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Property Hawk

Council Tax - Who Pays?

Most landlords who let a property that is tenanted will not be liable for council tax.  This is because where a property is occupied by a tenant; it’s the tenants who are responsible for meeting the costs of the council tax charge.

However, there will be occasions and situations where a landlord is liable, for instance if the buy-to-let property is empty due to a rental void.

Even where a landlord is liable for the council tax from the outset, as is the case for Houses in Multiple Occupation; it should be remembered that it’s perfectly reasonable for the costs to be recovered as a charge or part of the rent; providing such a provision is made within the tenancy agreement.

Recovery of the costs will however not change the ultimate liability for the charge.

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Landlords liability for council tax



Whilst in general it’s the tenant that pays; there are several important cases where landlords need to be aware of a shift in liability, exemptions from the charge and where a landlord is able to claim a discount on the council tax bill.

Firstly, the 20% of landlords that let Houses in Multiple Occupation (HMO properties ) are liable by statute for the council tax charge, even where the property in fully let. Another situation that frequently arises is where a landlords buy-to-let property is empty for a period because of a letting void; or whilst the property is being refurbished. Finally, where landlords let to students; the property is exempt from council tax.  In all these cases the law can get confusing for both landlord & tenant, especially as individual Local Authorities interpret the rules differently

HMO landlords and council tax


Landlords that own a property that has been classed an HMO property are liable under the Council Tax Regulations for the payment of council tax due on the building.

As many landlords are aware; there are several definitions of what constitutes an HMO.  The confusing aspect is that they are very different.  This means that a property that could not be considered an HMO under the planning regulations may constitute one under the Housing Act 2004 and thereby require a licence.

The Coalition Government has recently removed the requirement for landlords to make a planning application for all properties let to three or more tenants.

Professional landlord insurance rates from Alan Boswell Group

What is a HMO for council tax purposes?


For Council Tax purposes the definition as to whether a property is classed as a HMO for Council Tax purposes is set out within the HMO the Council Tax (Liability for Owners) Regulations 1992.

For the purpose of Council Tax liability, a ‘House in Multiple Occupation’ is:

built or adapted for occupation by people, but who don’t live as a single household.

Or

a dwelling which is occupied by people who have a tenancy or licence to live in only part of the a dwelling, or who pays rent or a license fee for only part of the dwelling.

For example; a house which has been divided into separate bedsits is a good example of an HMO under category, but a block of flats does not come into this category because each flat in the block is a separate, self contained dwelling in its own right.

The decision on whether a property is classed as a HMO for council tax purposes is made by the local authority, who periodically sends out a council tax assessor to band properties.  The list of properties and their banding is maintained by every local authority & is publicly available to view.

If the landlord is unhappy with the classification it is possible to make an appeal against the council tax banding.

If the landlord believes their tenant is exempt from council tax then they should appeal to the relevant local authority.

There are some other occasions where a property may be exempt from council tax

Student landlords


A property that is let entirely to full time students is exempt from council tax and therefore neither landlord or tenant are liable for any council tax.

However, the situation is complicated where students are part time or may be living with non-students.  This is frequently the case in some shared houses where former student tenants move into employment or where student friends move out to be replaced by employed tenants.

For more information on liability for council tax for student landlords.

Council tax and empty properties


The other area where a landlord may be exempt from paying council tax is where their buy-to-let property is empty because they are experiencing a rental void or their property is undergoing a major refurbishment.

Taking the first scenario where a buy-to-let property is empty.  This means that it has to be unoccupied.  The exemption applies for a maximum of 6 months and the property has to be vacant for the whole of this period (although up to six weeks of occupation during the period is allowed). 

Finally, the regulations require the property to be substantially unfurnished.  This is where there can be some confusion. Often local authorities will take the existence of some furniture as evidence of occupation even when the landlord is only storing furniture or has inherited ‘stuff’ as a result of a recent acquisition.  An empty property is exempt from council tax for 6 months, whilst a landlord with an empty furnished property will benefit from a 50% discount.  An empty properties exemption only lasts for 6 months after which a 50% discount applies.

