Why is a second home premium being applied to a rental property?

Why is a second home premium being applied to a rental property?

0:01 AM, 18th March 2025, About a month ago 18

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Hi, I own a small maisonette in London. It has been rented out for 19 years, always using a letting agent and never been used as a second home.

In July of last year, I decided to help my daughter, who is finishing her final year at university in May this year, by renting her the property for £500pcm to cover the small remaining mortgage.

The local council (Merton) have now decided that they are going to classify the property as a second home and have now sent me the 2025/26 bill with a 100% second home premium. They are also refusing to grant her a student discount for the time she has been there.

Has anyone else experienced this problem and can offer some advice?

Thanks,

Bradley


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Steve Rose

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9:43 AM, 18th March 2025, About a month ago

Councils have a number of tests to determine whether someone really lives in a property or are just using it as a way to avoid tax or to be in a particular school's catchment area.
Was your daughter on the electoral roll there? Did she change the address of her bank accounts, driving licence, credit card, etc to there? Did she have a legal tenancy agreement? Did she pay the rent out of her own money or did you give it to her to give back to you? Were all the utility bills in her name, and paid from her own bank account, with money that was hers? Was she registered with a local Doctor/Dentist?
You can appeal their decision, but unless all the above answers were "yes" then I don't fancy your chances.

Steve Rose

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9:52 AM, 18th March 2025, About a month ago

On the other hand, if the answer to all the questions is yes, here is the process:

https://www.gov.uk/council-tax-appeals#:~:text=If%20you%20disagree%20with%20the,appeal%20to%20the%20Valuation%20Tribunal.

Brad

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12:46 PM, 18th March 2025, About a month ago

Thanks for your feedback Steve. The answers to most of the questions you posed is "yes", however there are some things like driving licence and electoral role that she hasn't bothered to update (being a typical student). She has a valid tenancy agreement and rent is paid from her student loan. Everything is above board as it would be with any other tenant I have rented to. There are two lessons I've learnt from this:
1. Landlords renting to family will need to take extra care not to fall foul of this new legislation. (I don't advocate renting to family but in this case I made an exception)
2. Landlords void periods in future will incur double (in my case) council tax.

Steve Rose

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14:06 PM, 18th March 2025, About a month ago

I once had a tenant who moved jobs and kept my flat as a weekend retreat for two months before moving out. Because she'd told the council she was no longer permanently living in the flat, they came after me for the full amount. It turns out legally that's exactly what they're entitled to do! Luckily we had a decent lady in the council who agreed to give me a three-month derogation and cancelled the bill, but I have no doubt if it happens again I won't be so lucky. So now all my tenants have to wait until I receive confirmation from the council that there are no outstanding Council Tax charges before I release their deposit.
The crazy thing is, who actually benefits from this? If you're anything like me all your costs get lumped together and recovered through the rents you charge. So it isn't me who pays the inflated Council Tax charges, it's the next tenant!

Slooky

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16:27 PM, 18th March 2025, About a month ago

All rental property are now classed as second homes if they are furnished. This allows the council to charge double council tax from next month. I have had this argument with our council, contacted my MP and had a letter from Michael Gove who was relevant at the time. The legislation was not supposed to catch rental properties and it is at the councils discretion as to whether they charge double. Apparently the government said if the property is advertised for rent it will.only get charged 100% council tax but strangely I can not find this exception on my councils website.
Regarding student. If you can prove she lives there. No problem I've done it we did not have a problem and my daughter didn't have to pay the council tax. Being on the electoral role isn't a decider. You can't live somewhere and not have some kind of proof.

Brad

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20:53 PM, 18th March 2025, About a month ago

So another poorly thought through ruling, seized upon by the Council and turned into yet another money grab.

Thanks for the info re your daughter. My daughter managed to finally get through to the council today. They advised her to send details of her Doctor's and Dentist's appointments which she had done, so hopefully they will accept this.

Joey Barton

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7:34 AM, 19th March 2025, About a month ago

Until recently I was a tenant in a 4-person HMO in Hammersmith. I rented a room in that house for 13 years. At the same time, I owned and rented out a studio flat in Westminster. The studio was the only home I owned. As far as Westminster City Council were concerned, yes, my studio flat was a second home!

Slooky

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9:18 AM, 19th March 2025, About a month ago

Want to correct my previous post. Info is now updated on our council website and you have to apply for an exception and prove at the same time that the property is advertised for rent so council tax will be 100% not 200% during the void. I have a property becoming void on 1st April and new tenant going in on the 4th April. Quite clearly the property will not be advertised for let during those days because I already have a tenant moving in, most landlords most of the time advertise to let when the current tenant hands in their notice. I assume the council will see common sense if I show that a tenant will be moving in - will have to wait and see how that plays out.

TheMaluka

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9:46 AM, 19th March 2025, About a month ago

Reply to the comment left by Slooky at 19/03/2025 - 09:18
Why not advertise, on a free site, to cover yourself? Any applicants can be told that the property was taken immediately it was advertised.

Slooky

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10:31 AM, 19th March 2025, About a month ago

That's a good idea. The time it becomes an issue is when we know we need to do work on a flat. We have realised its far better to only advertise when the flat is actually ready. In such an old building we have found when you try to rectify one problem it often uncovers 3 more so its impossible to know the end date. If you've agreed a move in date with someone the pressure and the stress is unhealthy and also unnecessary. Unfortunately the people who just want to charge 200% council tax to increase their income don't care about this. I wouldn't be able to advertise and do that on my normal letting platform because I would be black listed. Your solution is as perfect as it can be for such a ridiculous condition.

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