HMO and Council tax decision has caused an issue with the inclusive AST contract?

HMO and Council tax decision has caused an issue with the inclusive AST contract?

10:30 AM, 16th January 2017, About 7 years ago 13

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I was ‘threatened’ some time ago with my HMO tenants being liable for council tax – or rather their rooms are – this has now come to pass and I’ve been sent council tax demands in my name for all rooms.Council tax

I’ve been back to the department and they will now issue them in my tenants’ names. I’ve argued the toss on this, but an interesting point is that the valuation department does not recognise ‘HMO’ and anywhere that someone can live is a dwelling and every dwelling is liable for council tax – so be warned other HMO owners or convertors, you could be captured under this daft decision if your house cannot be used as a family home ‘with no changes’ when the sharers move out.

Anyway my issue now is that the tenant’s contracts have ‘council tax included’ in their contracts – are the council now voiding my contract, how do I now get the tenants to pay if their contract says it is included?

This has come to pass by the way because someone has claimed housing benefit and an inspection was done (unknown to me but it is down on the record that I denied access which is an absolute lie, my first knowledge of this was an email from the council department) and accessed the property without my permission. Interestingly the Valuation Department do not have right of access without my permission and they were surprised that the council gained access without.

Bottom line really is how do I now get out of the clause of inclusive council tax, I’ve written to my tenants informing them that this is about to happen and again that it is now happening and obviously I will return to them the portion of council tax that I pay and have offered to help as much as I can by making a reduction in rent. I’m waiting for their responses and if someone brings up the contract issue. I’m a bit loath to pay all (around £10,000) a year as there is going to be one (at least) who is not paying council tax and dropped the whole house in it in the first place.

I am guessing that I need to give them all notice and reissue new contracts to those who stay.


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Neil Patterson

10:42 AM, 16th January 2017, About 7 years ago

Hi Elizabeth,

Thank you for the warning on the Dwelling status and HMO's being liable possibly even without tenants.

I have read the question a few times and is the issue that the tenants now pay direct, but your AST contract says you will be paying the Council Tax?

Also can I know ask if there is a cost differential between what you were paying before and what the tenants will now have to pay direct?

With regards to AST contract law I would consider consultanting with Tessa Shepperson and Landlord Law. Go to Landlord Law – online support and services for landlords under our Legal advice Page >>


10:59 AM, 16th January 2017, About 7 years ago

Yes, the tenants will be billed directly - of course any voids it will be my responsibility. I currently pay around £1800 per year - each tenant is paying between £850 and £960 per year, with 11 of them that is a considerable amount increase for the house. Considering it is one of the worst run boroughs in London it is pretty insulting that the money collected will just go down a bit black hole.

Nick Faulkner

12:14 PM, 16th January 2017, About 7 years ago

I think that you are not able to avoid being liable for Council Tax on your HMO. It is the landlord's responsibility and if you have issued a AST that says the CT is included you have shot yourself in the foot.
On future tenancy agreements you may be able to say that you reserve the right to charge the tenant the equivalent of the CT but it remains your responsibility to pay it. The council will not be interested in serving CT demands on individual tenants when they have a legitimate right to charge the landlord of an HMO one amount for the whole building.
As far as I know this has been the law for several years and I am surprised you have not been aware of it. It is just part of the fun of being a landlord. It gets even more interesting when some tenants are on HB or are students who forget or lose their exemption certificates .
I would like to be proved wrong because sorting out CT on HMOs is a bloody nightmare with tenants coming and going, the council sometimes behaving rationally and other times just issuing County Court summons after ignoring letters and calls on the matter....and HMRC regarding our rents as "investment" income.
If you leave it to the agents to sort it out they soon give up and pay everything the council demands whether it is right or wrong.... why should they care it is not their money?

terry sullivan

12:25 PM, 16th January 2017, About 7 years ago

which council?

Derek Bendall

15:43 PM, 16th January 2017, About 7 years ago

So a family of four say, the parents plus two grown up children (4) get away with one council tax charge but an HMO with four tenants is charged at whatever rate four times. How fair is that?

Nick Faulkner

16:35 PM, 16th January 2017, About 7 years ago

I do not think that is the case....our HMOs are charged Council Tax on the property as a whole and at similar rate to similar houses next door but we no longer( for the last four or five years) get any relief for voids and for student houses for the vacations .....and in fact only from the day their course starts.So if they move in at the end of July and term starts at the end of September CT is due for the two months....asking students for that figure is met with shock and horror.


