NRLA win on unfair HMO tax
A controversial system which has seen council tax bills soar for HMO landlords is set to be axed following pressure from the NRLA.
Disaggregation is the process by which the Valuation Office (VOA) can ‘split’ a HMO into single units for council tax purposes, meaning landlords are liable to pay council tax per room, rather than for their property as a whole.
For some landlords this has added thousands to their council tax bills, often leaving them with little choice but to increase rents to cover costs, hitting tenants in the pocket.
Now, following talks with the NRLA and pressure group HMO Council Tax Reform Group, the Government has mooted plans to end this unfair practice, announcing a public consultation on the issue this week.
How does disaggregation work?
At present the VOA has wide ranging discretion as to when and where disaggregation should happen, with no blanket rules in place across the England and Wales.
Rooms do not even need to have self-contained washing or cooking facilities to be disaggregated, and landlords have no system by which to appeal a decision, even though the same property in a neighbouring local authority may not be subject to the same rules.
What has the NRLA done?
The NRLA has been campaigning against this unfair practice for some time, writing to the Law Commission and the Government and highlighting the issue in evidence submissions.
In addition to its discussions with Ministers, the NRLA has been working closely with the HMO Council Tax Reform Group, supporting its calls for an amendment to the Local Government Finance Act 1992 - the act that gives the VOA its powers.
And NRLA Chief Executive Ben Beadle also raised disaggregation with Felicity Buchan in his first meeting with the new PRS Minister just weeks after her appointment.
He said: “I was delighted to hear the Government has listened to what we had to say on disaggregation and has mooted plans to end this unfair practice for good.
“HMO landlords, especially those with more than one property, have seen council tax bill skyrocket through no fault of their own. This is turn leaves them with little option but to increase rents at a time when the cost-of-living crisis is biting across the board.
“I would encourage members to respond to this consultation to protect both landlords and tenants, and scrap this unjust system for good.”
Daryn Brewer, Daryn Brewer, Managing Director of houseshare company Prop Pods who spearheaded the campaign for change via the pressure group has thanked the association for its backing.
He said: I’d like to say a big thank you to the NRLA for supporting the HMO Council Tax group. It’s been a real battle to get this far and there have been a lot of people lobbying to get minsters to see that this is an unfair way of taxing tenants who reside in HMOs.
“We now need as many tenants and landlords as possible to complete the consultation and submit their responses.”
What is the Government proposing?
The Department for Levelling Up, Housing and Communities has said it recognises the difficulties that disaggregation can cause, and is proposing amendments to the council tax regulations to tackle this. It is consulting on two options, both of which will see HMOs taxed as a single dwelling for council tax purposes in most cases, limiting disaggregation only to situations in which a property is split into distinct self-contained units.
More information
The consultation closes on March 23. To find out more and to respond click here.
To Listen To Daryn in conversation with Ben on the issue of disaggregation, listen to Episode 23 of our podcast Listen Up Landlords here.
