary Wharf, the tax is simply irrelevant. For many international or ultra-high-net-worth owners, a 300% council tax bill is a rounding error. These properties aren’t left empty by mistake. They’re strategic assets, safety deposit boxes in a volatile world, and the owners don’t flinch at minor surcharges. You don’t get behaviour change when the financial sting barely registers.
At the other end, many properties are stuck in probate, in disrepair, or located in areas with little rental demand. A tax doesn’t solve those problems. In fact, the most effective reduction in empty homes came not from tax, but from government-backed incentives and refurb grants in the early 2010s. Once that support dried up, empty homes rose again. The stick has never worked without a carrot.
Loopholes Undermining the Policy
Loopholes also let many dodge the charge altogether – simply furnishing the property and declaring it a second home is often enough. And while the upcoming second home premium aims to close that, I suspect we’ll see history repeat. Wealthy owners will find another workaround. Just look at Wales: second home premiums haven’t stopped the influx of empty holiday homes across coastal towns. Council tax is a blunt tool. If we want to change investor behaviour, we need sharper instruments.
What Might Actually Work?
One potential fix? Index the tax to the value of the property, not a flat-rate council band. A 1% annual charge on a £5 million vacant flat suddenly becomes £50,000, that’s a bill even the super-rich notice. Tie that to a tighter timeline, penalties kicking in after 6 months, not a year and enforce it consistently, and you might see movement.
But we must also tread carefully. While cracking down on empty homes may sound politically popular, layering punitive taxes and stripping landlords of rights through upcoming legislation like the Rent Reform Bill risks creating deeper problems. In Ireland, similar reforms led to an exodus of private landlords, rent spikes, and queues round the block for rental viewings. The UK risks importing that crisis.
A Shift In Investor Sentiment
We’re already seeing signs. At Ernest Brooks International, over 70% of our landlord clients are from East and Southeast Asia. Many are now choosing to leave their London flats empty rather than sign tenancy agreements that could leave them powerless to regain possession. That might sound extreme, but it shows just how worried the market is. It’s no longer just about tax – it’s about control, predictability, and risk. Take that away, and landlords pull out. Tenants are the ones who suffer.
At the same time, Britain is already seeing a record number of millionaires leaving the country each year and housing policy plays its part. Do we really want to be a country that drives out global capital while simultaneously wondering why investment is drying up? Punishing wealth may win headlines, but it doesn’t build homes. Smart policy does.
If we want to bring empty homes back into use, we need a balanced strategy not just heavier taxes. That means incentivising refurbishment, empowering councils to use empty dwelling management orders, offering adaptive reuse grants, and creating clear paths for local authorities or housing associations to step in. For second homes, we should consider planning restrictions in oversaturated areas and rethink business rate loopholes. Above all, we need to distinguish between those gaming the system and those genuinely struggling to bring properties into use.
The housing crisis won’t be solved by beating landlords with a stick while letting the system rot around them. It’ll be solved by engaging with the realities of ownership, finance, and development – and designing policy that actually addresses the reasons homes are empty in the first place.
First Time Buyers Likely to Stay Renting
A new report from the Building Societies Association has found that a significant number of potential first-time buyers have failed to get on the property ladder since the financial crisis.
Analysis of historic first-time buyer data shows that around 7.2 million individuals or couples would have been expected to buy their first home since 2006. However, only 5 million achieved homeownership in this time, meaning there are 2.2 million missing first-time buyers from the property market.
The BSA says today’s first-time buyers face a double affordability challenge, an almost record-high cost of buying a home and the end of record-low mortgage rates.
As a result, repayments as a proportion of income for new first-time buyers has increased by around 30% (22% of income) since its low in 2020 (18% of income).
Recently mortgage rates have started to ease, and further Bank Rate cuts which are expected this year should help improve repayment affordability. However, BSA research suggests first-time buyers are still ranking mortgage affordability as the biggest barrier to buying a home, with two-thirds (65%) selecting this.
Raising a deposit was also highlighted as a significant obstacle to homeownership, with 62% of would-be homebuyers citing this.
Most successful first-time buyers are stretching themselves to get on the property ladder, with many using higher loan-to-income and higher loan-to-value mortgages to mitigate the challenge of raising the initial deposit.
Choosing to have a higher monthly repayment, supported in part by wage growth, is likely to be the biggest factor that has enabled successful first-time buyers to achieve homeownership.
During the immediate aftermath of the financial crisis the missing buyers were broadly split across all age groups, but in more recent years they have tended to be those in the younger bracket, particularly those under 30.
Initiatives aimed at increasing first-time buyer numbers in the future will therefore need to target both younger borrowers, whilst also supporting those that missed getting on the property ladder at a younger age and failed to catch up at a later age.
The association claims many FTBs are “stuck in the private rented sector, where rental repayments as a proportion of income are significantly higher than mortgage repayments – even when the recent rise in mortgage rates has been considered. This severely limits the ability of those in the private rented sector to save for a deposit.”
Higher loan-to-value mortgages can help more private renters to buy their first home, but not all.
Whilst some 95% and higher loan-to-value loans can be found today their availability has been more limited since the financial crisis. Also, they are not a one-stop solution for all potential first-time buyers.
Paul Broadhead, Head of Mortgage and Housing Policy at the BSA, says “I’m disappointed that 12 months on from our first report, which highlighted the struggles faced by first-time buyers and the potential roadmap for change, the barriers to homeownership remain the same today. It’s shocking that 2.2 million first-time buyers who would have reasonably expected to buy their own home have failed to do so since the financial crisis. And every day that passes without real action the number of potential lifetime renters is growing.
We know that there is no single solution for all first-time buyers, and not all aspiring homeowners will be able to achieve their dream whilst the double affordability challenge of the high cost of buying and high cost of owning a home remains. However … several tangible actions can be implemented to help fix the broken housing market and to support the next generation of homeowners.”