HMO and council tax

tiggey22

I let a flat to two sharers , the council advised me to give them two separate agreements as I was not sure what to do and didn't want to end up liable for bills. The tenancy agreement is for the flat itself and gives no exclusive use to any part, so I have not allocated bedrooms or anything, it's up to them how they live and they share bills. The tenancy makes them responsible for paying the council tax but the council have just sent me a backdated council tax bill as they have reclassified the flat from a flat share to an HMO , they have said it's " at their discretion " how they Bill council tax. Am I able to claim any of this back from the tenants ? I have been billed now for all of their tenancy so the last 12 months and they would both just say we don't have the money. Has this happened to anyone ? The council gave me bad advice initially . letting agents have said they never heard of a two person at share being an HMO but the " use our discretion" seems to imply they don't have to treat all landlords the same

anselld

The rules for Council Tax HMO are completely different from HMO management, licensing, etc.

Actually the Council dont have discretion, they follow a set of rules, and in this case the fact that you have given each tenant their own individual agreement is what makes it a Council Tax HMO.

http://www.legislation.gov.uk/uksi/1992/551/regulation/2/made

For a Council Tax HMO the Landlord is liable to the Council for the CT bill. However it is perfectly legitimate to pass this on to the Ts under their tenancy agreement. Equally, some Ls include it in the rent.

Only you know what you originally agreed with the tenants regarding CT liability and what is written in the tenancy agreements.

booksurr

as Anselld says you are liable in law for the council tax on an HMO. There is no discretion involved.

the fact you failed to research this before becoming a LL is not the fault of the council. The fact you took "advice" from the council on how to let the property does not make them liable for your decision on how to let it.

unless your tenancy agreement expressly includes a clause saying the LL can charge rent plus council tax then no you cannot now demand extra money from your tenants. You will have to pay the CT from the rent you collect.

The good news is the CT bill is an allowable cost against your rental profit for tax purposes.
If the tenants have to date been paying the CT to the council then the council must, by law, refund all that money back to the tenants since the tenants were never liable to pay the tax at all. You may therefore have a small opening to negotiate with your tenants that they now pass the money on to you since that refund is money they have already spent and therefore they would be no worse off for given in on to you instead. Of course the tenants may disagree and simply decide that the refund is a nice windfall that they can now spend how they like. If your tenancy agreement is silent on the matter of who pays the CT then it is your loss

your letting agents are as usual displaying the fact that you need no qualifications or knowledge to call yourself a LA.
There are 2 types of HMO, the definitions are totally separate and you can have a situation, as in your case, where a) applies but b) does not :
a) HMO as defined in The Council Tax (Liability for Owners) Regulations 1992
b) HMO as defined in the Housing Act 2004

Your LA appear familiar with b) but appear ignorant of a). Sack your LA and get ones who are more knowledgeable.

jjlandlord

booksurr wrote: »

If the tenants have to date been paying the CT to the council then the council must, by law, refund all that money back to the tenants since the tenants were never liable to pay the tax at all.

Is there a reference for this?

booksurr

jjlandlord wrote: »

Is there a reference for this?

read the forum

jjlandlord

booksurr wrote: »

read the forum

Are you saying that you do not know where your claim above comes from?
If it is 'by law' then surely there must be a clear reference.

Sorry for asking a question...

CIS

jjlandlord wrote: »

Are you saying that you do not know where your claim above comes from?
If it is 'by law' then surely there must be a clear reference.

Sorry for asking a question...

If a person has overpaid council tax, which they will have done if an account has been paid and the liability is changed, then the council has to refund (or in some cases transfer to a new account) any monies. Regulation 24(2) & 31(4) of the 1992 Administration & Enforcement regulations.

booksurr

jjlandlord wrote: »

Are you saying that you do not know where your claim above comes from?
If it is 'by law' then surely there must be a clear reference.

Sorry for asking a question...

you were trying to be clever not "asking a question"

having read CIS's responses to the same issue many many times on this forum I saw no need to reply to you as you presumably have also read her responses many times

jjlandlord

booksurr wrote: »

you were trying to be clever not "asking a question"

having read CIS's responses to the same issue many many times on this forum I saw no need to reply to you as you presumably have also read her responses many times

Right... Always a pleasure.