Council tax and HMOs

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A recent High Court decision is likely to provide welcome relief to landlords who are being pursued by local authorities in respect of tenants that have failed to pay their council tax. The court decided that a landlord was not liable for council tax where the property was held not to be a house in multiple occupation (HMO).

What is an HMO for council tax purposes?

A property will be an HMO if it satisfies one of the following criteria:

  • It was originally constructed or subsequently adapted for occupation by a group of people who do not constitute a single household.
  • It is inhabited by a person who, or by two or more persons each of whom, either:
    • is a tenant of, or has a licence to occupy, part only of the property; or
    • has a licence to occupy, but is not liable to pay rent or a licence fee for the property as a whole.

Next steps

  • Landlords should be careful if planning to let out a property that could constitute an HMO. Not only are there licensing and planning considerations to address, but Landlords should try to ensure they are not exposed to any council tax liability.
  • To avoid any potential liability for council tax, Landlords should put all tenants on a single agreement and not reserve any part of the property for their own use or storage.

For legal guidance on HMOs and Landlord related issues call our FREE legal helpline on 0808 139 1606.