HMO rooms rated as Band A?

HMO rooms rated as Band A?

13:54 PM, 10th September 2021, About 3 weeks ago 26

Text Size

After having gained planning permission we recently carried out a renovation of a large house into a 7 bedroom HMO with all the rooms benefitting from their own en-suite, but still having to share kitchen and lounge facilities, and all services of electric, heating and Wi-fi included in the all-inclusive rent.

When the rating officer looks at the situation, he rates all rooms as Band A, not as an HMO!

My question to other Landlords caught in the same situation which I believe are many is:

Should it be necessary to re licence it as an HMO as they are now all “self-contained dwelling units” and paying their own Band A rates does the HMO planning still apply as the rating office has surely changed the category by making them independent dwellings, or would it be necessary to apply for a change of planning to not pay the licencing fees and having all the bureaucratic requirements surrounding such properties?

Anyone with experience in this relatively new situation?

Many thanks

Martin



Comments

by Luke

14:54 PM, 10th September 2021, About 3 weeks ago

But is that correct to look at them as self-contained dwelling units given that they still share kitchen and lounge facilities? If so, is there a now a 'safe' level of customisation i.e. not putting in ensuites in each room?

by Des Taylor & Phil Turtle, Landlord Licensing & Defence

15:03 PM, 10th September 2021, About 3 weeks ago

Hello Martin
Oh dear you have opened a can of worms!

Let's start with the legislation and enforcement agencies. All of which have different agendas:

1) Local Authority Planning - They decide whether the property is ALLOWED TO BE a C4 or Sui Generis HMO in that location. They enforce against various Planning Acts.

2) Local Authority Environmental Health Housing and Licensing - they decide whether its SAFE for occupation and issue licenses and enforce against the Housing Acts & Regulations

3) National Valuations Office Agency (VoA) - they decide how much your property's "rateable value" is

4) Local Authority Council Tax - they apply a multiplier set by the council to the rateable value stated by the VoA and send you a bill and collect the money.

OK now we've laid that out, it's important to note the the VoA is nothing to do with the Local Authority and the Local Authority has no sway over them. Of course the local authority may well "dob you in" to the VoA if they feel minded to.

Banding of HMOs
==============
Unfortunately for all HMO landlords, the VoA handbook is quite clear that anything which constitutes what it calls (as does ancient law) an "Hereditament" or dwelling. This is interpreted as anything which has a tenancy agreement. it has nothing to do with en-suite bathrooms, it is to do with the space demised under a lease or tenancy.

Which means that in HMOs where tenants have individual ASTs for their rooms (even if they use shared kitchens, bathrooms, halls and staircases, etc.) each room can (and eventually will) be individually banded.

There is no specific banding for an HMO room, and so these rooms will all be banded Band A and the council tax liability falls on the tenant except when there is a void when the landlord is responsible.

VoA trigger
=========
VoA does not admit where it gets its information from, although we have observed that VoA assessments seem to occur very regularly on the heels of a Building Control Certificate being issued for an HMO. There will be other triggers too.

Strangely some councils don't want HMO rooms to be banded - because it means they have to hand out a Residents Permit to each room - but they are powerless to stop the VoA.

We are also very aware that Artificial Intelligence is being implemented my many government and local authority agencies to spot opportunities to take revenue of hapless landlords.

Your question
===========
"Should it be necessary to re licence it as an HMO as they are now all “self-contained dwelling units” and paying their own Band A rates does the HMO planning still apply as the rating office has surely changed the category by making them independent dwellings, or would it be necessary to apply for a change of planning to not pay the licencing fees and having all the bureaucratic requirements surrounding such properties?"

These are all absolutely seperate issues under different legislation!
Licensing is completely different and separate to Planning, is septa to Building control is separate to Valuation and Council Tax.

Almost nobody wins an appeal against VoA individual banding because individual banding is in fact the law, it's just that VoA hasn't hated all the HMOs down yet. They do have the power to backdate by more than 6 years (possibly 11years I can't recall exactly as I write this)

At 7 rooms (which could be 7 persons or more) you ought to have Sui Generis planning (7 persons or more HMO) and this would remain. The banding does NOT make the inits C3 flats under planning. Valuation by VoA has no impact on planning.

You will remain liable to Mandatory HMO licensing as its 5 persons or more if they are not all related by blood or sexual union.

All HMO Landlords Beware
=====================
It is only a matter of time until the VoA finds your HMO and, if its let on individual room ASTs, remands each room as a Band A.

by HNN2210

7:25 AM, 11th September 2021, About 2 weeks ago

Reply to the comment left by Des Taylor & Phil Turtle, Landlord Licensing & Defence at 10/09/2021 - 15:03
Thanks for your comprehensive reply.

So an HMO on 1 AST for the entire house will not attract Band A?

by Kulasmiley

9:10 AM, 11th September 2021, About 2 weeks ago

Good question

by Buddie

18:36 PM, 11th September 2021, About 2 weeks ago

Reply to Des & Phil , many thanks for such a excellent explanation of what I thought was going to be more complicated than first thought but you have given a very clear and very helpful view that I hope helps others in my situation. Appreciated Martin.

by Terry Bibby

22:14 PM, 11th September 2021, About 2 weeks ago

Reply to the comment left by Luke at 10/09/2021 - 14:54
https://www.property118.com/landlord-defeats-voa-land-tribunal-ruling-banding-individual-hmo-rooms-council-tax-purposes/

It may be usefull to look at this article from 118 on this issue

by Terry Bibby

22:19 PM, 11th September 2021, About 2 weeks ago

Also in 1991 a room in my HMO would not have been worth £40,000 as the whole hose with 27 rooms cost £60,000 so as a band A would have to have been worth £40,000 I am unsure how they could now rate it a band A

by Des Taylor & Phil Turtle, Landlord Licensing & Defence

10:00 AM, 12th September 2021, About 2 weeks ago

Reply to the comment left by Terry Bibby at 11/09/2021 - 22:14
That was a very specific and quirky case where the LL won against the VoA.

Sadly the vast majority of appeals appear to have failed as VoA rely on a Hereditament being a dwelling (room) with its own lease (AST)

And then they band it! (And bandit it very apt!)

by Des Taylor & Phil Turtle, Landlord Licensing & Defence

10:04 AM, 12th September 2021, About 2 weeks ago

Reply to the comment left by HNN2210 at 11/09/2021 - 07:25
If the HMO is let on a single AST, then it’ll *should* count as a single Hereditament (dwelling) and therefore have a single banding

The chances of that banding being just Band A would depend on the size of the property and if it’s large enough to be an HMO I’d be expecting a much higher band than “A”

By the way, bear in mind that although individual Bedsit rooms are liable to banding, usually at Band A, the occupant in most cases will be eligible for the Single Person Discount

by Bill Morgan

13:56 PM, 12th September 2021, About 2 weeks ago

The VO could find thousands of rooms on spare room com if they wanted to but they don't, why not?

Surely there should be a level playing field.

Either do band A on all bedsits or don't do it at all.

Its not fair to pick on individual landlords.

Of course if all bedsits were band A the supply would fall dramatically.

So the poorest would have no where to live and the councils bed and breakfast bill would go through the roof.

The political parties would then attack the VO for wrecking the rental market and making the poorest homeless.

A bedsit can cost half the price of a self contained flat.

They are very good value for money.

If the VO want to destroy it, expect there to be a back lash later on.

1 2 3

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER