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Do Landlords Pay Council Tax When the Property Is Empty?

Overview of Council Tax on Empty Properties in the UK

In 2024, UK landlords face significant changes in council tax responsibilities concerning empty properties. Driven by a government initiative to address housing shortages and discourage property vacancy, the Levelling Up and Regeneration Act 2023 has ushered in new regulations that affect council tax charges on empty homes. This part of the article will cover the regulatory framework as of 2024, including new penalties for long-term unoccupied homes and the conditions under which these charges apply.


Do Landlords Pay Council Tax When the Property Is Empty?


Understanding the New Council Tax Regulations

From April 1, 2024, properties in the UK that remain empty for more than 12 months are subjected to a council tax premium of up to 100%. This measure is part of broader efforts to encourage the use of empty properties and alleviate the housing crisis in many parts of the country. This decision marks a reduction from the previous two-year threshold, intensifying pressure on property owners to either utilize or let out their properties more swiftly.


Exemptions and Discounts

Despite the overarching rules, there are notable exceptions and conditional reliefs designed to avoid penalizing owners unduly under specific circumstances:


  1. Renovation and Repair: Properties that are uninhabitable due to ongoing major renovations are exempt from the council tax premium for up to 12 months. This provision aims to facilitate property improvement without imposing undue financial burdens during significant refurbishments.

  2. Recently Inherited Properties: A grace period is provided for homes that have been recently inherited. During the first 12 months following inheritance, these properties are exempt from the premium, giving families time to manage estate affairs without the immediate financial pressure of additional council tax.

  3. Charitable Ownership: Properties owned by charities and left empty for purposes related to the charity’s function are also exempt from the council tax premium, provided they meet certain usage criteria set by local councils.


Regional Variations and Local Discretion

Local authorities are granted certain discretions to implement these rules, which can lead to variations in how the council tax premiums are applied across different regions. Some councils might choose to implement stricter measures sooner, while others may provide more lenient terms depending on local housing market conditions and council policies.


What Are the Levelling Up and Regeneration Act 2023 New Regulations That Affect Council Tax Charges On Empty Homes?

The Levelling Up and Regeneration Act 2023 introduced significant reforms to council tax charges on empty homes across the UK, aiming to address the issue of housing scarcity and encourage better use of property. These reforms are part of a broader initiative to "level up" various regions by revitalizing communities and making better use of existing housing stock. Here’s a detailed look at how these new regulations affect council tax charges on empty homes.


Introduction of Enhanced Council Tax Premiums

One of the central features of the Levelling Up and Regeneration Act 2023 is the introduction of enhanced council tax premiums for homes that remain empty for a significant period. This measure targets properties that are not used as primary residences, with the aim of encouraging owners to either rent them out, sell them, or bring them back into use.


Premium Rates and Duration

Under the new regulations, local authorities can charge up to 100% premium on the council tax of homes that have been empty for more than one year. This is a significant increase from previous regulations, where the premium kicked in after two years of a property being empty. The premium can escalate further if a property remains unoccupied for longer periods:


  • Double the normal rate for homes empty for between one and two years.

  • Triple the rate for homes empty for between two and five years.

  • Quadruple the rate for homes empty for more than five years.


These tiered premiums are designed to create a progressively increasing financial burden on property owners who leave their properties vacant, thus incentivizing them to take action.


Exemptions and Reliefs

The Act also specifies several exemptions and reliefs to prevent undue hardship in certain circumstances:


  • Renovation Exemption: Properties undergoing significant renovation can be exempt from the premium if they are demonstrably uninhabitable due to the works being carried out.

  • Inheritance Exemption: A temporary exemption is available for homes that have been inherited, giving the new owners up to one year to sort out the estate before any premiums are applied.

  • Charitable Ownership Exemption: Properties owned by charities and left empty can be exempt if they were last used for the charity’s purposes.


Local Authority Discretion

Local councils are granted discretion under the Act to implement these premiums according to local housing needs and conditions. This means that the application of the premiums can vary from one council to another, depending on the local strategy for housing and the specific issues faced by the community.


Implementation and Oversight

The implementation of these new regulations is monitored by the Department for Levelling Up, Housing and Communities, which provides guidelines and oversight to ensure the premiums are applied fairly and effectively. Councils are required to report on the use of these premiums and their impact, ensuring transparency and accountability in how the additional funds are used to benefit local communities.


