Hello Readers,
I recently stumbled across an article I wrote a couple of years ago and it crossed my mind that I have not written an update on how council tax for HMOs is calculated.
Up to the start of December 2023, council tax for HMOs was a challenging area because, on occasion, the Valuation Office Agency (VOA) calculated how much was payable on a per-room basis rather than a whole property.
This left HMO landlords with the potential risk of a significant council tax bill and several landlords who contacted me to talk about managing their properties were in this situation.
The problem with this was that, in the event of an HMO being assessed as individual dwellings, tenants found themselves ultimately liable or, at least, required to pay council tax on top of their rent.
Following my article, regulations changed, things becoming much more straight forward for landlords and tenants, as the Council Tax (Chargeable Dwellings and Liability for Owners) (Amendment) (England) Regulations 2023 came into force.
Simply put, these regulations made two key changes and I have outlined these below:
- An HMO is now considered a single dwelling for the purposes of council tax
- HMO landlords (not tenants) are responsible for paying council tax
These two changes were, ultimately, welcomed by landlords and several I work with in Medway have expressed that it’s positive there is now that additional layer of certainty when it comes to cost.
There are a few additional areas to be aware of in relation to council tax however as whilst it’s now more straightforward, it’s still an area you will want to know about!
Exemptions and Reductions
Landlords managing vacant properties face varying regulations. Prior to 2013, empty, unfurnished homes were often exempt from council tax during refurbishment or temporary vacancies.
However, local authorities now have the power to determine discounts, requiring landlords to stay updated on regional policies. For example, Medway Council has removed any discount for unoccupied and unfurnished properties, with additional council tax payable for extended periods of vacancy:
“From 1 April 2024, if a property has been empty for 1 or more years, you’ll be charged an additional 100% of your Council Tax (for example, if your yearly Council Tax is £1,500 it will increase to £3,000).
If a property remains empty for 5 years or more, you’ll be charged an additional 200%. For properties that have been empty for at least 10 years, you’ll be charged an additional 300%.”
Section 257 HMOs (self-converted flats)
Properties classified under Section 257 of the Housing Act (converted self-contained flats that fall under HMO licensing) are excluded from these changes.
The information section of the gov.uk website explains that:
“Self-contained flats which are covered by section 257 of the Housing Act are and therefore subject to HMO licensing are excluded from the scope of these regulations as the government considers that such flats should normally have their own council tax band.”
If you are planning on converting a property to this type of HMO, do get in touch and I will be more than happy to advise where you need.
In conclusion, council tax is a much more straightforward area today that it has been in the past, but still one to consider when planning a conversion. My opinion is that this change was a positive one and certainly everyone I have spoken to about it tends to agree!
If you have any questions around this, then do drop me an email on hasan@home-share.co.uk and I will be happy to help.
Hasan
