The increasing number of student Houses of Multiple Occupation (HMO) has caused what Durham Council is calling an “unsustainable” council tax shortfall. Arguing that students being exempt from paying council tax is making the local authorities lose millions of pounds, the council is asking the government to compensate for this loss and to consider putting in place new legislation.
Student exemption
Like in every other city in the UK, Durham students are currently exempt from paying council tax if they are studying full-time. This system has been in place since the rules regarding student exemptions and disregards were established in the Council Tax (Discount Disregards) Order 1992, which came into force on March 31, 1992.
The majority of full-time students don’t have the spare time to work and if they do they can only handle part-time due to workload. The Guardian says that as of 2024, more than half of students had to find some form of income due to the cost of living crisis, strengthening the argument that the additional payment of council tax would cause further strain for students.
Landlord liability
The exemption of students from paying council tax doesn’t mean that the tax isn’t paid at all (in some cases) but instead that the landlord of a student-only HMO is responsible for paying. However, in most cases landlords may be able to claim if the house is entirely occupied by students.
Financial impact
The council claims that the increasing number of HMOs is creating a significant tax shortfall, impacting local services.
Speaking as a planning committee considered two HMO planning applications, Liberal Democrat Mark Wilkes told the BBC: "That's another one-to-three thousand pounds that this local authority is losing in council tax.
"We are losing £13m as none of these landlords pays council tax on these properties because students are exempt."
Government role
Previous claims from campaigners states that the income lost from student exemption, would “plug” the shortfall.
As a result, the BBC says, “the council is urging the government to either increase its compensation for this loss of income or change the law to allow landlords of student HMOs to be liable for council tax.”
What next?
Despite the proposals to the government by Durham Council, the outcome of the summer government public consultation is due to be published by the end of the year.
