Halifax has called for the government to extend the reduced 5 per cent rate of VAT for restoring an empty home to all properties vacant for more than 6 months, not just properties vacant for more than 2 years to level the playing field.
It has also asked that local authorities adopt a unified approach to council tax reductions for empty homes, rather than variations in rates, to encourage buyers.
The lender's research has found that of the 27 per cent of the population who have lived near an empty home, 22 per cent claim that its presence had a negative impact on the value of property and their enjoyment of the street.
In addition, over a quarter would be put off buying a property if there was an empty home on the street - with most fearing the crime that empty properties are felt to attract - having a knock on effect on house prices which are 17 per cent lower in these areas.
This is not unfounded; twelve of the 15 Local Authorities with a high level of empty private homes rank amongst the 20 per cent most deprived areas in England according to the government's Indices of Deprivation.
There has been a 6 per cent fall in the number of empty homes in England over the past three years. However, there were still 288,763 empty homes in England as at April 2006 - 1.6 per cent of all privately owned dwellings in England.
Until recently the cost of restoring an empty home attracted the full rate of VAT (17.5 per cent) unless the property has been vacant for more than 3 years when a reduced rate of VAT of 5 per cent applies.
This has recently been extended to properties empty for more than 2 years. A property vacant more than 10 years, which is renovated and sold, attracts a zero rate of VAT.
Restoring an empty home could attract VAT of more than £5,200 Halifax estimates the average cost of restoring an empty home is £29,824 and involves significant repair to many aspects of a house including plumbing, kitchen, windows, roof and wiring.
On this basis the average VAT payment for restoring an empty home vacant less than 2 years would be £5,219. This is three and half time more than the VAT for restoring an empty home vacant for more than 2 years, which would attract an average VAT payment of £1,491.
Jaedon Green, head of mortgage product development at Halifax, commented: "The number of empty homes in England has fallen by nearly 20,000 over the past three years but more needs to be done. One in four people continue to be directly affected by an empty house which they believe has a negative impact on the value of property, their enjoyment of the area and levels of crime.
"Halifax calls on the government to extend existing VAT and Council tax discounts to encourage the renovation of empty houses, thus making them homes.
"Rising property prices encourage the rejuvenation of empty homes in many parts of England. However, it is clear more direct action is needed in areas with high levels of empty homes as these are often deprived areas. In these areas councils need to make more use of Empty Dwelling Management Orders and consider removing the council tax discount for empty homes."