Impact on Housing and Community Development

The ultimate goal of these regulations is to reduce the number of long-term empty homes and reintegrate them into the housing market, thereby alleviating the housing shortage in many areas. By imposing financial penalties on owners of empty homes, the government aims to encourage the active use of all properties and support the regeneration of neighborhoods.


Future Considerations

The Levelling Up and Regeneration Act 2023 allows for future adjustments to the council tax premium system based on its effectiveness and the evolving housing market conditions. This adaptive approach ensures that the legislation can remain relevant and continue to address the core issues of housing scarcity and community decline.

These regulations represent a proactive approach to tackling the persistent issue of empty homes in the UK. By incentivizing property owners through financial means, the government aims to encourage more responsible property management and contribute to the overall goal of leveling up regions across the country.



Practical Implications for Landlords and Enforcement of New Council Tax Laws

With the introduction of stricter council tax penalties on empty properties in 2024, UK landlords must navigate a landscape where keeping a property vacant has become financially untenable. This part of the article addresses the practical implications these changes bring for landlords and details how local councils are enforcing these new regulations.


Impact on Landlord Decisions

The increased council tax on long-term empty properties serves as a significant financial incentive for landlords to avoid prolonged vacancies. This policy aims to reduce the number of homes that remain unoccupied in the UK, estimated at 1.5 million as of the last census, by compelling property owners to either rent, sell, or repurpose their properties.


  1. Financial Planning: Landlords must now factor in the potential of a 100% tax premium after just one year of vacancy. This changes the financial dynamics, particularly for those who might have previously allowed properties to sit empty while waiting for market conditions to improve or during prolonged sale processes.

  2. Property Management: Efficient management becomes crucial under the new tax regime. Landlords are incentivized to speed up renovation works, reduce downtime between tenancies, and actively market their properties to minimize vacancy periods.


Local Council Enforcement Tactics

Councils are equipped with new powers to enforce these council tax rules more rigorously. Enforcement tactics vary by region but generally include:


  1. Regular Inspections: Some councils have implemented more frequent inspections of properties reported as empty, ensuring that landlords are compliant with the new time frames for vacancies.

  2. Data Sharing Initiatives: Enhanced cooperation between local authorities and other governmental bodies helps in identifying long-term vacant properties. Data sharing has become a key tool in tracking and managing empty homes effectively​.

  3. Increased Communication: Councils are also stepping up communications with property owners to ensure they are aware of the changes and understand the financial implications of not acting to reduce vacancy periods.


Case Studies: Local Council Approaches

Several councils have adopted innovative approaches to encourage the utilization of empty properties:


  • Example 1: In Bristol, the local council has not only imposed the double tax rate but also offers a support system for landlords looking to bring properties back into use, including advice and potential financial aid for renovations.

  • Example 2: In Cheshire, special considerations are given to properties undergoing significant renovations, with exemptions provided to alleviate the financial burden during major upgrade phases.


These case studies illustrate how different regions are adapting to the new regulations, offering a mix of enforcement and support to ensure properties are brought back into use.


The changes in council tax regulations are reshaping how landlords manage their properties in the UK. The final part of this article will explore expert advice for landlords on staying compliant with these new laws while maintaining profitability in a challenging real estate market. Stay tuned for actionable insights and detailed guidance in the concluding section.


Expert Advice for Landlords and Navigating Compliance with Council Tax Laws

As UK landlords adjust to the new council tax penalties on empty properties, understanding how to navigate these changes is crucial for maintaining compliance and optimizing property management strategies. This final section provides expert advice on dealing with the new regulations and maintaining profitability in the evolving real estate market.


Strategies for Minimizing Vacancy and Managing Compliance

Given the financial implications of the new council tax laws, landlords need effective strategies to minimize property vacancies and ensure compliance:


  1. Proactive Property Management: Engage with property management services to ensure quick turnovers between tenants. Efficient property management can help minimize vacancy periods by handling repairs, marketing properties effectively, and vetting potential tenants swiftly.

  2. Utilize Temporary Occupancy: Consider short-term rentals or pop-up uses for properties that might otherwise sit empty. This can provide an income stream while avoiding the hefty council tax penalties associated with long-term vacancies.

