Industry News James Wood 24/11/2023

December deadline for HMO council tax changes

New legislation regarding council tax and HMO properties will come into force in England next week, putting an end to the practice of disaggregating houses in multiple occupation and clarifying who is responsible for council tax. 

Disaggregation is the process by which the Valuation Office (VOA) can ‘split’ a HMO into single units for council tax purposes, meaning landlords and tenants were liable to pay the council tax for each room, rather than for the property as a whole. 

Splitting the property in this way often meant that tenants paid significantly more council tax than they normally would. It also placed the landlord at a competitive disadvantage as disaggregation was not applied uniformly, meaning that some properties on the same street would be significantly more expensive than others.

Following a consultation earlier this year - and campaigning by the NRLA and the HMO Council Tax Reform Group - this practice will now come to an end, reducing council tax bills for some tenants and giving certainty to landlords.

What will change?

From 1 December landlords can expect a HMO to have a single council tax bill. In a letter to local authorities, the Government also states that 'council tax liability rests with the landlords of HMOs covered by the regulations.' 

Where the property is currently split, with multiple council tax bills sent out, the Government will 'reaggregate' it, to create one rebanded council tax bill.

How long this will take will vary depending on a property's licensing status.  

The Department for Levelling Up, Housing and Communities has confirmed that if tenants are in arrears with council tax as a result of disaggregation councils should offer discounts on the council tax bill until the issue is sorted out and the property reaggregated.

Licensed HMO 

If you have a licensed HMO property that has been disaggregated, you should not have to do anything to start the process.  

The VOA has written to local authorities asking for a list of all licensed HMOs in their area.  

The VOA should contact you by the end of January 2024 to inform you of the new council tax banding. 

HMOs that do not require a licence

If your HMO is unlicensed (as it does not require one) the onus will be on you to contact the VOA to challenge the current banding.  

The VOA should then respond to the challenge within four months, with a new council tax band for the whole property.  

HMOs in Wales 

As council tax is devolved, this legislation will not apply in Wales and disaggregated properties will remain as such.  

The NRLA believes this is unfair, and has made contact with the Welsh Government to recommend they adopt similar reforms in Wales.  

We will update our members with progress on this campaign but we would strongly recommend that landlords in Wales raise this as an issue in the Welsh Government’s current consultation on council tax reform.  

James Wood

James Wood Policy Manager

James Wood, LLB, is the NRLA’s Policy Manager. James has provided legally sound advice to thousands of landlords for over 6 years, along with producing the organisation’s guides and documents and training the organisation’s highly rated advice service.

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