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HMO Council Tax Changes from 01 December 2023

Posted on November 30th, 2023

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.

Licensed HMOs

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.

Please note

Rooms with self-contained facilities – e.g. a bathroom and kitchenette, will continue to attract their own council tax.

Article Abridged from NRLA


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