In the case of a property that is undergoing refurbishment works that means that it is uninhabitable; a property benefits from an exemption from council tax liability of up to 12 months.  After this time the 50% empty property discount will apply.  Most councils will need evidence that the property is uninhabitable.  This may include a builders’ schedule of works.  I’ve had a situation myself where the property has had no kitchen or bathroom.  An inspection by the local authority council tax inspector to verify this is normally sufficient to satisfy the powers that be.

If the period of refurbishment is going to be longer than 12 months and you are dissatisfied with paying 50% council tax then it is possible for you as the landlord to appeal to the Valuation Office to get the property removed from the council tax list altogether.

Professional landlord insurance rates from Alan Boswell Group



Comments (13)

You advise that "the regulations" and "...a landlord with an empty furnished property will benefit from a 50% discount".

Could you advise which Regulations you are refering to? I have looked through quite a few and can find no reference to this.

Thanks.
#1 - alexis anderson jones - 05/16/2012 - 13:46
Council Tax
The council have issued me with a liability order for outstanding council tax even though it's Been let to tenants
Us their an appeal whether I can get thus heard again to get this overturned
#2 - Anthony welch - 09/21/2012 - 17:41
Empty furnished property council tax discount
50% discount for an empty furnished property-not any more!

For some time now legislation has allowed councils to limit the council tax discount to a furnished empty property to only 10%. I would be surprised in these economic hard times if there are any councils out there applying a more generous discount.
#3 - Mike Spencer - 10/20/2012 - 09:00
Empty furnished property council tax discount
From 2013 South Glos CC are charging 150% for all empty properties, yes 150% for not using their services like having the bin emptied every 2 weeks etc!
#4 - Mark Anthony James - 10/27/2012 - 09:15
Council tax
My daughter is leaving her rented house which she has a further six months of her lease left to run. The letting agent are advertising the house to let but so far no one has viewed the house. The letting agent has said that my daughter has to pay the monthly rent until the house is let and also pay the council tax even though the house will be completely empty of furniture - is this true? Thanks.
#5 - SR - 01/11/2013 - 18:45
Landlords and Council Tax
Isn't it about time that landlords of ALL rented houses, (whether student_occupied or not), were made liable for Council Tax on their properties? They could then pass on the charge through the tenancy agreement, or even just pay through their (considerable) profits. Council incomes would be vastly improved by this.
#6 - David Wood - 04/26/2013 - 07:58
Council Tax
We completed on a property on 8th May 2013 the property had been empty for 2 years. We received a council bill and are duly paying the monthly payments. Now we have been told we have to pay £333 because the property had been empty and previous owner had the discount. Surely we cannot be held responsible for this when we didn't even own the property.
#7 - Mrs Blackwell - 08/13/2013 - 11:18
HMO
Is it illegal to rent out a 3 bedroom property to 3 people from different families without an HMO.
#8 - scott penma - 02/04/2014 - 20:59
bedsits and council tax
Tenancy agreement included council tax with my rent for the last 10 years. The bedsit now been re classed as a dwelling by my local council. My landlord still charging me for council tax and is refusing to reduce my rent. I'm paying council tax twice. What should I do?
#9 - Peter kitchener - 02/16/2014 - 00:35
council tax
Unemployed relative (son) living alone in a property owned by myself. Accumulating council tax and services arrears.
Can I be made liable ? If so, how do I provent myself from being liable ?
#10 - graeme - 03/07/2014 - 19:41
HMO/re-designation to Private dwellings
We have a HMO (or should I say had) which was re-designated to privated dwellings. We appealed this ruling to the VOA, but were not successful. The council backdated this re-designation by two years and are demanding payment of private council tax for these two years, despite the fact that tax had been paid on the property as a HMO. Are council's legally entiled to backdate council tax like this ?. What a sham of a legal system if this is so!
#11 - Margaret Murphy - 09/05/2014 - 14:45
Let to management letting agency
I let the property to a letting agent who has stopped trading iin 2013 and now the council is chasing me for council tax. I remember the agent saying it was let to students but he has closed his business and i have no details of tenants. Would i have to pay council tax for them? I saw the agent and he said he has no records of his old business etc. please can someone advise?
#12 - S - 12/08/2014 - 19:04
hmo council tax england
hmo with 5 rooms 4 rented out to students my son works and will be fitht tennent what poll tax would he have to pay with thanks ian
#13 - ian - 02/01/2015 - 20:59
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