  3. Engage with Local Council Programs: Many local councils offer programs and support for landlords looking to bring their properties back into use. Engaging with these programs can provide access to resources, financial incentives, and advice on effectively managing and re-purposing empty properties.


Navigating Legal and Financial Considerations

Understanding the legal and financial aspects of these new regulations is fundamental for landlords:


  1. Legal Consultation: It's advisable to consult with a property law expert to understand fully the implications of the new laws on your specific circumstances. Legal advice can help mitigate risks associated with non-compliance and provide guidance on potential exemptions and reliefs available.

  2. Financial Planning: Reassess financial strategies to account for the potential impact of council tax premiums on profitability. This might include revisiting rental pricing strategies, property investment plans, and tax obligations.


Maintaining Property Value and Community Engagement

Landlords play a vital role in the communities where their properties are located. Maintaining property value and engaging positively with the community can lead to better outcomes for landlords and residents alike:


  1. Community Relations: Engaging with community leaders and residents can help landlords understand local needs and preferences, which can inform decisions about property use and tenant selection.

  2. Upkeep and Improvements: Regularly investing in property maintenance and improvements can enhance property value, attract and retain tenants, and prevent properties from becoming uninhabitable, thus avoiding council tax penalties.


By implementing these strategies, landlords can not only comply with the new council tax laws but also contribute positively to solving the housing shortage, improving their property value, and maintaining profitability in a challenging market. As the landscape of property ownership and management continues to evolve, staying informed and adaptable will be key to success.



What Happens If a Landlord Falsely Declares a Property as Occupied To Avoid Council Tax on an Empty Property?

When a landlord in the UK falsely declares a property as occupied to avoid council tax on an empty property, several consequences and legal implications can arise. This deceitful practice not only breaches local government regulations but also potentially constitutes fraud under broader legal statutes. This discussion will delve into the mechanisms of detection, legal consequences, and preventative measures within the council tax system.


Detection Mechanisms

Local councils in the UK have various methods at their disposal to detect whether a property is falsely declared as occupied. These methods include, but are not limited to, data cross-checking with utility companies to monitor usage patterns indicative of occupancy. Councils may also perform physical inspections or use information from neighbours and other community sources to verify occupancy claims. This proactive approach helps ensure that property statuses are accurately reflected in council records.


Legal Consequences of False Declarations

The legal repercussions of falsely declaring an occupied property can be severe. Under UK law, such deception can be classified as council tax fraud. According to the Fraud Act 2006, making a false representation to gain a tax advantage constitutes a criminal offense, which can lead to prosecution.


  1. Financial Penalties: If a landlord is found to have falsely declared the occupancy status of their property, they can be subjected to financial penalties, including backdated council tax charges with additional fines and interest on unpaid taxes.

  2. Criminal Prosecution: In more serious cases, landlords may face criminal charges, which could result in a criminal record. Penalties might include substantial fines or even imprisonment, particularly in cases where the fraud is extensive and involves significant sums of money.

  3. Reputational Damage: Beyond legal and financial penalties, landlords may suffer reputational damage, impacting their current and future business dealings. Being known for fraudulent activities can deter potential tenants and business partners, severely affecting their professional reputation and operations.


Preventative Measures by Councils

To combat the issue of false declarations, councils are increasingly employing preventative measures. These include more rigorous verification processes during the council tax registration and periodic checks. Educational campaigns are also conducted to inform property owners of their legal responsibilities and the consequences of non-compliance.


Implications for the Housing Market

The practice of falsely declaring property occupancy not only affects individual landlords but also has broader implications for the housing market and local communities. By dodging council tax, landlords contribute to reduced local government revenue, which is crucial for funding public services. Additionally, this practice can exacerbate housing shortages by keeping properties unnecessarily vacant, thereby denying potential tenants a chance to find homes.


Legal Advice for Landlords

Landlords are advised to maintain transparent dealings with local councils regarding property status. Legal advice should be sought when in doubt about the obligations and implications of property management within the realm of council tax laws. This ensures compliance and avoids the hefty penalties associated with deceitful practices.

In conclusion, falsely declaring a property as occupied to avoid council tax is a serious offense with significant consequences. It is imperative for landlords to adhere strictly to legal requirements and maintain honest communications with local councils to avoid legal repercussions and contribute positively to their communities.



