Council Tax Valuation for HMOs: Consultation Summary

The Department for Levelling Up, Housing and Communities (DLUHC) published a consultation on the council tax valuation of Houses in Multiple Occupation (HMOs) on 17th February 2023. The consultation's objectives were to provide greater certainty and consistency regarding how HMOs are treated for council tax and ensure that HMOs are banded as one property with a single council tax band.

This article summarises the responses received during the consultation and provides an overview of the government's response to the consultation, including its approach to implementation.

Summary of Responses

The consultation generated a total of 563 responses from a range of perspectives, including landlords, tenants, representative groups, trade bodies, local authorities, and more. All responses were considered in the decision-making process.

Respondents supported the government's proposal that HMOs should have only one council tax band for the whole property. Concerns were raised about the current unpredictability surrounding council tax liability for HMOs, which creates a disincentive for investing in or modernising HMOs.

However, the views from councils were mixed. Some councils noted that the current approach is fair in alignment with policy intentions, while others identified an administrative burden not compensated by increased revenue.

Government Response

The government recognises the issues raised during the consultation and plans to deliver a framework that ensures that all HMOs are valued as a single property for council tax.

To achieve this, the government will amend existing legislation, including the Council Tax (Chargeable Dwellings) Order 1992 and related regulations. These amendments will apply to all HMOs, both licensed and unlicensed.

Definition of HMOs and Exceptional Circumstances

In response to the consultation, the government will adopt the well-established definition of HMOs in the Housing Act 2004. Councils already use this definition for the licensing of HMOs.

Where an HMO contains annexes or self-contained units, the entire HMO property should be valued as one property. However, annexes and self-contained accommodation that do not form part of an HMO as defined by the Housing Act 2004 will continue to be valued in the usual way.

Approach to Implementation

The government aims to bring HMOs currently not aggregated in line with new legislation as soon as possible.

The Valuation Office Agency (VOA) will work with councils to proactively identify licensed HMOs that have not been aggregated and re-band affected properties. The VOA has set a goal to make these changes within two months of the legislation coming into effect. Landlords or tenants of unlicensed HMOs can submit a proposal to the VOA to re-band affected HMOs in line with the new legislation.

Next Steps

The government will lay regulations later this year, intending that the policy change comes into force before the end of 2023.

This consultation outcomes summary provides essential insight into the future direction of council tax valuation for HMO properties. By ensuring that all HMOs are valued as a single property for council tax purposes, the government aims to provide greater certainty and fairness for landlords and tenants alike.