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HMOs and Council Tax

coinsA different definition of HMOs

Did you know that the definition of an HMO for council tax is different from the one that is used for licensing and similar purposes under the Housing Act 2004.

The definition is in Regulation 2 Council Tax (Liability for Owners) Regulations 1992. This states:

The following are the classes of chargeable dwellings prescribed for the purposes of section 8(1) of the of section 8(1) of the [LGFA]-
Houses in multiple occupation, etc
Class C a dwelling which
(a) was originally constructed or subsequently adapted for occupation by persons who do not constitute a single household; or
(b) is inhabited by a person who, or by two or more persons each of whom either-
(1) is a tenant of, or has a licence to occupy, part only of the dwelling; or
(2) has a licence to occupy, but is not liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of the dwelling as a whole.

So this means that if you, the landlord, reserve part of the property for your own use, for example if you keep a room to store your own possessions in, then you will be the person who has the primary liability for council tax.

In the current economic climate, Councils are under pressure to raise as much tax as they can, so if your tenants are not paying their council tax, the Council Officers will be looking for an opportunity to make you responsible.

Goremsandu -v- LB of Harrow

This was looked at in the recent case of Goremsandu -v- London Borough of Harrow. Here the tenants had a joint and several tenancy agreement but paid their rent separately to the Landlord. Also as they did not require the furniture which was let with the property, it had been stored in a conservatory which therefore could not be used (as there was so much furniture in it).

The Council claimed that these two facts meant that the landlord was responsible for the council tax, and this view was upheld by the Valuation Tribunal.  However when the landlord appealed to the High Court, the decision was overturned, and the Court confirmed that the property was not an HMO for council tax purposes.  You will find a more detailed report on the Nearly Legal Blog.

However this case serves as a useful reminder that if you want to avoid any liability for council tax, you should put all tenants on one tenancy agreement (on a joint and several basis) and not reserve any part of the property for your own use or storage.

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Important note. If you are reading an old post, remember that the law may have changed since it was written.

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3 Responses to HMOs and Council Tax

  1. Interesting. On a related point, I was surprised to learn that an empty but furnished property attracts full council tax liability for the landlord, but an unfurnished one doesn’t. When I enquired what constitutes ‘furnished’ I was told a property that has ‘seats and beds’. So, landlords of furnished property, it’s probably going to be cheaper to dismantel beds and store your seats during voids.



About the post author:

Tessa Shepperson

Tessa is a lawyer and specialises in creating products and services which help landlords and letting agents learn and understand landlord & tenant law. For example, she runs the Landlord Law website (now in its 14th year) and is a director of Easy Law Training Ltd and Your Law Store. Tessa also sits on the Property Redress Scheme Council. When not working she enjoys reading, cooking and messing around on the computer. You can also find her on Google

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Tessa is an English lawyer specialising in residential landlord and tenant law.

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