If Students don’t provide proof I’ll have to pay Council Tax?

If Students don’t provide proof I’ll have to pay Council Tax?

9:06 AM, 6th August 2019, About 2 years ago 24

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I’ve just received a Reminder Notice from Newcastle City Council for the Council Tax (CT) on my student HMO. This is despite me completing the online change of tenancy notice over two months ago.

I called the Council and the gentleman I spoke to (after 32 minutes on hold) was very polite, saying that they need the students to provide proof that they were indeed students. Then he dropped the bombshell that as the property is a licensed HMO, the liability is with the owner.

In other words, if the students don’t provide proof of their education status, then I’ll have to pay the full CT. Providing proof of the tenants’ status is not within my control, so this seems a ludicrous rule. I’m hoping that if this situation comes up they can cross-reference against the Council’s list of students, but if not then I have a significant exposure.

There’s a clause in the contract that says the students are responsible for CT so I guess there’s recourse there, but that could get messy.

Anyone else had a similar experience?



by Freda Blogs

11:14 AM, 7th August 2019, About 2 years ago

I believe there are two issues here: one is liability for council tax, the other is exemption from its payment. My understanding of the position is as follows:

Liability for payment rests with the occupier, in this case the students, if they are on a single AST with joint and several liability. If/when there is no tenancy, the liability goes up the chain to the landlord. The exception would be if it were an HMO let on a room by room basis in which case the liability rests with the landlord.

Usually the University liaises with the Council and provides a list of qualifying students. If all of the tenants in the property are qualifying students, there is an exemption from payment of council tax on the property. However, if any one (or more) of the student tenants ceases to be a qualifying student, liability for the full Council Tax for the property is payable - it is not pro-rated.

In my case, the Council writes to me before the forthcoming financial year seeking information as to the identity of the students who are/will be occupying the property and the tenancy dates, which I provide.

In the past I never had any bills for Council tax, but these days the Council has tried billing for the period after term ends and the student qualification period expires. However, as the liability remains that of the students as tenants/occupiers under the terms of the AST (irrespective of their student status) they are required to pay the Council Tax until the end of the tenancy; I will only accept liability for the two week period between tenancies.

If your Council is looking to make you liable, if the information is not provided by the students (there should be a clause in the AST to the effect of them complying with all statutory and regulatory requirements or similar wording), as others have suggested, you should seek information from the University itself as to the status of your tenants. I suggest you also ask the Council to specify the legislation they are relying upon to state that the liability is yours.

by Mr B2L

11:36 AM, 7th August 2019, About 2 years ago

Reply to the comment left by Freda Blogs at 07/08/2019 - 11:14
One thing I haven't been able to find is if the HMO is let on a room-by-room basis but say only half of the rooms are let to students and the other half are empty. Obviously council tax is due on empty properties but in this event would the council pro-rate the council tax or would all be due?

by Nick Faulkner

11:45 AM, 7th August 2019, About 2 years ago

Reply to the comment left by Freda Blogs at 07/08/2019 - 11:14There are problems with "joint & several " agreements for students.While I have been a student landlord for decades and enjoy most of my student tenants they can be a bit flakey.... they get homesick, dislike the others on their course or in their house, they can't hack the work ....for whatever reason one or two drop out. A J&S agreement then requires the other tenants to pay their departed colleague's rent until they can find a replacement . If the system worked as it should the landlord is protected...he gets his rent.
However it does not work as it should. Students are generally poor financial managers and can barely cope with their own rent let alone having enough to pay the rent of the person who has dropped out. Therefore several years ago we ceased to use J&S contracts. The hassles involved in chasing the lost rent were rarely successful and usually involved upsetting the remaining,perhaps excellent, tenants.
So we issue individual agreements. This, of course, brings other problems because it creates an HMO even if it is a non-registerable one. ....and the liability for Council Tax falls on the landlord. One has therefore be careful to word the agreement to ensure the tenant student is aware that he may be liable for CT if he drops out or leave the tenancy.
Some colleges have an arrangement with the council to automatically notify the council of their students. Others do not so you then have to chase the students for their Council Tax Exemption forms. When you point out the danger of therm having to pay several hundred pound of the tax it usually concentrates their minds PDQ.

