“Landlords and tenants will be hugely relieved to see this change happening. No longer will there be any question about council tax and who is responsible for paying.”

Welcome news has emerged the Government is changing the law on council tax being imposed on individual rooms in Houses of Multiple Occupation (HMOs) .

This change in the law will protect tenants in HMOs from being taxed on their bedrooms and returns to principles on which the council tax was established.

Earlier in the year the Government announced an accelerated consultation on  reforming council taxation of HMOs after thousands of landlords and tenants were being adversely affected by a Valuation Office Agency policy of making individual bedrooms in shared houses liable for council tax. The policy increased the council tax payable by an HMO by many thousands of pounds, often making continued use as an HMO unaffordable.

The Government has now announced the outcome of the consultation and is pledging to change the law by the end of the year.

A Government source stated:

“The amendment to legislation will ensure that HMOs will be valued as a single property, creating consistency in the sector, and provide certainty for councils and households moving forward.

“This should also help ease administrative burdens for councils as the council tax liability should remain with the landlord in the usual way, rather than moving to individual tenants who may only occupy the property for a short period of time.”

These changes will reverse a policy  by the Valuation Office Agency on taxing HMOs first put into practice in 2015 whereby randomly selected properties were being hit with multiple bills, one council tax bill for every bedroom, making the house liable for seven or eight times the original tax.

Variously dubbed ‘Poll Tax Mark II’ ‘Bedroom Tax Mark II’  or the ‘Toilet Tax’ (when applied to en-suite bedrooms) the practice only targeted selected HMOs. Mistakes in law and fact were rife with, in some cases, cupboards and utility rooms being made liable for council tax bills.

The impact of the policy has been to drive out tenants unable to meet the bills, cause overcrowding and in some cases forcing the closure of  entire HMOs, reducing the supply of available accommodation  for tenants on low and middle incomes.

In other cases landlords were being  suddenly chased  for multiple bills by councils and debt collecting companies  collecting the tax.

Effectively, this will protect both landlords and tenants  from excessive tax demands living in HMOs and prevent rooms without washing or cooking facilities being banded as flats with individual flats liable for tax.

This has been hailed as a victory by the HMO Council Tax Reform Group who have been campaigning tirelessly for this practice to end. 

Alan Murdie, legal advisor and barrister for the group commented:

‘This is excellent news in so far as it indicates that the government has recognised that VOA policy needs to view HMOs as a single property. We wait to see the implementation in practice.’

Wendy Whittaker-Large and Daryn Brewer said:

“Landlords and tenants will be hugely relieved to see this change happening. No longer will there be any question about council tax and who is responsible for paying. It will be the landlord’s responsibility to pay one bill for the whole property. We are delighted to have won this ongoing fight for the whole HMO sector.”

Matt Baker added:

“This gives certainty for the development of new and quality HMOs which is a huge help to the supply of much needed housing.”

The following is a recording of announcements made in the House of Commons on 23rd November 2022 about the steps in the campaign to remove council tax from rooms in HMOs.

Source: HMO Council Tax Reform Group

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