A BOOM in student housing is costing millions a year in ‘lost’ tax revenue which pays for council services.
In the last year Warwick District Council would have collected £3million had properties used by students – of which Leamington has one of the highest populations in the UK – been family homes.
But since students are exempt from paying council tax – and so too are their landlords if they do not live at the premises – they do not contribute a penny towards services like rubbish collection, care for the elderly and vulnerable, rubbish collection, road maintenance and traffic safety.
The loss of funding is currently made up by a government Revenue Support Grant which is expected to be axed in the next two years.
Calls have now been made for a plan to be put in place for when the funding dries up.
The loss to the district council’s purse amounts to some £300,000. The vast majority, around £2.4million, would have gone into county council coffers.
Warwickshire county councillor Jonathan Chilvers represents Leamington Brunswick ward which has a high student population.
He believes council tax exemptions should be rescinded allowing landlords to be charged. He added the charge could possibly be covered by student rent.
Coun Chilvers told the Observer: “For decades government have compensated for council tax exempt student properties. Now they are getting rid of that compensation they urgently need to deal with this costly anomaly to help fund local services like roads and bin collections.
“The government must be far-sighted and put in place solutions that make sure everyone has quality affordable housing and local councils can fund services.”
Warwick District Council says it plans to combat the loss of government funding by keeping 100 per cent of the business rates it collects. Currently it can only keep up to half of the money it collect from local companies.
Finance spokesman Coun Peter Whiting said: “We expect the Revenue Support Grant to reduce to zero in two years’ time.
“At the same time, 100 per cent Business Rate Retention will be introduced across local government, and while the details are not yet finalised, this has the potential to offset at least some of this reduction in government support.
“This specific issue is one element of a complex equation involving the desirability of a better-educated population, student loans, tuition fees and student accommodation costs. The vast majority of policies in this area, including the eligibility of student accommodation for council tax exemption, are determined by central government.”