by Nick Faulkner

13:03 PM, 7th August 2019, About 2 years ago

Mr B2L
I think if half the rooms are let to exempt students and half are empty CT is not payable....after all nobody tells you how many student you must house. Therefore if all tenants paying are exempt effectively the house is exempt.
We have a house (registered HMO) with one non-exempt person and four exempt.The non-exempt person pays CT with a 25% reduction for single person occupancy ....so she is paying 75% of the total CT for the house....and seems quite happy about it as she has just renewed her tenancy for the third year

by Freda Blogs

13:52 PM, 7th August 2019, About 2 years ago

Reply to the comment left by Mr B2L at 07/08/2019 - 11:36
I believe all C Tax would be due - for two reasons: HMO let on a single room basis - so liability to C Tax is not that of the tenants, and the exemption to payment will not apply as the house is not 100% qualifying students - but even if it were, I think the single room letting basis would still prevail and prevent pro-rating.

The rateable entity (the hereditament) is the whole house, and unless each room is separately banded (a very dangerous and expensive road to go down - to be avoided at all costs as it will end up costing a lot more), I doubt you will be cut any slack for empty rates by the Council, and you can expect the full force of their credit control processes to recover any payment shortfalls, whatever the reason.

by Freda Blogs

13:58 PM, 7th August 2019, About 2 years ago

Reply to the comment left by Nick Faulkner at 07/08/2019 - 11:45
@Nick Faulkner
I'm surprised at this Nick - I can only say that the joint and several approach for students works well for me, especially as there is a guarantor for each tenant. They do have the odd fall-out, but to date and after about 15 years of letting to students in this location, no arrears or major deposit issues...

by Mr B2L

16:13 PM, 7th August 2019, About 2 years ago

Reply to the comment left by Freda Blogs at 07/08/2019 - 13:58
I agree with Freda here. If we've had any student fall-outs between themselves one or two have agreed to leave at the end and the others have found replacements themselves thus saving us the aggro of advertising, doing viewings etc.

by Neil P

19:08 PM, 8th August 2019, About 2 years ago

Reply to the comment left by Freda Blogs at 07/08/2019 - 13:58
Thank you everyone for your comments, though there's no consensus as to what is right or wrong!

I totally agree with Freda that the J&S option is the best way forward. Their deposits would cover some/all of the rent that hasn't been paid. Failing that a guarantor can be chased for payment, though we've not had to use that yet, thankfully. We've been doing this for 26 years and have never had a bad debt (nor a void for that matter). Maybe we've just been lucky.

On the CT, the Council haven't been tough with me, they just pointed out that I'm liable if the students don't provide proof of their education status. As one poster said, the threat of them being liable for the CT (if only through the AST and not directly with the Council) should be enough to get them to provide the relevant proof.

by Robert M

14:23 PM, 10th August 2019, About 2 years ago

Some comments on this post are misleading so I thought I might summarise:
A property let to more than two unrelated individuals is an HMO. Therefore if you have a four bedroom house let to students it is an HMO, regardless of whether it is let on a joint tenancy or a single joint tenancy. You do not "create" an HMO by opting for individual agreements.
Personally, I would always recommend a single agreement for students. This gives you leverage for persuading them to find a replacement and cuts down on (not eliminates!) arguments about responsibility for communal areas. You can always elect not to pursue extra rent from remaining students, or keep it as a negotiating point when discussing deposit returns.
The council can demand that the landlord be liable to them for the council tax if there are separate tenancy agreements. However, contrary to the casual advice given by Wayne or Tracey on the council helpline, the fact that the council (quite correctly) regards the landlord liable to them, it does not alter the terms of the tenancy contract which may make the tenants liable to reimburse the landlord.
Finally, watch out for the standard council trick of ending the student exemption as soon as the student's course ends. Not correct.

by Steve Hards

12:39 PM, 11th August 2019, About 2 years ago

@ Robert M - "the standard council trick of ending the student exemption as soon as the student's course ends. Not correct."

This is what Southwark does - please could you elaborate on why it is not correct and how the (now ex) students can appeal against it? Thanks

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