Wales HMO council tax rules to be clarified

The Welsh government has outlined plans to overhaul how Houses in Multiple Occupation (HMO) are treated for council tax, confirming that property owners, not tenants, will be liable.

Also, HMO properties will be valued as a single dwelling.

The proposals will bring the system into line with the approach used in England, where most HMOs fall under one council tax band and landlord liability applies.

Propertymark said the changes follow its response to a consultation in November 2024, when it called for Wales to adopt a single-band structure for HMOs.

Multiple banding, it said, has created operational issues for agents dealing with inconsistent local interpretations.

Wales’ HMO definition

Propertymark said: “Propertymark members operating in Wales under the current system have reported that, because local authorities have the discretion to define what an HMO is for the purposes of council tax, there is variation between different areas, with some contract holders paying high bills and others not paying at all.

“Therefore, we are pleased to see a clear definition included in these proposals.”

HMO assessed by councils

Under the current framework, some HMOs have been split into separate dwellings for council tax depending on layout and facilities.

That distinction has led to differing liabilities across similar properties, with contract holders in some cases facing higher charges while others pay nothing.

The proposed reforms would see HMOs generally assessed as a single property, removing the need to assign multiple bands within one building.

This applies across both licensed and unlicensed HMOs.

HMO landlords responsible

Responsibility for council tax will sit with the property owner under the changes, ending cases where liability has fallen to individual occupants, particularly in bedsit-style accommodation or units with separate facilities.

Agents will need to account for the shift when advising landlords and structuring management agreements, with council tax becoming a defined landlord cost rather than a tenant charge, Propertymark warns.

Properties previously disaggregated by the Valuation Office Agency before the new rules take effect will require a formal application to amend the valuation list.

Propertymark said a consistent framework would assist agents working across borders and reduce discrepancies between local authority interpretations.