Review of Council Tax rule for HMOs – Petition

The ruling for separate Tax banding use to be that the accommodation had to be fully self-contained. I have flat that contains separate rooms for, Lounge, Kitchen, Bedroom and Toilet, but no shower. The resident uses a shared shower off the communal hallway. In the past I have successfully appealed the VOA attempt to Tax Band it because I claimed no one could live in it without the shared shower.
Now the rules the VOA apply are “Is it a Habitat?” What’s a Habitat? It is anywhere a person lives that is private. So a single room with no facilities but with a lock on the door could be classified as a “habitat”. So if the VOA band a room, all you have to do is appeal every time it is empty, because it is no longer a “Habitat” The VOA can’t just band rooms because they have the potential of being a Habitat.
Because this banding is based on the person living there and not the room its self, this is the Pole Tax selectively applied to the poor in a different form.
I have a nice 20 bedsit property. All working people paying £80 a week each . The Council Tax is £6K for the whole building. It has been re banded as 20 band “A” at a cost of £16.5K a year. Up £10K. So the Tax on each bedsit has gone from £5.76 a week to £15.80 a week. That might seem like its only £10 a week, but the previously total cost including the mortgage was around £50 a week. So it was £30 net profit less the crippling new tax. That profit has dropped to £20 a week.
This banding is yet again changing the face of letting. Why provide lower cost bedsits with shared facilities for working people when you pay the same tax as a one bed flat? Also consider people on benefits don’t pay council tax. So are you better off now accommodating those on benefits and turning away the working?

I think you will find that tenants on benefits now pay council tax, although not always at the full rate. I know ours do but it may vary between Local Authorities.

I had an HMO re banded several years ago, the first I knew about it was when the tenants received their letters from the VOA, I was not notified by the VOA. The tenants had to pay council tax from the 1st of the month but did not receive the letters until the 8th of the month so they were already in arrears when they received the notification. I wrote to my MP
about it and received a written apology from the VOA.
I submitted a freedom of information request to my local council and found that council tax collection had been outsourced to a private company whose contract included "Maximising income from council tax". I also found that councils were claiming the new homes bonus on the additional units which were listed on the council tax base form
after HMOs were re banded. This was confirmed in a letter from Grant Shapps who was Housing Minister at the time.
Four out of the five tenants affected by the re banding claimed
council tax support. The cost to the taxpayer for this policy must be immense.

Yes, it is yet another policy, the net result of which will be to add to the pressures on the long term let part of the private rented sector - adding to the impact of the various tax hikes and increasing amounts of regulation that private landlords have had to deal with over recent years.

The NLA / RLA, in a press release out tomorrow are highlighting the fact that these pressures will continue the shrinkage of long term lettings. They quote ARLA Propertymark who recently warned that almost half a million properties could be left unavailable for tenants in need of long-term homes to rent.

The RLA and the NLA are pressing for the stamp duty levy to be dropped where landlords add to the net supply of housing through developing new properties, bringing empty homes back into use, or converting large properties into smaller, more affordable units of accommodation.

I agree, but their argument that “the tax system encourages the provision of holiday homes over long-term properties to rent" may simply result in holiday homes/short lets facing the kind of tax hikes that long term lettings have faced - an equalisation of the playing field, yes, but in a bad way, leaving us all playing up hill, against the wind and with a dodgy ref.

Thus, I think we have to be careful in what we wish for and be careful how this is presented to government - or we all get worse off.

One of the worst parts of this is that local authorities see landlords as a cash cow to be milked for extra council tax / licence fees (even though in a distributed market, costs applied equally tend to all get passed on to the end customer, in this case, the tenant). However, the folks at the councils who manage the homeless and who are desperate to get good private landlords to take tenants off their list, often despair at such policies, which simply see the cost of accommodation rise and its availability shrink.

David Lawrenson
http://www.LettingFocus.com
Private Rented Sector Consultancy

I am going through something pretty similar at the moment with planning .
I fell foul of planning over one of my hmo's that has been up and running now about 6 years. after they came and had a look around they have decided that all rooms are self contained and as such will charge £460x9 and £460 for the adjoining flat for planning fees . if i accept these finding , I'm sure that in due course i will have VOA on my back for all these new self contained units .
quite frankly i don't agree with planning and are looking at all options to challenge there decision .
The bedsits are all en suite and do have a worktop and cupboard to put your cornflakes in.
they share one central heating system and all utilities via the main body of the house .
if they want to cook or do laundry they would use the main kitchen.It's a ridiculous situation .
They have told me to remove the worktop and cupboard and they wont be classed as self contained ?. so making the tenants room less comfortable.
council bang on how they are trying to improve living conditions and yet want me to make things less comfortable .certainly not looking out for tenants

Reply to the comment left by mccabeproperties at 17/02/2020 - 18:29A "work top and cupboard to put your Cornflakes in", I don't like cornflakes! This is VOA scare mongering. All HMO owners need to fully understand the guidelines (they are quite clear) used by them to determine the designation of individual rooms. Stand your ground and stop being bullied!

Reply to the comment left by LANDLORD 35 at 17/02/2020 - 14:58If each tenant paid the CT for their room, then how did the VOA re-value the main house, now that all the bed rooms were charged separately?  Did the landlord's bill drop a band or two?

Reply to the comment left by mccabeproperties at 17/02/2020 - 18:29 LL are free to design accommodation to avoid extra council tax. There is no need for a new law. Please don't suggest a new law or they will surely make a new one to charge LL more in every case.
. Here the council have been helpful to advise to remove the worktop and you won't pay extra.
That is what you should do.

If they make a new law to charge poll taxes for individual tenants then LL will all be up s* creek. No campaigns please. Leave well enough alone and design your housing carefully to comply unambiguously.