I did my tenancy agreements workshop yesterday and an interesting point was raised by one of the delegates.
It was following on from a discussion about Leeds City Council v Broadley, reported by Nearly Legal here which is about Council Tax liability and about whether a periodic tenancy is contractual or statutory.
Why does this matter? Because in the hierarchy of council tax liability, the tenant is liable for council tax so long as they are in occupation, or if they have a ‘material interest’ of 6 months or more, for the duration of the tenancy. Otherwise, it is the landlord who is liable (section 6 Local Government Finance Act 1992).
The Broadley case says (unless and until it is changed on appeal) that the tenant is liable (so far as the Council are concerned) if a periodic tenancy is contractual but not if it is statutory.
The point raised by the delegate was a different one, though. He asked – if the tenant is in a statutory periodic tenancy and is not liable for Council Tax under the Council Tax rules – wouldn’t any tenancy agreement clause requiring the tenant to pay Council tax be unfair?
Under the Unfair Terms rules (now part of the Consumer Rights Act 2015) any clause which materially changes the rights of a tenant for the worse is vulnerable to being found unfair and unenforceable.
This point is particularly significant for tenancy deposit adjudicators (the delegate was a tenancy deposit adjudicator!) as it will affect whether or not they allow deductions from the deposit for claims where landlords have had to pay Council Tax when the tenancy agreement clause provides for it to be paid by tenants.
The other problem is that Council Tax is generally lumped in with all the other utilities so if the clause is found invalid, this may affect the landlord’s right to claim for these also. So I am considering putting Council Tax liability in a completely separate clause.
I would be interested to hear what your views are on all this.