Can I change the tenancy terms after finding out tenants are not students and paying Council Tax?

by Readers Question

14:05 PM, 16th May 2017
About 2 years ago

Can I change the tenancy terms after finding out tenants are not students and paying Council Tax?

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Can I change the tenancy terms after finding out tenants are not students and paying Council Tax?

I own a 3 bed flat which I rent out to University students on a single 12 month AST (the tenancy agreement asks for each person’s student id and place of study). On this basis the agreement states that council tax (along with other utilities) is the ‘Landlord’s responsibility’ as the property will be exempt from council tax provided all 3 tenants are full time students for the duration of the tenancy agreement.

This has never caused a problem as each year the different tenants have been given the exemption by the council. However for this year (the tenancy agreement runs from 25th July ’16 – 24th July ’17) I was notified only half through the tenancy agreement that not all 3 tenants were students, in fact only one of them was a part time student, one other did not start their course at all and the final one graduated in December.

None of this was made clear to me as the landlord until well into their tenancy agreement. Therefore the property is no longer exempt from council tax and as it is classed as a HMO from the Local Authority this liability falls on me as the landlord.

Obviously with the property and tenancy agreement being aimed specifically at students I have not factored in the cost of council tax into their rent. I have therefore had to foot the cost of the council tax for the duration of their tenancy agreement whilst asking them to reimburse me this cost (and to no avail at present).

Bearing in mind that the wording of the tenancy agreement is not ideal (there is no mention of notifying the landlord of change of circumstances and no longer being students), is there any way I could pass this cost onto the tenants e.g. amending the contract in light of their change of the status to non-students and increasing the rent due or deducting an amount from their deposits?

It is also worth mentioning that they have now paid in full for the whole tenancy period (ending 24th July 2016).

Josh



Comments

Grumpy Doug

17:03 PM, 17th May 2017
About 2 years ago

Josh. I can only echo Mandy. Single AST, make the tenants responsible for CT and bills. Proper students dont pay CT, everyone else does!!

Yvonne Francis

17:43 PM, 17th May 2017
About 2 years ago

Mandy has put this all very well. The landlord is responsible for Council Tax only in HMO's let as separate rooms. In a shared tenancy the Council should deal directly with your tenants. However your lease where you have opted for 'landlords responsibility' was very unwise at least for CT. You say your lease ask's for ID and status but does the lease in any way imply that this is a condition of the lease and if it did you would have a good case for breach of contract and possibly you could claim from their deposit. You didn't say if the request for ID and status was filled in? If they did fill it in and where lying then that must be good evidence.

I have students on shared tenancies and have a clause in my lease to say any Council Tax is their responsibility. I also check their status by checking with their University and warn them of the problems if any of then cease to be full time students. If a replacement has to be found I make a great fuss over CT to ensure they find a full time student. Luckily I've never had problems.

17:52 PM, 17th May 2017
About 2 years ago

Reply to the comment left by "Yvonne Francis" at "17/05/2017 - 17:43":

"Mandy has put this all very well but the landlord is responsible for Council Tax only in HMO’s let as separate rooms."

A HMO for council tax purposes also includes any property where the tenants are not jointly responsible for the entire rent, it doesn't just have to be that they only rent a room. There's also the catch-all that a council tax HMO can simply be any property that "was originally constructed or subsequently adapted for occupation by persons who do not constitute a single household" (this would be regardless of the tenancy agreement).

Craig

Josh Ellicock

18:33 PM, 17th May 2017
About 2 years ago

Reply to the comment left by "CouncilTaxGuy " at "17/05/2017 - 17:52":

The tenants are all under one AST but speaking to the council they seem to still class this as a HMO as there are 3 non-related individuals living in it. There are no locks on bedroom doors and the tenancy agreement states one overall rental amount for the entire property. As far as the council are concerned, as it is a HMO the council tax responsibility lies with the landlord.

As for the student IDs and university information these were all filled out at the start of the tenancy period. It was not until 5 months into the agreement I was notified that not all of them were full time students.

