Urgent Help - Houses in Multiple Occupation

nottslass_2

Hi,

I've also posted this in benefits .

I'm a new to this land lord malarkey (so still learning) and could do with a bit of help please.:)

I own a small 2 bedroom house which I rent out .

1st tenant moved in in Dec 13 and was employed
2nd tenant moved in in feb 14 and although employed was only working part time and has put in a claim for H/B

They both have individual tenancy agreements.

Tenent no1 was made redundant in march so has also put in a claim for Housing /council tax benefit.

The council has apparently classed the property as a HMO and will therefore not pay c/t benefit saying that as landlord I'm the one liable for C/Tax - is this correct ?

can anyone please confirm what is officially classed as a HMO ?

Is it simply because there are 2 tenancy agreements ?

Many Thanks

BitterAndTwisted

Have you consulted the Local Authority's website? Each LA has their own criteria about which properties fall into their definition of an HMO.

Mr_Pitiful

Which council is it? It wouldn't be subject to mandatory licencing but a council can run selective or additional licencing or can declare that a particular property is a HMO.

00ec25

an HMO has 2 separate definitions, one for council tax and one for whether it needs to be registered:

the council tax definition is simple: 2 or more tenants each on their own tenancy agreement renting a nominated room with share of common facilities (ie it is not a joint tenancy where they rent the whole house as a single group) means the liability rests with the LL not with the tenant

the council is correct that the tenants cannot therefore claim CT benefit as they are not liable for CT.
It is down to you to set a rent level which provides you enough money to cover all the bills you face plus leave you with a profit.

The tenant is entitled to claim Local Housing Allowance (the correct name for HB) but the amount they will be paid is capped at the "shared housing" rate because they are in an HMO. It may or may not be enough to cover the rent you charge. If there is a shortfall then the tenant has to make good the difference themselves and you will have to deal with any arrears they run up just the same as any other non payment of rent

00ec25

BitterAndTwisted wrote: »

Have you consulted the Local Authority's website? Each LA has their own criteria about which properties fall into their definition of an HMO.

Mr_Pitiful wrote: »

Which council is it? It wouldn't be subject to mandatory licencing but a council can run selective or additional licencing or can declare that a particular property is a HMO.

the definition for CT is set out under the CT Regulations and is NOT the same as that for licensing, it is irrelevant to talk about websites and mandatory/selective licences

for CT purposes an HMO is defined as a Class C property
http://www.legislation.gov.uk/uksi/1992/551/made

http://www.mglewisandson.co.uk/hmo-houses-in-multiple-occupation/hmo-and-council-tax-2

nottslass_2

Thank you .

I didn't realize I'd now be liable just because they had separate tennancy agreements - suppose its too late to change that ? ( the tenants are old school friends)

I'll double check on the Councils website re the multiple occupation.

I know I still have a lot to learn and everyone's help is very much appreciated :beer:

00ec25

nottslass wrote: »

Thank you .

I didn't realize I'd now be liable just because they had separate tennancy agreements - suppose its too late to change that ?
yes
the council is now aware of their tenancy arrangements so any attempt to change that either retrospectively or going forward purely to access benefits would be benefit fraud

I'll double check on the Councils website re the multiple occupation.
pay attention as to whether it is referring to licensing or CT Regulations, not all council website cover the CT Regulations in detail

I know I still have a lot to learn and everyone's help is very much appreciated :beer:

let us hope you understand income tax better than you do CT :cool:

nottslass_2

00ec25 wrote: »

let us hope you understand income tax better than you do CT :cool:

No worries there OH works for HMRC

harrys_dad

Who has paid the council tax up to now? It appears that you are liable, but I suspect that your tenants have been paying it. Do you owe them money?

00ec25

harrys_dad wrote: »

Who has paid the council tax up to now? It appears that you are liable, but I suspect that your tenants have been paying it. Do you owe them money?

a very good question

technically the council should refund any CT paid by your tenants to those tenants and send you a bill instead since they were not liable and did not have to pay

there is a poster called CIS who works in a council tax dept that confirmed the legality of such a move but also pointed out that its an exercise in admin for the council and costs them money to process a refund and issue a new bill just to end up with the same amount of CT received. So your council may not bother but legally it can do so!

nottslass_2

harrys_dad wrote: »

Who has paid the council tax up to now? It appears that you are liable, but I suspect that your tenants have been paying it. Do you owe them money?

No - it would have only been one months C/T (end of feb to end of march 2014) as property was single occupancy until then,which I had incidentally paid in advance anyway (Tenant no1 is a relative )