How Does a Council In the UK Verify the Occupancy Status Of a Property?

In the UK, councils employ various methods to verify the occupancy status of a property. These measures are crucial for ensuring accurate council tax billing, detecting fraud, and managing local housing resources efficiently. This article explores the most commonly used methods by which councils determine whether properties are occupied or vacant.


1. Data Matching with Utility Companies

One of the primary methods councils use is data matching with utility companies. Councils can access records of water, gas, and electricity usage to ascertain signs of occupancy. A property with minimal or no utility usage over a significant period might be flagged as unoccupied. This method provides a non-intrusive way to gauge property usage without needing to visit the property physically.


2. Physical Inspections

Councils also conduct physical inspections to verify occupancy. These inspections might be triggered by discrepancies noted in utility data, reports from neighbors, or as part of routine checks for properties known to be vacant previously. During these inspections, officers look for signs of habitual residence, such as the presence of furnishings, personal items, and overall condition of the property.


3. Reports from Neighbours and Local Community

Information from neighbors and the local community plays a vital role in identifying empty properties. Councils often encourage local residents to report suspected vacant properties. This community-driven information can be particularly useful in identifying properties that have been empty for long periods, helping councils take appropriate action.


4. Monitoring Local Authority Records

Councils monitor various local authority records that might indicate occupancy changes. These include electoral roll registrations, where a sudden removal or lack of registered voters at an address could suggest that a property is unoccupied. Similarly, changes in council tax payments or applications for certain permits and services can trigger a review of a property’s occupancy status.


5. Cross-referencing with Government Databases

Further data matching involves cross-referencing with other government databases such as those held by the Department for Work and Pensions or HM Revenue and Customs. This can reveal if the property’s occupants have moved without updating their address for tax, benefits, or electoral purposes, which might indicate that the property has become vacant.


6. Direct Communication

In some cases, councils directly contact property owners or landlords to clarify the occupancy status. This might be through mail, phone calls, or electronic communication, especially if there are inconsistencies in the property’s records or if there has been a recent transaction or inheritance that could affect occupancy.


7. Use of Technology

Some councils are beginning to use more advanced technological solutions, such as aerial imagery or AI-driven analytics, to identify changes in property conditions that might indicate vacancies. These technologies can detect unreported renovations, extensions, or signs of neglect often associated with unoccupied properties.


Legal Framework and Compliance

All these methods are conducted under strict legal frameworks to ensure privacy and data protection compliance. Property owners also have the right to contest findings and provide proof of occupancy, ensuring that the process remains fair and transparent.

By employing these methods, councils can effectively manage and apply council tax, ensuring that resources are allocated fairly and that properties are utilized efficiently, helping to alleviate housing shortages and maintain the vibrancy of communities.



Case Study: Managing a Council Tax Notice for an Empty Property

Background

Let's study a scenario involving a property owner, Oliver Martin, who has a property in London that has been empty for 11 and a half months. Oliver has been refurbishing the property, but due to unforeseen delays, the renovations are not yet complete. Just shy of the 12-month mark, he receives a council tax notice indicating an impending premium due to the property's extended vacancy.


Initial Notice and Response

Upon receiving the notice, Oliver learns that from April 2024, properties left empty for over 12 months are subject to a 100% council tax premium under the new regulations set by the Levelling Up and Regeneration Act 2023. This change aims to encourage the use of empty properties and alleviate housing shortages.


Seeking Exemptions

Aware of the nearing 12-month deadline, Oliver contacts his local council to discuss possible exemptions. He finds out that properties undergoing significant renovations might qualify for an exemption from the premium if they can prove the property is genuinely uninhabitable due to the ongoing work.


Documentation and Council Review

Oliver gathers necessary documentation, including contracts with the construction company, permits, and photographs of the ongoing work, and submits them to the council. The council reviews the evidence to determine if the property qualifies for the renovation exemption. This process involves verifying the extent of the renovations and ensuring they are substantial enough to render the property uninhabitable.


Council Decision

The council confirms that the property qualifies for the exemption due to the significant renovation efforts, thus exempting Oliver from the premium for the duration of the work, provided it does not extend beyond another six months. They advise him to keep them updated on the progress and to notify them when the property becomes habitable again.


