New legislation came into force on 01 December 2023, putting an end to the practice of disaggregating houses in multiple occupation (HMOs) and clarifying who is responsible for council tax.
Disaggregation is the process by which the Valuation Office (VOA) can ‘split’ a HMO into single units for council tax purposes, meaning landlords and tenants were liable to pay the council tax for each room, rather than for the property as a whole.
Splitting the property in this way often meant that tenants paid significantly more council tax than they normally would. It also placed the landlord at a competitive disadvantage as disaggregation was not applied uniformly, meaning that some properties on the same street would be significantly more expensive than others.
Following a consultation earlier this year – and campaigning by the HMO Council Tax Reform Group – this practice will now come to an end, reducing council tax bills for some tenants and giving certainty to landlords.
What has changed?
Landlords can now expect a HMO to have a single council tax bill. The regulations also make the landlord liable for council tax in all HMO properties, regardless of whether it is let on a joint tenancy or by the room. Given this, HMO landlords should factor council tax in for their rents going forward, if they are not doing so already.
Where the property is currently split, with multiple council tax bills sent out, the Government will ‘reaggregate’ it, to create one rebanded council tax bill.
The Department for Levelling Up, Housing and Communities has confirmed that if tenants are in arrears with council tax because of disaggregation, councils should offer discounts on the council tax bill until the issue is sorted out and the property reaggregated.
If you have a licensed HMO property that has been disaggregated, you should not have to do anything to start the process.
The VOA has written to local authorities asking for a list of all licensed HMOs in their area.
The VOA should contact affected landlords by the end of January 2024 to inform you of the new council tax banding.
HMOs that do not require a licence
If your HMO is unlicensed (as it does not require one) the onus will be on you to contact the VOA to challenge the current banding.
The VOA should then respond to the challenge within four months, with a new council tax band for the whole property.
Rooms with self-contained facilities – e.g. a bathroom and kitchenette, will continue to attract their own council tax.
Article Abridged from NRLA
Good news for landlords earning under £30,000 a year – the government have no plans to make them use the HMRC’s MTD scheme. The announcement came in paperwork released following the Autumn Statement.
As it stands, landlords with an income over £50,000 will still have to join MTD from April 2026, followed by those earning over £30,000, from April 2027.
A statement on the HMRC website says it will “keep under review the decision on further mandation of businesses and landlords with income below £30,000”,
MTD is HMRC’s plan to digitise the tax system for VAT, Income Tax Self Assessment and Corporation Tax for businesses and individuals. MTD aims to make tax returns simpler and more efficient.
Just a year ago, landlords and others were given an extension to the deadline for using the software. Now landlords earning under £30,000 a year are completely exempt (for now).
HMRC adds: “The government remains committed to delivering MTD for Income Tax Self Assessment and believes this is central to building a trusted, modern tax administration system and supporting small business productivity.
Higher earning landlords who do have to join the system from 2026 onwards must submit quarterly summary data to HMRC, rather than one larger end of year self assessment. This will have to be submitted via special software.
Article Abridged from Landlord Today
Some takeaways from Jeremy Hunt’s Autumn Statement –
Unfreezing Local Housing Allowance Rates. LHA to cover at least 30% of local market rents. The government has stated that this will give 1.6 million households an average of an extra £800 per year.
Self-employed landlords and letting agents to receive tax cuts. The cuts include an abolishment of class 2 national insurance for self-employed people earning over £12,750 per year. This means that affected self-employed people will not need to pay a current compulsory charge of £3.45 a week – saving around £192 a year. Meanwhile, self-employed people who pay class 4 national insurance will now pay 8% (rather than 9%) on all earnings. Taken together, these measures will save self-employed landlords and letting agents up to £350.
Measures to support increased homebuilding. This may alleviate pressures on the sector. The government has committed to spending more money on building new homes and relaxing planning rules. The Chancellor committed to investing £110 million into “nutrient mitigation schemes”, which could lead to the building of 40,000 more homes. There was also a commitment for £450 million worth of funding to local authorities to build 2,400 new homes, and a £32 million investment to tackle planning backlogs in Cambridge, London, and Leeds.
Opportunities for property developers, including converting houses to flats. Intention to consult on a new permitted development right, enabling any home to be converted into two flats, so long as “the exterior remains unaffected”. Meanwhile, homebuilders may benefit from new premium planning services across England with guaranteed accelerated decision dates for major applications, and fee refunds wherever these are not met.
Smaller agencies to benefit from business rate relief. The small business multiplier has been frozen for a further year. This affects small businesses – likely agencies – whose rateable value is under £15,000. These rates may impact independent high street agencies, with Jeremy Hunt stating that these measures would save the average independent shop more than £20,000 over the next year.
