Council Tax change to be debated on Wednesday

A proposed change to council tax legislation is set to be debated on Wednesday in good news for some HMO landlords.

Dame Caroline Dinenage’s amendment seeks to stop the Valuation Office Agency (VOA) splitting HMO properties into multiple separate dwellings for the purpose of council tax.

Landlords are encouraged to contact their MPs today or tomorrow if they wish to make their views known on this.

Background

The VOA has had powers to ‘disaggregate’ properties for decades, however landlords have reported more widespread use of the power in the last few years. Leading to rising costs for tenants and landlords alike.

Once a room is disaggregated, then the room itself is given a Band A council tax bill charging typically £1-1.5k per year.

Normally, where a landlord is letting a property on a room only agreement then they are responsible for paying the council tax bill. However after disaggregation, it becomes the tenant’s responsibility to pay the room’s council tax bill while they live in the room.

Because most properties aren’t disaggregated this can mean the landlord’s property is less attractive as the tenant has to pay the additional council tax charge.

It also means landlords face significantly higher council tax bills during void periods, as they have 4 or 5 council band A council tax bills to pay instead of one higher band council tax bill.

What does the amendment do?

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.

As the amendment will be considered on 23 November, landlords who do wish to get involved should contact their MPs as soon as possible to make their views known.