The Home Builders Federation (HBF), together with Paragon Development Finance, has published its Licence to Bill report, highlighting growing concerns over the way council tax is being applied to newly built homes awaiting sale or occupation.
The report found that 45% of local authorities charge full council tax on completed homes before they are occupied, even where properties remain uninhabitable due to delays outside developers’ control, such as utility connections, labour shortages or material availability.
According to the research, 88% of SME housebuilders said council tax charges are affecting cash flow and threatening their ability to bring forward future developments. The report also found a 154% increase in developers appealing council tax bills during the 2025/26 tax year compared with 2022/23, indicating the scale of the issue.
The HBF is calling on Government to introduce a national framework so new homes are only deemed substantially complete for council tax purposes once a building control completion certificate has been issued.
It also wants a 12-month exemption for newly completed, unoccupied and substantially unfurnished homes, alongside a two-year exemption from Empty Homes and Second Homes premiums.
Neil Jefferson, Chief Executive of the Home Builders Federation, said: “Government attempts to increase housing supply are being thwarted by huge increases in taxes and policy costs that are making many sites unviable while a lack of affordable mortgage continues to suppress demand.
“Charging council tax on incomplete new build homes before they are sold, occupied or, in some cases, fully ready to live in places further pressure on cash flow and can make the difference between a site being viable or not.
“These properties are not long-term empty homes, second homes or homes deliberately withheld from occupation. They are new homes being brought to market in challenging circumstances, often by the smaller businesses government has repeatedly said it wants to support.”
Neal Moy, Managing Director of Paragon Development Finance, added: “Paragon works predominantly with SME developers, so we see first-hand how disproportionately this issue affects smaller housebuilders. Early and inconsistent council tax charges are something many of our clients are grappling with, and the impact on cashflow can be severe.”
