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Council Tax: Houses in Multiple Occupation

A recent High Court decision is likely to provide welcome relief to landlords that 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; or 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.

Property owners should be very careful if are planning to let out any properties that could constitute HMOs. Not only are there licensing and planning considerations to address, but you must also ensure that you are not exposed to any council tax liability.

To avoid any potential liability for council tax, you should put all your tenants on a single agreement and not reserve any part of the property for your own use or storage.

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