HMO outrage for landlords & tenants – this time it’s Council Tax!

by Property118.com News Team

13:35 PM, 2nd July 2012
About 8 years ago

HMO outrage for landlords & tenants – this time it’s Council Tax!

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HMO outrage for landlords & tenants – this time it’s Council Tax!

We have received an anonymous tip off that could cause yet another HMO outrage and could be a disaster for both landlords and tenant groups if the rumours are indeed true and are implemented.

Allegedly, Torbay Council collated data of all HMOs in their area two weeks ago and are intending to charge Council Tax based on each room being a Band A property (£996.55 a year currently). By way of comparison, a six bed HMO now in Band E would incur a council Tax bill of £1827.01 per annum. The new plans will yield £5,979.30 a year. That’s a whopping 227% increase!

Homeless in Devon - HMO outrageOur informant told us that one of the reasons for doing this is to move the unemployed out of the area. I can’t see how that will work though as the unemployed should qualify for exemption from Council Tax. Is this a way for Torbay Council to increase its share of the public purse I wonder? Another sinister view is this could be a longer term plan to drive out the unemployed when benefits fall under the proposed Universal Credit payment system.

What will this do for homelessness?

We have recently seen Newham Council in London attempting to relocate its unemployed to Stoke on Trent. Are other councils going to adopt what some might see as social cleansing policies?

HMO Outrage – What Devon Landlords Association had to say

On receiving this tip off I spoke to a representative of Devon Landlords Association who had heard nothing of these plans but was very concerned. They will be making their own investigations.

Concerned tenants living in HMOs in Devon are advised to contact Devon SmartMove

Rest assured we will provide more information as this story unfolds. I’m sure it will not be long before the powers that be in Torbay Council will learn of the existence of this article and we very much hope they will provide a definitive response in the comments section below. In the meantime, please let your own feelings be known by leaving a comment below.


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Comments

Mark Alexander

14:14 PM, 2nd July 2012
About 8 years ago

UPDATE - we've had another tip off that Torbay Council are also looking to licence anybody with a room to let.

Industry Observer

17:57 PM, 2nd July 2012
About 8 years ago

I very much doubt that the Regulations controlling Council Tax enable a local authority to do this.
And since when are unemployed people an exempt category for C Tax unless also receiving full LHA and thus qualifying for support for Council Tax. They are not exempt - they get a benefit to pay it. That is different from being exempt - they still have a liability to pay but the money comes from elsewhere.

Mark Alexander

18:18 PM, 2nd July 2012
About 8 years ago

You are quite right, unemployed are not exempt from Council Tax, bad use of words on my part. As you say though, they get benefits which pay it for them. Same difference really isn't it?

18:38 PM, 2nd July 2012
About 8 years ago

Surely this would signal the end of HMO's as we know it!! As landlords of HMO's we are in a way performing a social service - so where are they going to place all these people?

Devon Landlord

20:29 PM, 2nd July 2012
About 8 years ago

As Chairman of a leading Landlords' Association in the South West and one that tries to work closely with all local Authorities in the region I am surprised and a little annoyed if this rumour is true because it throws the notion of consultation out of the window. I know that most of our HMO landlord members will be astonished by this if it is true. And so will all those tenants who will be directly influenced by this decision. No landlord will be able to absorb this additional cost in to their outgoings without passing most if not all on to tenants.

I am amazed that at a time of austerity, Councils are even willing to contemplate increasing charges to those least able to cope with additional costs. Most people on LHA are in work and need LHA as a top up to enable them to make ends meet. If the Council thinks this is a way to remove their problems they are mistaken as we need workers in our region to meet the demands of our most important industry - Tourism, which is not the best paid anyway.

I urge Torbay Council to respond to this rumour and come out clearly and deny it. This would be welcome if the rumour is just that, a rumour as if it is intentional it could have a disastrous effect not only on tenants but also on the letting industry in the region. Most landlords are not grasping people and many see what they do as helping people who need somewhere to live. Even landlords need to make a profit to survive and if they don't they may well leave the industry. Where would the local Authorities find themselves if they are not able to call upon the PRS to help solve their housing problems. So let us not have local authorities shooting themselves in the foot over this issue and let us have more consultation with the representatives of landlords so that foolish notions are not considered and even more foolish decisions made.

23:59 PM, 2nd July 2012
About 8 years ago

That means that these homeowners will have to obtain a CP12 anuallly for ALL gas appliances.
They should do this now; most don't.
Tv licencing would be very interested in this info as any lodger has to have a separate TV licence.
Nobody ever does this in a normal houseshare.
How would the councils ascertain who these homeowners are that are letting their spare room.
Only normally traceable if the lodger was in receipt of benefits.
Technically the householder who lives alone and is in receipt of SPD would have to give this up as a lodger lives there.
So immediately the homeowner is about £325 out of pocket.
No homeowner ever advises the council unless the lodger is on benefit as the only way to obtain CT benefit is for the lodger to be on the CT bill.
If the homeowner doesn't do this then it is presumed that the rent includes CT and the claimant does not receive CT benefit.
Not many RFR LL are aware of that.
But still an actually mad admin issue if the council ever tried to licence RFR LL

7:35 AM, 3rd July 2012
About 8 years ago

As commercial financier of many HMO portfolio's this proposal is a concern as it will undoubtedly put the gearing of many operators at risk . However it unfortunately seems a reasonable step for cash strapped councils to consider in an effort to generate income no doubt by a zoning program me. I suspect the local electorate in the most part would be in support of such steps as it may well free funds to further develop other services and protect core values

11:33 AM, 3rd July 2012
About 8 years ago

I have had the same problem with a HMO in North Cornwall, see link to Property Tribes:http://propertytribes.ning.com/forum/topics/hmo-council-tax-dilemia-valuation-office-want-to-charge-council?id=2886658%3ATopic%3A438484&page=1#comments
The VOA eventually backed down, but only after I threatened legal action, appeal and a national campaign with the RLA!

Alan

Mark Alexander

14:12 PM, 3rd July 2012
About 8 years ago

There is a related discussion I'm involved in over on the Property Tribes form. It would appear that The Guardian have also reported on a very similar topic. The following comment was made over on Property Tribes.

There was an interesting article in The Guardian about the subject."Cash-strapped councils can make thousands of pounds when a HMO is re-valued and split into separate units. Tenants in band A homes typically pay about £1,000 per year each in council tax, while the landlord of a band E or F property is charged about £2,000, a sum normally recouped from tenants through rent.Not only can an authority increase its council tax receipts after a HMO is split into discrete "homes" but, thanks to the bonus, it gains twice. Under the NHB scheme, designed to encourage local authorities to approve new housing, the authority receives a sum equivalent to the council tax chargeable on each extra property for six years, plus a further £350 per year if the home is deemed "affordable"...."I am not sure how LHA/HMO landlords will react to the changes, but I for one will stick to studentlets. I did consider to venture into the LHA/HMO market with the help of an experienced LHA landlord but I am completely put off by the current situation (Article 4 + LHA arrangements) and even more by things to come (UC).

As you said Mark, "train crash in slow motion".
Link to Property Tribes discussion:- http://propertytribes.ning.com/forum/topics/hmo-council-tax-dilemia-valuation-office-want-to-charge-council

15:21 PM, 3rd July 2012
About 8 years ago

Council tax is charged on the property and not individual rooms so how can they get away with it,
and if they are on benefits who pays in the end?

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