Tax advice for landlords

Council tax and HMOs

The definition of a house in multiple occupation (HMO) is different when determining council tax liability from the definitions used for HMO Licensing or Planning. This means, for example, that a property could need an HMO licence, but may not need planning permission, and may not be an HMO for council tax purposes. The council tax rate will depend on the banding of the dwelling(s) at the property. This is a complex area of law and if you are in any doubt, you should always check.

Under council tax rules, a property is an HMO if:

• It was originally built, or subsequently adapted, for occupation by persons who do not constitute a single household; or
• Each person who inhabits it is either:
  • A tenant or licensee able to occupy part only of the dwelling; or
  • A licensee who is not liable to pay rent or a licence fee on the whole of the dwelling.

Council tax liability for HMOs

If a property is an HMO under council tax rules, the owner is always liable.

Students

If a house is occupied solely by qualifying students, the household will be exempt. However, if a non-student moves in, or an existing student abandons their course, a liability is created. If the property is occupied under a joint tenancy, the bill is issued in the name of the non-student; if it is let on individual tenancies, the owner will be billed.

Self-contained flats

The Valuation Office Agency (VOA) may determine that each self-contained flat or bedsit within the HMO is a separate dwelling and each occupant should be billed separately. This means that whenever a flat become empty, the landlord will have a separate bill for each flat.

Abandoned tenancies

If a tenant who is liable for council tax abandons a property with a period left to run under a tenancy that was granted for 6 months or more, they remain liable for the council tax for the remainder of the term, unless the owner takes steps to regain possession or re-let it.

Letting agents

Letting agents will never be liable for council tax unless they have taken on a tenancy themselves and are sub-letting the property. However, bills can be sent care of the agent if requested by the owner.