Council Tax

Council Tax is an annual charge by local councils to fund various community services. Tenants typically bear the responsibility for Council Tax in self-contained flats or houses. However, landlords must promptly inform the local authority's Council Tax section about changes in occupancy or if the property becomes vacant.

Unoccupied Properties

The landlord generally becomes liable for Council Tax when a property is unoccupied. Various councils offer differing discount periods for unoccupied and unfurnished properties. These discounts range from short-term full exemptions to reduced rates over several months. Landlords must consult their local authority for specific policies and durations applicable in their area.

Tenancy Status and Council Tax

The tenancy status affects liability for Council Tax in cases where a property is unoccupied, such as during tenant abandonment or transition. To maintain tenant liability, there must be an ongoing tenancy initially granted for at least six months and continuing as a contractual periodic tenancy beyond the fixed term.

Student Exemptions

Properties wholly occupied by full-time students are exempt from Council Tax. Students need to apply for this exemption and provide proof of their full-time education status from their institution. This exemption typically extends through the summer vacation if the tenancy agreement covers that period. Landlords liable for Council Tax should obtain this proof from their student tenants to apply for the exemption.

Council Tax in HMOs

Billing council tax

Effective 1 December 2023, there has been a significant alteration in how Council Tax is billed for Houses in Multiple Occupation (HMOs) in England. Before this date, individual units within an HMO, such as bedsits with their own bathrooms or kitchens, could be assessed and billed separately for Council Tax, depending on their self-contained nature. This often resulted in multiple Council Tax bands within a single HMO property.

However, under the Council Tax (Chargeable Dwellings and Liability for Owners) (Amendment) (England) Regulations 2023, this approach has fundamentally changed. Now, an HMO must be treated as a single dwelling for Council Tax billing, irrespective of the individual characteristics of the units within it. This applies to all HMOs except s.257 HMOs (certain converted blocks of flats not meeting specific building regulations), including those with rooms or units that were previously considered self-contained, such as bedsits with en-suite bathrooms or individual kitchens. The amendment ensures a unified billing process for the entire HMO as one entity, eliminating the prior practice of assigning separate Council Tax bands to individual units within these properties.

Council Tax Liability

Understanding council tax liability is crucial for landlords, as it varies depending on the property type and tenancy arrangements.

General Rule

The occupant of a property is typically responsible for paying council tax. However, the landlord may be liable sometimes, especially when the property is unoccupied or falls under specific categories.

Council Tax Hierarchy

According to Section 6 of the LGFA 1992, a hierarchy is followed to determine liability. A resident occupier is the first in the hierarchy, and further down, if the property is unoccupied without any tenancy agreement, the freeholder becomes responsible.

Landlord Liability

Section 8 of the LGFA 1992 states that for specific classes of properties, the "owner" is liable regardless of occupancy. However, the definition of "owner" can include the tenant in particular scenarios. The Council Tax (Liability for Owners) Regulations 1992 list these classes.

Class C is for houses in multiple occupation (HMO), etc.

Class C HMOs are a vital category where the owner's definition differs and is a dwelling which -

  • has been subsequently adapted for more than one household
  • only part of the dwelling is rented (or only liable for rent on part of the dwelling); or
  • HMO.

Regulation 2A changes the definition of "owner" for council tax liability for Class C to the person with either the inferior material interest of the whole dwelling or, if absent, the freeholder.

Where the whole dwelling has been rented, the tenant will usually be liable. Still, the freeholder is liable if only part of the dwelling is let (for example, a tenancy per bedroom).

Liability Examples

Example 1

A four-bedroom house rented to a group of unrelated friends on a single tenancy is classified as an HMO. The tenants, holding a leasehold interest in the whole dwelling, are liable for council tax.

Example 2

The same property, but each tenant has an individual tenancy for their bedroom. No single leasehold covers the whole dwelling, making the freeholder liable for council tax.

Example 3

A property adapted for multiple occupation by adding locks on bedroom doors is rented to a family under a single tenancy. The family is liable for council tax as they have a leasehold interest in the whole dwelling.

Example 4

A dwelling is rented to a company that sub-lets individual rooms. Here, the company is liable for council tax as it holds the lease for the whole property despite sub-letting parts.

Letting part of a dwelling

Landlords must exercise caution if excluding areas of the property, such as lofts, basements, or conservatories. This approach might be interpreted as leasing only a portion of the property rather than its entirety. An illustrative case is R (Goremsandu) v LB Harrow 2010 EWHC 1873, in which the storage of the landlord's furniture in the conservatory led the local authority to contend that only a part of the property was rented out. Although the landlord ultimately prevailed, the outcome could have been different.

Single Person Discount

A single occupant over 18 in a property is eligible for a 25% discount on their Council Tax bill.

Long-Term Empty Property

Councils may charge up to 150% of the regular Council Tax rate for properties that have been unoccupied and substantially unfurnished for over two years, known as the 'empty homes premium'. Exceptions apply, including properties left vacant due to the occupant's job-related armed forces accommodation and annexes used as part of the main property.

Major Repairs Discount

Local authorities may offer discounts, potentially up to 100%, for unoccupied properties due to major repair works or structural alterations. The discount duration and amount are at the local authority's discretion and can extend up to 12 months.

Related Forms

Council Tax Letter Before Appeal - Tenant Not Given Correct Notice

This template is a first (and fairly basic) letter before appeal against council tax liability on the basis of no notice given by a tenant but it can be modified with whatever grounds you wish to insert.

Council Tax Second Letter Before Appeal - More Detail

This template is a second (and quite in-depth) letter before appeal against council tax liability after the local authority have already responded to a first letter and refused to change their decision.

Notify Council Tax Change of Occupier

This Word template is for notifying the Council Tax department about any change of occupancy.