18:38 PM, 17th May 2017
About 2 years ago

Reply to the comment left by "Josh Ellicock" at "17/05/2017 - 18:33":

It looks like they're using part a) of the definition of a Class C Property (Council Tax HMO's) to make you liable. They are correct providing the property meets the definition, regardless of the tenancy agreement in this particular part of the regs.

Unless the property falls under part a) then it makes no difference as to whether people form one 'household' or not - ask the local authority to confirm which section of the Class C property definition they are using. (Locks also make no difference when determining a council tax HMO)

Class C
a dwelling which

(a) was originally constructed or subsequently adapted for occupation by persons who do not constitute a single household; or

(b) is inhabited by a person who, or by two or more persons each of whom either--

(i) is a tenant of, or has a licence to occupy, part only of the dwelling; or
(ii) has a licence to occupy, but is not liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of, the dwelling as a whole.

Craig
CouncilTaxGuy recently posted...School leaver – missing out on a discount ?

Yvonne Francis

20:20 PM, 17th May 2017
About 2 years ago

Reply to the comment left by "CouncilTaxGuy " at "17/05/2017 - 17:52":

HI
I would love to know how you arrive at your information when most online sites state the opposite. Council Tax is levied on a house and not individual rooms so the Council would have great difficulty demanding rent from single rooms hence the need to make the Landlord responsible. Whereas in a shared tenancy if Council Tax applied it can be demanded as a house.

I'm not to hot on all the classifications you give Josh. I thought 'single household' went out in 2004 when HMO licensing came in to force. These houses where then classed as 'unrelated tenants', so a HMO could be defined as unrelated tenants of two or more with some various licensing requirements based on your Council. Josh clearly falls within this category. Josh unfortunately has put himself into hot water by making himself responsible for Council tax.

20:40 PM, 17th May 2017
About 2 years ago

Reply to the comment left by "Yvonne Francis" at "17/05/2017 - 20:20":

"I would love to know how you arrive at your information when most online sites state the opposite. Council Tax is levied on a house and not individual rooms so the Council would have great difficulty demanding rent from single rooms hence the need to make the Landlord responsible. Whereas in a shared tenancy if Council Tax applied it can be demanded as a house."

What I posted is from the definition of a Council Tax HMO as shown in the Council Tax (liability for owners) regulations 1992 as amended by the 1995 amendments and defines when a property is a Council Tax HMO or not (A 'Class C' property). This has nothing to do with individual banding, which is why I didn't mention that, but whether the landlord is liable in law for the charge

If a person rents an individual room in a property then that will make the property a Council Tax HMO by virtue of both parts bi) and bii) of the descriptor of the Class C property.

As an aside,
If single rooms are banded by the VOA (which they are in some cases, using John Laing & Sons as the relevant case law) then those rooms would be charged individually but that's not particularly relevant to what I posted. There's also the Chargeable Dwellings Order 1992 which also allows rooms to be individually banded in some cases and also causes a single property to be split in to multiple dwellings for Council Tax purposes.

Craig
CouncilTaxGuy recently posted...Council Tax and moving to a Care Home

Mandy Thomson

7:19 AM, 18th May 2017
About 2 years ago

There is a useful blog about HMO council tax liability on the Anthony Gold (solicitors) site: http://www.anthonygold.co.uk/latest/blog/council-tax-exemptions-importance-checking-tenancy-agreement

I have come across other landlords who have had trouble convincing their local authority they're not liable to pay the CT when they've started letting a property as a single dwelling that was previously let on single tenancies as an HMO.

7:30 AM, 18th May 2017
About 2 years ago

"I have come across other landlords who have had trouble convincing their local authority they’re not liable to pay the CT when they’ve started letting a property as a single dwelling that was previously let on single tenancies as an HMO."

It can certainly happen, I've dealt with plenty of cases like that over the years but it's usually down to lack and clarity of the information which has been provided clouding the issue.

Yvonne Francis

9:19 AM, 18th May 2017
About 2 years ago

Reply to the comment left by "CouncilTaxGuy " at "17/05/2017 - 20:40":

If you read Mandy's link then the 1st point raised illustrates what I'm trying to say.

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