Who pays for the council tax in a HMO?
To me this is quite an easy one but to some people, its a bit muddy.
I read an interesting article recently in the excellent Nearly Legal blog on the joys of housing law. Don’t immediately switch off because I mentioned the law but read on to find out a little more about whose responsibility it is to pay the council tax.
In the eyes of the council and housing law; the owner or tenant is responsible for the council tax. In a HMO where you are renting rooms on an all-inclusive basis to your sharers, it is YOUR responsibility to pay the council tax.
If you are renting a HMO to students where they generally pay most of the bills – it is their responsibility to pay the council tax – except as students, they are one of the few exempt people to not have to pay the council tax.
In the blog posted on Nearly Legal, a tenant rented a property, claimed never to have moved in, then sub-let the property to four people (making it a HMO) but did not pay the council tax. He claimed his tenancy ended after six months and that he had never lived there.
These two points are irrelavent because a tenancy automatically converts to a periodic tenancy after six months unless notice is given and it is the responsibility of the owner or the tenant to pay the council tax.
As this tenant was renting from the landlord, the responsibility passed over to the tenant even if he was not living there. There were several other extenuating circumstances which the article goes into but it is worth remembering that you, as the landlord are responsible for paying the council tax.
I am a landlord who rents rooms in a HMO. I only let to students but, even though I ask for proof they are students do not check the information too thoroughly as the tenancy agreements state they are responsible for council tax. I pay most bills as it is convenient but they pay electricity on pay as you go. Suddenly the council have tried to hit me for 3 years worth of council tax despite me telling them it is student occupied. Now what?Thanks
Hi Audra, the actual process that needs to take place is that the tenants need to apply to the council for council tax exemption. Normally, the university has to provide this exemption as well to concur with your students stating that they are students. I would suggest that you a) speak to the university to get their records of the students you’ve had in and b) get the AST’s proving your students have lived at the property.
hope this helps
Matthew
Hi Matthew,
I just recently moved out of my parents house and I am living with 2 other friends and we share a kitchen a bathroom etc. Now I believe that is a HMO?
After reading the above article, I just want to 100% sure that I get this right, is it the responsibility of the landlord to pay the council tax?
Before I moved in there was a third person who I have now replaced but they have been paying council tax for the past three years.
What are your thoughts on this?
Many thanks
Gareth
Hi.
I have a HMO with 3 tenants on individual contracts. They are all full time students. Southwark council state that I am liable to pay the council tax, even though I have full time students. They say this is because I am liable and the tenants situation is not taken into account.
Is this right. Where can I find more information on this?
thanks for your help
N x
Hi Gareth, you are right in that technically its a HMO but its a small one so most councils will not be too interested in implementing HMO regulations. In terms of the council tax, this depends on your contract. If you are renting out the entire house on one contract with NO bills included, then you may be responsible. If however, you are renting out a room and just sharing with other people and bills ARE included, then the landlord may be responsible. With precedent set of the sharers paying the council tax, then I think that’s where it will continue.
Council tax needs to be paid by the person living in the house. Its only because HMO’s often are all-inclusive that the landlord pays it on behalf of the tenants.
hope this helps
Hi Nicki, they are wrong I believe. A student can submit an opted out form from their university so that they do not have to pay council tax. It is the responsibility of the person living in the house to pay council tax, not necessarily the landlord. And with students living in the property, they will be very hard pressed to prove that the landlord is liable.
Good luck and let me know how you get on!
Hi Matthew
I rent houses to student s in northampton. I have several houses and the students are on a single tenancy agreement for each house. The houses are HMO’s as they have tenants from more than 3 families. I am getting frustrated as despite telling nothampton council that they are students and giving them the students contact details they still send me Red bills and threaten toi take ME to court for not paying the bill.
They are saying as i have not proven they are students and as it is an HMO that the landlord is liable for the council tax. I explain the logistical problem of chasing up 40 drunk students for council tax exemption certificates which they got when they enrolled will 1000 other sheets of paper.
Is it my responsibility to collect these forms? or are the council just trying to get there money??
can u give me any advice?
thanks
Anthony
Hello Anthony,
Nice to see someone local! If you need any management help in Northampton then do me let know as we cover this area.
