Council tax per room for HMO in Nottingham!

Council tax per room for HMO in Nottingham!

10:36 AM, 12th February 2021, About 2 years ago 43

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Hello all, I wanted to make fellow landlords and agents aware of a situation we are facing in Long Eaton, Nottingham. A recent ruling by the Valuations Office has ruled that a newly converted building providing 8 luxury ensuite bedrooms (HMO) is to be classed as separate dwellings and each tenant will be liable for council tax. The VAO is saying that because there is an ensuite and a lock on the door it is a “dwelling”. All the other facilities are shared in the house.

This newly converted, beautiful HMO has now had the rug pulled from under its feet. We have had to communicate to all tenants that the council will be pursuing them for Council Tax. We manage an HMO in the same area with 8 ensuite bedrooms, the same setup and there is only 1 Council Tax. It means this property is now not on a level playing field compared to its competitors. It is madness. So the once affordable ensuite bedrooms have suddenly become unaffordable and uncompetitive as each tenant is looking at a council tax bill of around £100 a month after the single person discount has been applied.

I find this ruling completely wrong and more importantly a devastating ruling for single people – young people trying to gain independence, saving for the first home, marriage breakdown, so many reasons why people need, good quality, affordable shared housing.

The landlords are trying to campaign the Valuations office to demonstrate that they are being unfairly treated. The council say it is nothing to do with them as it is the Valuations Office that decides. Looking at the comparables in terms of local HMOs, none have had their rooms classed as “dwellings”. Only bedsits are classed as “dwellings” and that I understand.

I’m an agent and a landlord. We have multiple HMOs. This ruling sends a shiver down my spine for the future of HMOs.

Does anyone have any experience of this?
Many thanks.


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eagle view

22:49 PM, 12th February 2021, About 2 years ago

Students pod development pay council tax and this is similar situation. If this was conversion from commercial to residential and it was first time registration withe valuation office then outcome will be the same.

terry sullivan

22:55 PM, 12th February 2021, About 2 years ago

Reply to the comment left by Yasin at 12/02/2021 - 22:49
but students are exempt--hmrc cannot change law

eagle view

23:18 PM, 12th February 2021, About 2 years ago

In student pods block management collect the council tax through the rent or from the pod owner. Every student pays rent including bills/ council tax. Best option is to call the development self contained flats, add kitchen give title each unit.

steve p

23:35 PM, 12th February 2021, About 2 years ago

Incase you go down the challenging the council tax route. I lived in a 3 bed town house that was semi detached, it was exactly the same layout as houses on the same road but they were blocks of 3 so 1 terrace, 2 end of terrace, however the end of terrace had bigger gardens and garage next to house with bigger drive whereas my garage was on a block of garages with one parking space away from the house.

My house was a band above the end of terrace houses despite being worth exactly the same amount and being exactly the same house. When I appealed I was told no the banding was correct and no way of appealing the decision was final

About a decade later when the house was rented a tenant obviously went down the same route, however I think I failed because I had been in the house for years when I appealed but because they were in there a shorter time they won. Afterwards the council contacted me to say the property was banded incorrectly and I was repaid hundreds of pounds.

Moral to this story is that banding of houses in my eyes seems to be a law unto themselves with some bizarre decisions, even if they say no, keep trying.... Good luck, seems nuts.

Amanda GdM

8:48 AM, 13th February 2021, About 2 years ago

Hi all
Many thanks for taking the time to comment and feedback. Alot of food for thought. We are keeping our fingers crossed the decision can be overturned. Unfortunately the high spec of the build and investments costs never took into account this bombshell so reducing the monthly rent per room to compensate for the council tax that tenants will have to pay just doesn't make it a particularly viable investment now. It is unfortunately a major issue.

raj beri

9:41 AM, 13th February 2021, About 2 years ago

Your situation is not unique. With all-ensuite, you will probably have to accept it. Did you add any clause to the tenants contract - if this happened?

Amanda GdM

9:52 AM, 13th February 2021, About 2 years ago

Reply to the comment left by raj beri at 13/02/2021 - 09:41
We had put in the all inclusive section that coucnil tax was included where there was 1 CT for the building. As this is now not the case, we have had to inform tenants to expect to receive CT bills from the council. You can imagine their reaction. Landlords are graciously offering to cover and back dated CT bills but going forward cant cover it. its massive becuase we are talking backdating 14 x single CT bills (there are actually 8 rooms in 1 flat and 6 rooms in an above flat).


10:22 AM, 13th February 2021, About 2 years ago

Reply to the comment left by Amanda GdM at 13/02/2021 - 09:52
Don't forget the single occupancy units will get 25% discount.

Alistair Cooper

10:54 AM, 13th February 2021, About 2 years ago

Thank you Andrew for providing the You Tube link; the Tony Dand Tribunal case in Rugby is quite different and won’t be a golden ticket enabling landlords to escape this tax grab I’m afraid. Tony’s case was ‘won’ at Tribunal mainly due to poor process on the part of the VOA and the inconsistent advice it had given in prior written exchanges. Also Tony had removed all water supplied to each room and had a shared kitchen and bathroom on each floor of the building
Even then the VOA (with all shared facilities) suggested that they may band each floor as a separate dwelling rather than return the banding to a single band C for the whole house as before.
The video then goes on to ‘suggest’ further defences which were not argued at this Tribunal; ie the ‘trick’ of putting all tenants on one AST. Firstly most professional tenants would be unlikely to ever agree to this as they become jointly and severally liable with each other for rent and damage to the whole building and you would need to amend the whole AST (getting all tenants to agree) every time there was a change of tenant ; a mess and a nightmare to manage. Even then there is no evidence this would work as a defence to the VOA as they are concerned with the occupation and facilities in each room (or as they would say ‘dwelling’) not the form of contract signed by the tenants
In Tony’s case as most of this tenants were short stay construction workers not occupying the accommodation as their main home he may of been better off registering for NDR (business rates) and operating as a short term let.
Depending upon the value applied to each bed space in the area (comparisons can be found on the VOA website) he may have ended up being rated under £15k a year and thus being eligible for full exemption ; ie paying nothing! (This also depends on if he owns other commercial properties)
I have done this on 3 of my former HMO’s (all are genuinely let Mon-Fri to travelling construction workers and are owned as separate entities not in my sole name) and have full exemption. You do however have to pay to get the rubbish collected!


11:16 AM, 13th February 2021, About 2 years ago

Hi all. I’m actually looking to gather case studies on this matter. I’m currently lobbying the government via my MP and there is a detailed letter going out to various departments within government next week in regard to this. I currently have 11 rooms which have been banded as individual CT banding. When I lost my first appeal it’s wasn’t to do with ensuites it’s all about separate AST in each room and that the tenant has exclusive possession of that room. The main fact here which is the bigger picture is ‘what is a dwelling’?? This is the question I have asked the government as planning say a HMO is 1 dwelling, licensing says a HMO is 1 dwelling, benefits system say they will pay out on a room in a shared dwelling, housing act stipulates a HMO is 1 dwelling, but the VOA see them as multiple dwellings. Should anyone wish to email me with there own stories to allow me to compile case studies to present that would be great. I do believe these decisions can be overturned but firstly we need another case studies to show how every VOA ruling is difference and why a dwelling should be a self contained unit with a kitchen and bathroom, and something you can live in without any shared facilities. Thanks DB

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