16:44 PM, 16th January 2017, About 7 years ago

Thanks for the responses so far - but looks like no one really knows - I know that I can't avoid it and I wasn't avoiding council tax, I was paying as I had since 1999 and it had never been questioned. My HMO licensing is via the local authority - Lambeth - so it's not as though anything was being hidden.

I wouldn't have said that I'd 'shot myself in the foot' - I was paying the council tax requested and not charging the tenants so this was reflected in the relevant part of the AST. I could have added a little clause that 'should the rooms be separately valued they will then pay' but it hadn't crossed my mind that council tax would be payable on a room in a house, I could add. Hindsight is all well and good Nick. I will now redo the tenancy agreements of those that decide to stay, they are all on periodic tenancies now.

The Council HAVE valued each room and billed each tenant so I don't know where you have your information NIck, as long as the tenants stay as long as they have in the past then it should be too much hastle and I can't see how they can bill me for the whole house when I rent it out - and most will get their 25% single person discount, or perhaps the odd student (meant kindly) so they can't bill me as a whole - but I will be liable should there be a void.

It is very unfair in council tax terms as it was £1800 and now Lambeth will be getting around £9000.

I'm surprised no one has mentioned the Pole Tax as was and hated - I thought it a damn good idea then and I do now.

There will be one person in the house who will not be paying council tax of course and that ironically is the one who is claiming benefits and started this whole thing off.


16:55 PM, 16th January 2017, About 7 years ago

Reply to the comment left by "Nick Faulkner" at "16/01/2017 - 16:35":

It seems your council has a different system to mine - but the valuation department is nationwide and follow the same rules and regs so I will chase this.

Can I be clear - you are being charged a similar rate for an HMO as a house next - are you absolutely positive then that you are being charged as an HMO? I was told very clearly that HMO is not a term recognised by the valuation department, it is one residence - or nothing - the criteria being that to have a single council tax you can return the HMO back to one residence with no further work, literally all the tenants move out and a family move in and no one could have known - mine have mini kitchens - always did.

When I spoke to the valuation department initially they told me that many HMO's will now be captured because very few have 'family facilities' - as an HMO has a statutory requirement for kitchens and bathrooms.

So maybe this isn't something that has been known about for years.


17:15 PM, 16th January 2017, About 7 years ago


They can charge per room on an HMO. I was interested in converting a house to an HMO and had some heated arguments with the council office about them wanting to charge by the room.

One council advisor said if a fridge or microwave was in the room it was charged
One council advisor said if a lock on the door it was charged
One coundil advisor said if separate tenancies but if 4 sharers were on the same tenancy then not.

I spoke with a valuation officer in Cornwall in the end and he said yes the council could charge it .
It was up to the councils if they did.

I also think that they can count it has a new dwelling ie was 1 house now 5 rooms so increase of 4 units and can claim 3years from the government for same amount.

How can the rooms be a cheaper option when they get billed the A rate which is the same as a studio/ 1 bed. RLA I think were trying to get a new band of £300 for rooms at one time.

We are being robbed blind

jamie jones

22:58 PM, 17th January 2017, About 7 years ago

Im confused,

read this:

This page clearly gives examples of houses modified which fall into different tax bandings.

The first example shows a standard layout, shared kitchen and bathroom with seperate rooms, your typical HMO. For this it states it would be just normal council tax. Ok no problem.

The second layout example shows where the owner has put in 2 kitchens, one on each level. Making 2 seperate tax codes, ok fair enough.

The third layout shows a layout where all of the rooms have kitchettes put in, so once again, fair enough, they have seperate tax codes for each room.

The forth layout shows a layout where every room has an ensuite shower and toilet. Once again, fair enough, seperate tax codes for them.

On none of the 4 examples on the VOA website does it show or mention that you could have seperate council tax banding just for standard rooms, (ie with no on suite). (Unless each level had a kitchen).

So I fail to see how people are getting rooms banding seperatly when their rooms dont have ensuites or kitchens on their own level.

Olivia, would you be able to explain?

Or anyone else?

Ad far as I can see, if your rooms dont have en-suites you will be fine, and if you dont have more than one kitchen you will be fine.

It doesnt say ANYWHERE or give ANY examples of rooms been banded individually regardless of whether group contract or single.

So whats all the fuss about

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