OK, I did a bit more research into this and it turns out that the Northampton Council website is pretty dire in terms of any information.
However, the direct gov site is very useful:
http://www.direct.gov.uk/en/HomeAndCommunity/YourlocalcouncilandCouncilTax/CouncilTax/DG_10037383
It states the following plus other useful info:
Who is responsible for paying the bill?
There’s one Council Tax bill for each home. Usually the person living in the property has to pay the bill. Spouses and partners who live together are both responsible for paying the bill.
The person at the top or nearest to the top of the following list has to pay the bill:
• lives in the property and owns it
• lives in the property and has a lease (this includes ‘assured tenants’ under the Housing Act 1988)
• lives in the property and is a ’statutory’ or ’secure’ tenant
• lives in the property and isn’t a tenant but has permission to live there
• lives in the property (for example a squatter)
• has a lease of six months or more on the property, but doesn’t live there
• owns the property but doesn’t live there
So, from looking at this, it would appear that the students are the first line in paying the council tax, you are actually right down the bottom in last place.
So, I would refer them to these guidelines, ask them to stop hassling you for rent and at the same time, instigate a system which ensures that you get the students to sign their exemption forms BEFORE they move in. Its the only way.
By the way, if you can prove they are the tenants and responsible for bills, then that’s another angle to take.
good luck!
We have a licensed HMO of 6 people, all are working full time. Now the council tax bill has come through in my name as the owner/landlord so I have paid it and asked the tenants for their share of the bill as it is stipulated in their contract that they are liable for council tax. Their bills are not included in their rent. Is this correct?
Thanks
Hi I have a 4 bedroom house, that I have previously let to students. However in 2008 it wasn’t full so I let a couple of rooms to professionals. I assume I’m liable for council tax at this point, although they have always been responsible for paying the bills?
The students then moved out therefore there were only two tenants for a few months, so are they then liable for the council tax as it was not a HMO for that period?
Thanks Rebecca
Anna,
not sure on this as are you renting the rooms as all-inclusive rent or not? Most rooms are sold all-inclusive but may have extras for electric (common in lower end hmo’s). COuncil tax depends on your set-up.
Rebecca
the landlord is generally responsible for council tax unless you have students/housing benefit clients in there where they get discounts or free council tax. So yes for professionals you would normally be liable.
Hi Matthew.
I normally let to students and have never had a problem here in Huddersfield until this last year. One tenant in a house of 4 (a regsitered HMO) was supposed to be a student but failed his year and started claiming Housing Benefit. The Council then decided I was responsible for the Council Tax but said that my tenant couldn’t claim Council Tax benefit as ” … he wasn’t paying Council tax.”
The Tenancy Agreement (shown to the Council), is a single Assured Shorthold agreement, includes all bills but explicitly excludes Council Tax. The Council also reduced his Housing Benefit for some reason they will not tell me (it’s not my benefit after all) so his benefit doesn’t even cover the rent, let alone the Council Tax.
I am paying the Council Tax, but am arguing with the Council over their treatment of my tenant, denying him benefits to which he should be entitled.
I have seen the list of priority above, but it ap[pears the law regarding HMO’s and Landlords trumps this.
Any input would be appreciated.
Hi, I have a licensed HMO of 6 people, all are full time students on separate AST’s. However, since September one of the students has left their course and applied for work. The council have said that I am liable for the council tax from that period and not the tenant. The tenant is also in breach of their contract as the AST is students only.
All the tenants pay their own water, electricity, broadband bills
Hey Dave and Greg, very similar questions and if you look at the comments, I’ve pretty much already answered this.
If you have students in a property, then they are exempt from paying council tax. Therefore, you cannot be held liable for paying tax for them. However, if they then become a normal member of public (ie not a student), then it would normally fall upon you to pay the council tax.
However, if they are unemployed, then normally the council will foot this bill but you will need to apply for this through them.
In the case where they are now looking for work, it really depends on how the contract is worded in relation to the inclusion of the “council tax” within the rent. If everything is included, then you may be liable.
hope this helps
Matthew
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