Forward Planning

To avoid future premiums and ensure his property does not remain vacant beyond the permissible period, Oliver plans to either complete the renovations and rent out the property or sell it. He schedules the remaining work meticulously to meet the new deadlines and explores potential rental or sale markets to prepare for when the property is ready.


This hypothetical case illustrates the steps and considerations involved in dealing with council tax notices for properties nearing the 12-month vacancy threshold. Property owners must be proactive in seeking exemptions and providing necessary documentation to avoid hefty premiums. The case also highlights the importance of understanding new tax regulations and planning property management strategies accordingly.




How Can an Online Tax Accountant Help You Manage Your Council Tax?

In the complex landscape of UK taxation, managing council tax can be particularly challenging for property owners. An online tax accountant specializes in providing remote financial advice and management services, including assistance with council tax. Their expertise can help you navigate the intricacies of council tax regulations, identify potential savings, and ensure compliance. Here’s how an online tax accountant can assist you in managing your council tax effectively:


1. Understanding Council Tax Requirements and Changes

Council tax is a local taxation system in the UK charged on domestic properties, with the amount varying based on the property's valuation band, the local council's charges, and personal circumstances of the occupants. An online tax accountant stays updated on the latest changes and regulations affecting council tax, including exemptions, discounts, and penalties for non-compliance. By leveraging this knowledge, they can provide valuable guidance to property owners.


2. Identifying Eligibility for Discounts and Exemptions

There are several discounts and exemptions available for council tax payers, such as reductions for single occupancy, students, and properties undergoing significant renovation. An online tax accountant can review your specific situation and advise on potential eligibility for these reductions. They can assist in gathering the necessary documentation and guide you through the application process to ensure that you receive any entitlements.


3. Assistance with Appeals and Disputes

If you believe your council tax bill is incorrect, or if your property has been improperly assessed, an online tax accountant can help you challenge the assessment. They can provide expert advice on the grounds for appeal and assist in preparing and submitting your case to the valuation tribunal. This support can be crucial in navigating the complexities of tax disputes and ensuring a fair resolution.


4. Property Valuation and Banding Advice

The banding of your property significantly impacts the amount of council tax you owe. Online tax accountants can provide advice on property valuation and the implications of rebanding. If your property has been modified, or if there have been significant changes in the local property market, your accountant can help assess whether a revaluation is necessary and beneficial.


5. Budget Planning and Tax Optimization

Online tax accountants can help you plan your finances by incorporating council tax into your overall financial planning. They can offer strategies for tax optimization, ensuring that you're not only compliant but also making the most efficient use of your financial resources. This can include scheduling payments or advising on how to allocate funds effectively to cover tax liabilities.


6. Automating Payments and Managing Deadlines

Missed or late council tax payments can result in penalties. An online tax accountant can help set up automated payment systems to ensure that your council tax is paid on time. They can also keep track of deadlines for you, alerting you to upcoming payments or changes in tax rates, thus preventing any last-minute surprises.


7. Liaison with Local Authorities

Sometimes, dealing directly with local councils can be time-consuming and frustrating. Online tax accountants can act as intermediaries, handling communications with your local council regarding your council tax. This service can be particularly valuable for those who own multiple properties or are not residing in the UK.


8. Education and Advice on Tax Responsibilities

Beyond just managing council tax, online tax accountants can educate property owners on their tax responsibilities and rights. This education can help you understand how to manage your property taxes better and make informed decisions regarding property investments and changes.


9. Supporting Property Investment Decisions

For property investors, understanding the implications of council tax is crucial when evaluating potential investments. Online tax accountants can provide analysis and forecasts on how council tax could affect the returns on potential property acquisitions, helping investors make more informed decisions.


An online tax accountant provides a comprehensive service that extends well beyond simple tax preparation; they offer valuable guidance, strategic planning, and administrative support for managing council tax. By leveraging their services, property owners can navigate the complexities of council tax more confidently and efficiently, ensuring compliance and optimizing financial outcomes. Whether you're a homeowner, landlord, or investor, the expertise of an online tax accountant can be instrumental in managing your council tax responsibilities in the UK.



FAQs


Q1: What happens if a landlord falsely declares a property as occupied to avoid council tax on an empty property?

