Amendment seeks to change council tax rules for HMOs
A proposed amendment to the Levelling up and Regeneration Bill may stop the Valuation Office Agency (VOA) charging council tax on individual rooms in houses in multiple occupation (HMO).
Background
Since 1992, the VOA has been able to split properties into multiple dwellings for the purposes of council tax.
Where a property is ‘disaggregated’ in this way, the tenant will usually become liable for the council tax, increasing their annual costs by over £1,000 in most areas. During void periods, the landlord will be liable for the council tax in each individual room, increasing their costs substantially as well.
These powers were previously rarely used, and most houses in multiple occupation have one council tax bill, often paid by the landlord themselves.
However, HMO landlords have reported that the VOA has been far more active in disaggregating properties in recent years, often creating five or six separate council tax bills from a single property.
The VOA has significant discretion when re-banding, and properties can be split up even where the individual rooms lack any ensuite facilities such as a bathroom or kitchen. As a result, virtually any HMO could be disaggregated even if the room is, by any reasonable standard, not self-contained.
The NRLA has highlighted this issue in the past, writing to the Law Commission and the Government asking them to investigate and address this unfair system, as well as raising this in evidence submissions. Our CEO, Ben Beadle, raised this as a concern with Felicity Buchan in his first meeting with the new PRS Minister this week.
The HMO Council Tax Reform Group has also been carrying out significant campaign work in this area. Lobbying MPs directly to raise awareness and press for an amendment to the Local Government Finance Act 1992 - the act that gives the VOA its powers to disaggregated properties.
The amendment
This lobbying has now led to a proposed amendment that would put an end to the practice of disaggregating rooms that aren’t self-contained.
Dame Caroline Dinenage's proposal would amend the Local Government Finance Act 1992 so that the following can never be classed as a separate dwelling for council tax purposes -
- a room or bedroom subject to a tenancy agreement that does not contain bathroom and cooking facilities within its physical curtilage;
- a room or bedroom subject to a tenancy agreement which includes bathroom facilities but does not include cooking facilities within its physical curtilage;
- any rooms or bedrooms within a licensed House of Multiple Occupancy; and
- any room which is not in law a self-contained unit regardless of any clause, term or condition of any contract, license of agreement conferring a right to occupy that room.
The amendment (NC7) is ‘intended to prevent the imposition of Council Tax individually on tenants of a room in a house with shared facilities, or in a licensed House of Multiple Occupancy."
How can you help get the amendment adopted?
The best way is to make contact with your local MP to raise awareness of the amendment and explain why this is an issue.
Disaggregation remains a niche issue that many MPs will not have heard of before and they may not realise that it raises costs for tenants.
The HMO Council Tax Reform Group has produced a sample letter and briefing to help explain the issues to your MP.
To give MPs time to consider this amendment the NRLA recommends writing to your MP no later than the end of November.
