I may have to sell after Council Tax reassessment increase of £100pm per room?

I may have to sell after Council Tax reassessment increase of £100pm per room?

11:30 AM, 27th March 2017, About 5 years ago 42

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I have 5 large properties in Aberdeen which I let out room by room to long and short term professionals.

I pay the council tax bill and all utilities and then charge the tenant a flat monthly rent.

However, I’ve just been informed by the Grampian Assessors office, that EACH BEDROOM will now be classed as an individual property entered on the valuation roll even though the rooms are not self contained (the showers/kitchens are shared) and as a result will be all subject to Band A council tax.

This means and extra £100 per month per room costs. I have 40 rooms!

Unfortunately, the market wont stand a rent rise of £100 per month per room (the average rent I charge is £425) and I can’t carry that amount so I’ll probably have to sell up.

It seems a bit strange that the Valuation roll will be changed to show 40 properties which clearly there are only 5.

Isn’t this a huge distortion of any city’s valuation roll?

Is there any other landlord facing the same situation?

Many thanks

Karen



Comments

by Tobias Nightingale

19:25 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Robert Mellors" at "27/03/2017 - 16:54":

Can a Universal credit/Benefits claimant have a joint tenancy? Because in a joint tenancy I would imagine the tenancy normally would state the total rent due as a whole not individual? Is there a way around this eventuality? Because the insecurity of the job market a LL is bound to find some tenant is bound to lose there job sometime. Does it have to be fully occupied all the time to ensure this story does not happen?

Anyway so your sure a joint tenancy prevents this 100%?

by Karen

20:04 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Barbara Goulding" at "27/03/2017 - 13:16":

Hello Barbara
Thank you for your comment.
I'm not sure but from David's reply, it looks like it's a national problem. Not just Scotland.
Karen

by Karen

20:21 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Michael Holmes" at "27/03/2017 - 13:36":

Hello Michael
Thanks for your comment.
I'm afraid that all of my 'guests' arrive and leave at different dates - they are unrelated and single occupants . They are mostly Monday to Friday oil professionals, visiting lecturers, foreign contractors etc
Our planning department put me off developing the rooms last year - I had wanted to upgrade them all to ensuite with mini kitchens but was told that would make them self contained and subject to individual council tax. I agree - I cant see that shared facilities make them an individual property.
This stopped me from investing in upgrades to improve quality - now its going to shut me down all together, removing 40 excellent value bedrooms in nice, well managed properties from the market - but I'm working on a 'Cunning Plan' to stop me going under...
Thanks again
Karen

by Karen

20:29 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Tobias Nightingale" at "27/03/2017 - 19:25":

Hello Tobias
Thank you.
I'm sorry - I don't know anything about universal credit - I don't take benefit claimants - and all of my guests are unrelated and stay for different dates and have homes elsewhere - so a joint tenancy is out of the question in this case.
I can't see an individual taking on the liability of unpaid rent for a complete stranger. It would be different for a group of friends moving in together, but in my case I cater for individual professionals.
Thank you again
Karen

by Robert Mellors

20:38 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Tobias Nightingale" at "27/03/2017 - 19:25":

Hi Tobias

No, I'm not certain, this is just my opinion, and as with all complex legal matters, professional legal advice should be sought. I also imagine that different local authorities will interpret the regulations differently so there will be a mismatch between different authorities.

All that said, I believe that, there is a hierarchy of who is responsible for Council Tax, and it revolves around who has a material interest in the property (and a lease/tenancy of 6 months or more creates a sufficient material interest), such that the tenants become liable for the Council Tax. When there are joint tenants/joint occupants who are not part of your household (e.g. they are not family members), then all the joint occupiers will have joint liability to pay the Council Tax.

Each joint occupier can claim Council Tax Rebate (used to be called Council Tax Benefit) in their own right (so long as they qualify for it), but in calculating the amount of CTR the Council Tax for the property will be apportioned by dividing the Council Tax Bill by the number of occupiers that are jointly liable.

Also, if it is a joint tenancy, then the individual rooms cannot be defined as individual letting units because access to the rooms can only be gained via the shared communal areas of the main building and this in itself means that the house has to be let as a whole, i.e. as one single property (albeit to multiple people) so that each joint tenant has a right of access and cannot be lawfully barred from exercising his/her right of access.

by Robert Mellors

20:41 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Karen McKee" at "27/03/2017 - 20:21":

Hi Karen

It sounds like what you are really doing is running a guest house. Why not change it to a guest house and have it rated as a guest house business?

by Karen

20:42 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Luke P" at "27/03/2017 - 13:38":

Thank you Luke
I read this afternoon on the RLA website that transient, short term guests like a lot of my guests, cant be subject to council tax - a 1 or 2 month stay would make it impossible to complete the admin and collect the tax.
To be honest, I'd rather pay the tax instead of my guests (5 properties at Band H, NOT 40 properties at Band A)- it's easy to collect from me and as a tax payer I think it's fair and it's more attractive to potential customers if they see they don't have to sign up for utilities or council tax and just have a 'flat rent' to pay every month.
Thanks again
Karen

by Karen

21:06 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Robert Mellors" at "27/03/2017 - 20:41":

Hello Robert
Thank you again.
Yes, 2 of the 5 properties are former guest houses and I do have that option. However, the assessor , I imagine, will want proof that they are run as guest houses (I was inspected by the assessor 2 months ago) which means proving that they are being marketed as a guest house (on Trip Advisor/Visit Scotland etc). I'd have to offer room cleaning, laundry, towels and breakfast (I CAN'T COOK!!!).
That puts the rent way beyond the extra council tax - plus I'd have to hire staff (PAYE/NI/Pensions, Maternity leave/ sick leave/Health and safety/staff problems etc etc ). At the moment, my 'staff' are contractors - cleaner/agent/gardener /plumber- very easy to run and no drama.
Also if you run a guest house you can't be choosy guest-wise. With the current set up - I only offer accommodation to quiet, mature professionals which keeps the houses quiet, calm and safe.
It's a niche market but I like to think my guests benefit.
Thanks again
Karen

by Karen

21:16 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "David Price" at "27/03/2017 - 15:41":

Hello David
Good advice, thank you.
I'm worried that I'd loose my guests to other landlords 'flying under the radar' so I have to find a compromise for the sake of cashflow.
Regards
Karen

by Robert Mellors

23:51 PM, 27th March 2017, About 5 years ago

Reply to the comment left by "Karen McKee" at "27/03/2017 - 21:06":

Hi Karen

A guest house does not have to serve breakfast.
A guest house can choose who they give the rooms to.
Yes, you would need to provide laundry and a cleaner, but these can still be contractors.

Perhaps running it as a guest house is not for you, and that is fair enough, but the barriers you've mentioned (breakfast, laundry, cleaner, contractors, etc) are not really barriers (or if they are then they are barriers that can be easily overcome).


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