Hello Readers,
Something that has had the risk of keeping HMO investors up at night is the banding of properties for council tax to be charged per room as opposed to per property.
Whilst it’s fairly rare, there are a couple of investors I know who have fallen into this bracket and it’s been a significant issue.
Back in March 2021, I wrote a detailed article on HMOs and council tax banding, which explained how HMOs are banded and the risks of getting it wrong. Simply put, you really don’t want to be getting this one wrong as the risk is that your property may become non-rentable!
What’s happening?
Well, here’s the good news…following a consultation by the Department of Levelling Up, Housing and Communities, HMOs will now be classed as a single property. This is fantastic news and welcomed with opened arms by HMO investors.
I honestly can’t believe it’s taken so long for the government to see the light on this one, but finally it’s great that we got there. I’ll be keeping my eyes open for the regulations that will be laid out in the coming months, with the policy to come into force before the end of 2023.
NRLA Chief executive Ben Beadle explained that:
We are delighted that the government has listened to NRLA and others and will end the unjust practice of charging council tax on individual rooms.
Not only will it save tenants money, it means landlords will once again be able to let rooms inclusive of council tax, making it easier for renters to budget.
Unsurprisingly, feedback from the consultation was that the current system is unfair, with a disincentive for landlords to invest, improve or modernise their HMOs and concern from tenants that they may suddenly become liable for a bill they were previously unaware of.
With these changes, does this mean more incentive for investors to branch out into operating an HMO? I certainly think so and Medway is an excellent choice for those who do!
It will be interesting to see what happens where HMOs have been incorrectly banded as multiple properties as well. Will landlords (and, or tenants) get their money back? I should certainly hope so, but I think if they do it will be a long and drawn out process.
A shift in government policy?
We’re really seen something of a shift in policy over the past couple of weeks. First the removal of the EPC upgrade requirements, then the requirement to reform the courts before the banning of section 21, now this change.
The only problem investors have is that that with Labour storming ahead in the polls, I think it could be inevitable we will end up with a Labour government who may end up reversing some of the changes (particularly around energy efficiency).
Voting intentions in a general election in the United Kingdom from July 2017 to October 2023
Is it time to leap for joy? I certainly wouldn’t say that, but I do think it’s time to welcome the changes with cautious optimism. It will be interesting to see what 2024 brings, that’s for sure!
Hasan
