Student boom costing Coventry £6.5m in 'lost' council tax

[dutchman]

The boom in student housing in Coventry is costing £6.5 million a year in ‘lost’ tax revenue which pays for council services



Figures obtained through a Freedom of Information request reveal that over the last seven years the city would have raised £37.5m more had those houses stayed as family homes.

But they don’t contribute a penny towards services like rubbish collection, care for the elderly and vulnerable, rubbish collection, road maintenance and traffic safety.

The reason is that students are exempt from paying Council Tax. And so too are their landlords, so long as they don’t live at the premises.

While most people agree that students shouldn’t be taxed, campaigners for reform have called for the law to be changed so that landlords foot the bill through business rates.

Presently neither student houses nor the massive Halls of Residence springing up across the city are classified as businesses.

The call to make landlords pay has been backed by major student cities like Liverpool, but Coventry has shown a marked reluctance to limit the spread of student houses.

Today, however, after the Coventry Observer had questioned the council’s policy, leading Labour councillor John Mutton issued a statement urging all-party support to make landlords pay.

The cabinet member for strategic finance and resources said: “The universities and students help bring a real vibrancy to the city, and we believe that it should be the businesses and landlords, who benefit from their income, who should be asked to contribute to business rates.

“We know that local people would agree – but until the government introduces legislation to enable this to happen it is very difficult for a local council to do anything to address this.

“I would also want to see any new legislation prevent landlords from increasing their rent to offset the costs of any business rates charge.”

Coun Mutton added: “We are calling on councillors to agree for us to write to the Chancellor of the Exchequer, the Secretary of State for Communities and Local Government, the Chair and Vice Chairs of the Local Government Association and the three Coventry MPs to request that councils should be given powers to bring landlords of student properties within the scope of business rates in the same way that hotels, self-catering and holiday lets are within the scope of business rates.

“With the support of the council we would also wish to establish a working group to consider the operation of such a scheme in Coventry to ensure that it is designed in such a way so that it does not undermine the city’s wider housing strategy and that the cost is not passed on to students.”

The reason for the change of heart comes as local authorities prepare for the abolition of Rate Support Grant which the government currently pays to councils to compensate for the ‘lost’ Council Tax.

In its place the authorities will be allowed to keep all revenue from Business Rates – presently they hand over half to the government.

And therein lies the Catch 22, as Coventry major business boom is in student accommodation. Which isn’t classed as a business.

*The city’s two universities non-residential buildings only pay 20 per cent of the normal business rate as they are teaching institutions and have charitable status.

[dutchman]

Bid to fill Coventry's £6.5m tax blackhole caused by student housing boom rejected by minister

PROPOSALS to fill a £6.5million annual blackhole in Coventry’s taxes for crucial services caused by the student housing boom have been turned down by a government minister.

Nuneaton MP and local government minister Marcus Jones has told the House of Commons the government has “no plans” to change the law to force students’ landlords to pay business rates.

Coun Mutton told us last month: “The universities and students help bring a real vibrancy to the city, and we believe that it should be the businesses and landlords, who benefit from their income, who should be asked to contribute to business rates.”

But, after being quizzed on the proposal by Bristol MP Thangam Debbonaire, Mr Jones has now told fellow MPs in Parliament: “I can confirm to the hon. Lady that we have no plans to change business rates by bringing student accommodation into their scope as she advocates.”

Asked to comment on Mr Jones’s remarks, Coun Mutton told us this week: “No I haven’t had a response from Marcus Jones nor from anyone in his department.

“I think that it is scandalous that this government intend to stop giving councils any Rate Support Grant (RSG) and say that we must generate our own income, then make it impossible to generate the amount of business rates that we should be entitled to.

“I must make it clear that I am not trying to force students to pay Council Tax as they are under enough financial pressure as it is.

“What I am trying to achieve is that the owners of property used to house students and run as a business should pay business rates in the same way that other businesses have to do.

I think that it is only fair but of course, fairness does not seem to be in the DNA of this government.”

By 2020, government funding to councils in the form of Rate Support Grant will be abolished,

In its place. local authorities will be allowed to keep all revenue from Business Rates – presently they hand over half to the government.