Council tax reform for HMOs: good news for some, bad news for others

While the Government has announced a new policy to simplify the council tax system for houses of multiple occupation (HMOs), not all types of HMOs will benefit from the change, and many tenants and landlords will still face higher bills, one legal expert warns.

Currently, the Valuation Office Agency (VoA) is re-assessing each room in an HMO as a separate unit for council tax purposes and assigning them their own band.

This means that each tenant must pay an individual council tax bill, which could be higher than their share of the amount charged for the whole property.

The Government says it wants to provide more certainty and consistency in the treatment of HMOs for council tax, and to ensure that they are banded as one property and have one council tax band.

It also wants to ensure that liability for council tax remains with the HMO landlord and that their tenants are not subject to individual council tax bills.

Views on the council tax valuation of HMOs

The government’s decision follows a consultation launched by the Department for Levelling Up, Housing and Communities (DLUHC) in February, which sought views on the council tax valuation of HMOs.

However, the wording of the recent report leaves the fate of hundreds of thousands of HMO tenants in the balance.

Phil Turtle, the compliance director at Landlord Licensing & Defence, said: “On the surface, this is good news for HMO tenants and landlords.

“Or at least for shared-facility HMOs defined under Section 254(2) of the Housing Act.

“It’s not so good for section 257 converted building HMOs.

“However, these look like proper flats and the treatment was to be expected.”

‘Many tens of thousands of Section 254(4) HMOs’

Mr Turtle continued: “What no one seems to have taken account of is the many tens of thousands of Section 254(4) HMOs, where some of the bedsits have kitchenettes and en-suites but one or more of the bedsits in the building has private essential facilities outside their bedsit door.”

He says that a bedsit may contain a kitchenette, but the tenant must leave their bedsit to access their private bathroom which may be along a corridor, or down a few steps from their room.

And an HMO tenant with an en-suite in their room might have a private kitchen that is also accessed down a corridor but isn’t shared with other tenants.

Mr Turtle said: “It is essential that it is made clear in the legislation that ALL Section 254 HMOs – including s254(4) – are treated as single houses for council tax, otherwise the apparent win will be somewhat hollow for hundreds of thousands of tenants still forced to pay individual council tax bills.”

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