Council Tax - Rooms in Reading

[Luke Masters]

@Kevin Crocker following the PIN meeting in Reading last night, I have had a number of clients call me asking about new regulations whereby upon application of a HMO licence - the application will be referred to the Council Tax team as they are looking to charge council tax on rooms.

I have heard varying versions of the story including only for ensuite rooms, every room as long as there is at least one ensuite in the property or just generally they will be setting Band A on every room.

I understand you were in attendance as they mentioned your name and thought it best to come straight to the source and get the correct version of changes.

I look forward to hearing more about it, so I can understand it more and advise clients correctly moving forward.

Best,

Luke

 

[Kevin Crocker]

Hi Luke,
Consultation with varying departments, including Council Tax, is not a new thing, this is something Councils have done since the inception of HMO licencing. The main purpose of this consultation is to assist HMO teams across the Country in assessing the applicants Fit & Proper Person criteria. It just so happens that the Council Tax departments are now using this information to re-evaluate, or reassess, the Council Tax bandings of HMOs.

The link attached to my previous entry entitled Demand -vs- Reality provides the clearest explanation to this assessment and details when a property will be assessed on a room-by-room basis. I would encourage you to pass this information on to your clients and if further information is required then contact the Councils Council Tax team.

Hope this helps,
Kevin

 

[nmb]

How is this encouraging investment in the real estate market? There is a growing shortfall of affordable rental property in the UK yet the councils still try to squeeze every last drop from landlords and tenants. Perhaps if councils across the UK have not sold off the bulk of their stock in the 1980s the UK housing market would not be in such a mess? Too harsh?

 

[KSH]

Hi Luke,
Consultation with varying departments, including Council Tax, is not a new thing, this is something Councils have done since the inception of HMO licencing. The main purpose of this consultation is to assist HMO teams across the Country in assessing the applicants Fit & Proper Person criteria. It just so happens that the Council Tax departments are now using this information to re-evaluate, or reassess, the Council Tax bandings of HMOs.

The link attached to my previous entry entitled Demand -vs- Reality provides the clearest explanation to this assessment and details when a property will be assessed on a room-by-room basis. I would encourage you to pass this information on to your clients and if further information is required then contact the Councils Council Tax team.

Hope this helps,
Kevin

Hi Kevin

I have asked questions of Councils in West Yorkshire - around whether individual council tax bands would be applied to units in a HMO or whether it still stays as 1 band for the property. The 'vibe' I get, is that unless you could justifiably treat a room as a 'flat', it wouldn't have a separate band applied to it. So unless it has at least an ensuite, it wouldn't have its own band. Though I don't think its fair to treat a room with an ensuite the same as a completely self contained unit.

This situation of each room having its own band seems to vary a fair bit from region to region from what I've read. Does anyone else think this or do you think there would be a standardised methodology brought in, as again, from what I've read, its not clear.

 

[nmb]

I would be interested hear the views of others. Is this a justifiable interpretation of the current regulations or simply a means for local authorities to increase their tax income? If this is such a straightforward interpretation of the current regulations then why are different local authorities seeing things very differently?

 

[Tracey Woods HMO]

I recently had a client who I helped to build a HMO portfolio in Stevenage, Herts get a letter from the valuation office saying they wanted to come and inspect the property. This was a 4 bed house converted into a 5 bed HMO (using the lounge as room) with a garage conversion planned to be room 6. 2 ensuite were added to rooms upstairs and in the garage conversion but the other 3 rooms shared a bathroom and all shared kitchen/communal area facilities. Once they had visited they then applied Band A to the whole property which my client then appealed against. With the support of the NLA she stood her ground and actually asked the local council (under the freedom of information act) how many HMOs in Stevenage had individual council tax banding to date (FYI, as a professional helping investors create HMO portfolios I had done more than 15 projects for clients and had my own HMOs, none of which were separately banded!). Their answer was NONE! She then asked what their rules were to determine a separate band and they said that each unit must be self contained and if any facilities were shared by tenants this would not apply. Her appeal won and she had the council tax reverted to residential rate as before. So it is possible to fight this if you are not providing everything in each unit (cooking, living and washing facilities). Lets see how long it lasts though as this could be another way to make more money from HMO investors !

 

[Kevin Crocker]

I recently had a client who I helped to build a HMO portfolio in Stevenage, Herts get a letter from the valuation office saying they wanted to come and inspect the property. This was a 4 bed house converted into a 5 bed HMO (using the lounge as room) with a garage conversion planned to be room 6. 2 ensuite were added to rooms upstairs and in the garage conversion but the other 3 rooms shared a bathroom and all shared kitchen/communal area facilities. Once they had visited they then applied Band A to the whole property which my client then appealed against. With the support of the NLA she stood her ground and actually asked the local council (under the freedom of information act) how many HMOs in Stevenage had individual council tax banding to date (FYI, as a professional helping investors create HMO portfolios I had done more than 15 projects for clients and had my own HMOs, none of which were separately banded!). Their answer was NONE! She then asked what their rules were to determine a separate band and they said that each unit must be self contained and if any facilities were shared by tenants this would not apply. Her appeal won and she had the council tax reverted to residential rate as before. So it is possible to fight this if you are not providing everything in each unit (cooking, living and washing facilities). Lets see how long it lasts though as this could be another way to make more money from HMO investors !

Hi Tracey,
Thanks for this.

We've had landlords appeal this in Reading and loose so its really interesting to see that it is possible to overturn this decisions. I don't suppose you know the details of the case so that I can use it as a case study for other landlords here in Reading.

I look forward to your response.

Best wishes,
Kevin

 

[Tracey Woods HMO]

Hi Kevin, what sort of things do you need to know? It didn't ever get to a court of appeal. My investor just used their own admissions to fight this using letters. If I can help any further not a problem.