HMO council tax consultation: How to get involved
Landlords have until March 31st to respond to an important consultation on council tax in HMO properties.
The consultation proposes that HMO properties will never have more than one council tax bill - an issue the NRLA has been campaigning on for some time.
Under the current rules, the Valuation Office Agency (VOA) can split a property up for council tax purposes, creating multiple bills for one dwelling.
The VOA has wide ranging discretion to do this, as the bar for disaggregating a property is very low. Under the current rules, if a landlord lets a property by the room, even if the rooms are not self-contained in any way, the VOA will usually have enough to justify creating multiple council tax bills.
Application of this is inconsistent, but where the VOA does do this it means that:
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Tenants become responsible for paying the council tax for their room. Increasing their costs by around a thousand pounds per year.
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Landlords face higher costs from multiple bills during void periods. To remain competitive with the market they will usually have to reduce the rent by the equivalent of the new council tax bill for the room.
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Landlords will often find it more difficult to retain tenants due to the council tax costs.
What is the government proposing?
Following campaigning by the NRLA and other groups, the government is now looking to address these issues by proposing two different options that would prevent HMO dwellings from being disaggregated.
They are:
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Changing the Council Tax (Chargeable Dwellings) Order 1992 so that listing officers must treat a HMO as a single property unless there are exceptional circumstances.
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The Secretary of State would, by an order, declare that all HMO properties are one singular dwelling for council tax purposes.
Both of these solutions would be an improvement on the current system. However the NRLA recommends that the latter option is preferred as it would be the quickest way to make all HMO properties pay one council tax bill in the future.
Why you should get involved?
Most HMO landlords have so far managed to avoid disaggregation as the VOA cannot visit every property. However, anyone using a room only tenancy could be at risk of it happening to them.
Because of this we are strongly recommending that all HMO landlords respond to the consultation to endorse the government’s proposals.
How to get involved
You can respond to the consultation here before March 31.
What is the NRLA saying in its response?
The NRLA is also responding to this consultation. We are welcoming the Government’s proposals and suggesting that:
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The current system is failing landlords and tenants alike and needs to be addressed. Where disaggregation occurs it can raise the council tax bill on a five bed property by over £3,000 per year on average. There is no good reason to raise costs on tenants or landlords in this manner (Questions 1-4)
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The Secretary of State should make an order that all HMO properties are treated as one dwelling, unless that property has been split into multiple self-contained units (question 5).
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The meaning of HMO should be clear across all legislation and it must be clear that it is one property with multiple sharers. We recommend using the Housing Act 2004 definition (three or more people, at least two of whom are unrelated, sharing a house) as the basis for this (Question 6-10).
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Where a building has been turned into multiple self-contained units, each unit should have its own council tax charge. This has to be a fully self-contained property though and must include all of the facilities necessary for individual living (question 11)
What should you say in your response?
If your properties have already been disaggregated, then it is important to provide information on how it is impacted on your business. This could include –
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How much the council tax bill rose by;
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How it impacted on your tenants;
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Whether it prevented you from performing improvements in the future;
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Whether you tried to help your tenants with their new costs;
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Whether it affected your decision to invest in more homes for tenants.
If possible, a comment from your own tenants would be helpful in getting the points across.
If you have not been affected by disaggregation, we recommend explaining how it would affect you in theory.