Higher wages for lower earning tenants and property professionals. Confirmed increases of almost 10% to the National Living Wage, from £10.42 to £11.44 an hour. The National Living Wage is the minimum hourly pay workers receive, and has now been expanded to include anyone 21 years old and above. More than 2.7 million workers will benefit from this increase, which may impact tenant affordability.
One pension pot for life to affect entire rented sector. Multiple announcements were made regarding pensions, including a commitment to the ‘triple lock’ which increases the full state pension by up to £221.20 a week (up by 8.5%).
The government-backed 95% Mortgage Guarantee Scheme has been extended until the end of June 2025 – 18 months longer than previously agreed.
Universal Credit and other benefits to rise from April by 6.7%.
Article Abridged from GoodLord & Landlord Today
On 07 September 2023 the government released a publication named ‘Understanding and addressing the health risks of damp and mould in the home’. The publication highlights the serious negative health implications which damp and mould can pose. Further it provides detail on the legal responsibilities placed on landlords to ensure that accommodation they provide is free from serious hazards and fit for habitation.
If tenants report damp or mould within their home, landlords must address the problem promptly.
Visit the property and identify the cause of the problem, if you cannot identify the problem, you can instruct a damp surveyor to create a report.
Once damp and mould have been identified, it is essential that the mould is removed promptly, reducing health risks for tenants.
Mould can be removed from hard surfaces with an appropriate cleaning product and should be left to dry completely. Mould and mildew products should be used in preference to bleach, for health and safety reasons. Absorbent materials such as carpets, soft furnishings and ceiling tiles may have to be thrown away if they become mouldy, as it may be difficult or impossible to remove the mould completely. While most tenants could reasonably be expected to remove condensation and very small amounts of mould using an appropriate mould and mildew cleaner, larger areas of mould should only be addressed by qualified professionals. When identifying an experienced contractor, landlords should check training, qualifications and references. Regardless of the extent of mould, the person removing the mould should wear protective equipment, such as a mask, gloves and goggles, in order to avoid contact with mould spores or cleaning products.
If the problem is structural or through faulty installation, you must make a repair as timely as possible. Keep the tenant informed of actions and time frames. If the following problems are present, you must make repairs; leaking internal pipes, not enough ventilation, broken boilers and heating systems, cracked or rotten window frames, leaking roofs/faulty guttering, faulty extractor fans, external and internal structural defects. Fix any damage caused by the damp e.g., redecorate/clean carpets etc. You should check in around 6 weeks after the repairs are made to ensure that the problem has been resolved.
If the problem is not structural and not through faulty insulation – it’s likely that condensation is causing the damp/mould. It happens when moisture in the air meets a cold surface, like a window or an external wall. Tenants can do the following to keep condensation to a minimum; open windows regularly, use pans lids when cooking, dry clothes outside or use a dryer, close internal doors when you cook or shower, use extractor fans in the kitchen and bathroom, leave a gap between furniture and external walls, wipe visible condensation from windowsills each morning. Condensation is worse in cold properties, fuel affordability could be a contributing factor – encourage tenants to keep in touch with Shelter, Citizens Advice and the Local Authority if they are struggling with the rising cost of living.
There is help for tenants depending on their situation. https://england.shelter.org.uk/housing_advice/benefits/help_with_gas_and_electric_bills
Here is a brilliant damp and mould video by Plymouth Energy Community – many of our members have sent the video to their tenants to increase awareness of condensation and mould in the home.
Article Abridged from Plymouth City Council, gov.uk and Shelter
Plymouth Citizens Advice have created a booklet for tenants to highlight landlord and tenants repair/maintenance responsibilities. Landlords may like to share the booklet with their tenants to encourage the reporting of repairs and to make it clear who is responsible for what in the tenants home.
Wednesday 13th December – 3pm until 6pm – All SWLA members welcome for a mince pie and a catch up!
This month’s 30 minute Ashley Taylors Legal Webinar looks at ‘Disrepair Claims’ – an easy option for delaying possessions claims and in fact, there are now TV adverts encouraging compensation claims for tenants. Learn how to minimise these.
When: Thursday 9th November 2023 2.15pm – 2.45pm
Topic: Avoiding and Minimizing Disrepair Claims
Register in advance for this webinar:
After registering, you will receive a confirmation email containing information about joining the webinar.
PLEASE NOTE, THIS IS NOT AN SWLA WEBINAR
A note from the host – Martyn Taylor;
I have seen so many cases in the last nine months of tenants raising disrepair either in possession actions or bringing actions against their landlords for disrepair in ever increasing numbers that I am moved to make my next talk about how you can minimise these.
It’s not so much that I have seen a significant rise in disreputable landlords, it’s more that many of these claims could have been undermined from the outset if Landlords or Managing Agents had been shown ways to combat these claims. Many of you do know your duties and operate systems to do what is right but the way claims are brought means that you feel the playing field is not level. It’s not! That’s why we need to discuss this from my perspective to help you help me for a better outcome.
This talk is deigned to do just that.
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