Greater clarity and consistency in the assessment of HMOs for council tax will be provided to ensure that, other than in exceptional circumstances, they are treated as one property with a single council tax band.
New legislation will be brought in before the end of 2023. The Valuation Office Agency will work with councils to identify licensed HMOs that have not been aggregated and re-band affected properties within two months of the legislation coming into effect.
An end to the postcode lottery on council tax decisions
The current system allows rooms in some HMOs to be assessed as separate units for council tax purposes, which means tenants renting a single room can end up liable for the same council tax as would be charged for a one-bedroom flat or a small house – a significantly higher amount than a share of the bill for the entire property.
However, the guidance is not sufficiently clear, and decisions are left open to the interpretation and discretion of local VOA offices and individual assessors. This created a mixed picture across the country, with tenants in some areas penalised unfairly.
Best outcome for landlords, tenants and local authorities
A single, aggregated council tax band for an entire property ensures simplified administration and collection processes for councils and fairness among tenants sharing a home.
Having the landlord as the liable party can disincentivise empty properties, enable landlords to make improvements without penalty, and ensure the property remains affordable to tenants.
Unlicensed HMOs
Limited data means it is not possible to proactively identify unlicensed HMOs, however, the UK Government is keen that unlicensed HMOs that have not been aggregated are also brought into line with new legislation as soon as possible.
Landlords or tenants of unlicensed HMOs will be able to submit a proposal to the VOA to re-band affected HMOs and bring their council tax banding in line with the new legislation. The VOA will have a statutory four-month deadline to respond to such proposals.
