20th Nov, 2018

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

Les Reid 11th Nov, 2017

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.

This newspaper last month questioned whether Coventry City Council leaders would get behind a growing campaign nationally to make students’ landlords pay tax, given students do not pay Council Tax.

Figures obtained through a Freedom of Information request had revealed that, over the last seven years, the city would have raised £37.5million more had those houses occupied by students stayed as family homes.

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

As they are exempt from paying Council Tax, hard-up students do not contribute a penny towards services like rubbish collection, care for the elderly and vulnerable, rubbish collection, road maintenance and traffic safety. Neither do their landlords, so long as they do not live at the premises.

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

Leading Coventry city councillor John Mutton, finance cabinet member, responded by staging a debate at the Council House last month in which he called on the council to lobby government to introduce the measure. The council voted to lobby the government for the change.

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.

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