A: Misdeclaring the occupancy status of a property to evade council tax can lead to legal penalties, including fines and possible criminal charges for fraud. Local authorities have measures to detect such discrepancies and enforce compliance.


Q2: Are there any specific insurance implications for landlords with long-term empty properties under the new council tax rules?

A: Yes, insurance policies might require updates or adjustments as properties that remain empty for extended periods can be considered higher risk, potentially affecting premiums and coverage terms.


Q3: How can landlords apply for an exemption if their property is undergoing renovations?

A: Landlords need to provide evidence of ongoing renovations, such as construction receipts or permits, to their local council to apply for a council tax exemption during the renovation period.


Q4: What are the consequences for failing to notify the council when a property becomes vacant?

A: Failing to notify the council can result in backdated charges and penalties. It's essential for landlords to keep their property status updated with the local council to avoid unexpected liabilities.


Q5: Can landlords appeal against a council tax premium if they believe it has been wrongly applied?

A: Yes, landlords can appeal to their local council if they believe the council tax premium has been incorrectly applied. If the appeal with the council is unsuccessful, they can further escalate the issue to the Valuation Tribunal.


Q6: How does the council verify the occupancy status of a property?

A: Councils may use various methods, including data from utility companies, inspections, and reports from neighbours or community members to verify occupancy status.


Q7: Are there any tax reliefs available for landlords who rent out previously empty properties?

A: Some local councils offer tax incentives or reductions for landlords who bring empty properties back into the rental market to help alleviate local housing shortages.


Q8: What documentation is required to prove a property is uninhabitable due to extensive renovation?

A: Landlords need to provide construction contracts, building permits, photos of the renovation work, and any relevant correspondence with contractors to prove the property is uninhabitable.


Q9: How do short-term lets affect the council tax on a previously empty property?

A: Engaging in short-term lets can exempt the property from the empty home premium, but landlords must register the activity with the local council and possibly obtain necessary permits.


Q10: What should landlords do if they inherit a property that has already been empty for several months?

A: Landlords should immediately inform the local council of the change in ownership and verify how long the property has been vacant to understand any potential council tax liabilities.


Q11: Can a landlord receive a retroactive exemption if they were unaware of the possibility to apply for one during renovations?

A: Typically, exemptions are not retroactively applied, but landlords can contact their council to discuss any extenuating circumstances and possible considerations.


Q12: Are there differences in how council tax premiums are applied in different regions of the UK?

A: Yes, while the overarching regulations are set nationally, local authorities have discretion in how they enforce these rules, which can lead to variations in the application of council tax premiums across different areas.


Q13: What measures can landlords take to legally reduce council tax liability on empty properties?

A: Landlords can ensure the property is rented out or sold promptly, apply for statutory exemptions, or use the property for charitable purposes if applicable.


Q14: How long does it take for a council tax premium to be applied after a property becomes empty?

A: The premium is applied after a property has been empty for more than 12 months without a qualifying exemption.


Q15: What rights do tenants have regarding the disclosure of previous council tax premiums on a property?

A: Tenants can request information on any past council tax issues from landlords, which must be disclosed under the principle of fair trading, ensuring tenants are aware of any implications their tenancy might have.


Q16: Are there any council tax discounts for landlords who are actively trying to sell an empty property?

A: Some councils offer a temporary reduction or exemption if a property is actively on the market for sale, but landlords need to provide proof of ongoing marketing efforts.


Q17: What impact does the council tax premium have on the local housing market?

A: The premium encourages the utilization of empty properties, potentially increasing the availability of housing and stabilizing rental prices by increasing the supply.


Q18: Can a property be exempt from council tax if it is part of an estate still undergoing probate?

A: Properties that are part of an estate in probate may qualify for an exemption during the probate period, but specific conditions and durations vary by council.


Q19: How frequently can a landlord apply for exemptions related to council tax on an empty property?

A: Landlords can apply for exemptions each time the circumstances of the property meet the criteria set out for exemptions, such as during ongoing substantial renovations or changes in the property’s use. It is crucial to submit fresh evidence for each period or circumstance claimed.


Q20: What are the options for landlords if the local council denies an exemption or relief application?

A: If a council tax exemption or relief application is denied, landlords can formally challenge the decision through the council's appeals process. If unresolved, the issue can be escalated to the Valuation Tribunal for further review.

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