HMO tenants could save £1,000 a year on council tax after Government reform

Some tenants who share houses of multiple occupation (HMO) could save up to £1,000 a year on council tax, thanks to new plans from the Government.

These plans will only affect HMOs, which are homes where different people live together but are not part of the same household. HMOs are often rented by students, low-income workers and young professionals.

Some councils charge council tax for each room in an HMO as if it was a separate property.

This means that tenants of HMOs may end up paying more council tax than they would if they lived in a normal house.

However, a legal expert warns that the new plans will not help all types of HMOs, and many landlords and tenants might have to pay higher bills.

'Unjust practice of charging council tax'

The chief executive of the National Residential Landlords Association (NRLA), Ben Beadle, said: "We are delighted that the Government has listened to NRLA and others and will end the unjust practice of charging council tax on individual rooms.

"Not only will it save tenants money, but it also means landlords will once again be able to let rooms inclusive of council tax, making it easier for renters to budget."

He added: "We look forward to the necessary changes being implemented without delay."

HMOs are treated the same way for council tax

The Government wants to ensure that HMOs are treated the same way for council tax, and that they have one council tax band for the whole house.

It also wants to make the HMO landlord pay the council tax, and not their tenants who share the house.

The Government's decision comes after a consultation on how HMOs should be valued for council tax.

The consultation in February was launched after fears of landlords and tenants being worried that councils were charging council tax for each room in HMOs as if they were separate properties.

Hundreds of thousands of tenants in HMO properties

Despite the move being good news for most landlords and tenants - the report's wording potentially means that hundreds of thousands of tenants in HMO properties might not enjoy the new provision.

That's the view of Phil Turtle, the compliance director at Landlord Licensing & Defence, who said: "On the surface, this is good news for HMO tenants and landlords.

"Or at least for shared-facility HMOs defined under Section 254(2) of the Housing Act.

"It's not so good for section 257 converted building HMOs."

'Tens of thousands of Section 254(4) HMOs'

Mr Turtle points out: "What no one seems to have taken account of is the many tens of thousands of Section 254(4) HMOs, where some of the bedsits have kitchenettes and en-suites but one or more of the bedsits in the building has private essential facilities outside their bedsit door."

He explains that a kitchenette may be part of a bedsit, but the tenant must go out of their room to use their own bathroom, which could be along a hallway or down some stairs.

An HMO tenant who has an en-suite in their room may also have a private kitchen that is not in their room but is not shared with others.

Mr Turtle said: "It is essential that it is made clear in the legislation that ALL Section 254 HMOs – including s254(4) – are treated as single houses for council tax, otherwise the apparent win will be somewhat hollow for hundreds of thousands of tenants still forced to pay individual council tax bills."

'Landlords with HMOs who will be pleased to hear the news'

Simon Thompson, the managing director of Accommodation for Students, said: "There will be a lot of landlords with HMOs who will be pleased to hear the news - and many others wondering whether they will benefit.

"And while student tenants don't pay council tax, it's always worth watching these developments in HMOs to see what might, and might not, be happening.

"There's no doubt this is a positive step for many and will save lots of tenants money and confusion."

He added: "There is still the prospect of having different rules and criteria apply to other HMOs when it will be easier for everyone if the rules applied equally to all HMOs."

More information:

This is the Government amendment:

3.2. Amendments to legislation

The government will amend legislation to ensure HMOs are valued as a single property for the purposes of council tax. This will be achieved through amendments to existing legislation, including the Council Tax (Chargeable Dwellings) Order 1992 and related regulations. These amendments to legislation will apply to all HMOs (including both licensed and unlicensed HMOs).