Question

I am aware that if I let a large house to individual tenants on individual tenancy agreements on a per room basis, I will have the council tax to pay. I have been told by a friend though that even if I let the same property to 5 people on one tenancy agreement I could still be held liable to pay council tax as landlord. Is this correct?

Answer

As a rule of thumb, if you let a property on a room by room basis, the landlord will always be liable to pay council tax. There is of course the usual exemption if all the occupants are students.

When letting on one tenancy, the situation can become less clear.

Regulation 2 of the The Council Tax (Liability for Owners) Regulations 1992 states:

Houses in multiple occupation, etc

Class C a dwelling which

(a)was originally constructed or subsequently adapted for occupation by persons who do not constitute a single household; or

(b)is inhabited by a person who, or by two or more persons each of whom either—

(i)is a tenant of, or has a licence to occupy, part only of the dwelling; or

(ii)has a licence to occupy, but is not liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of, the dwelling as a whole.

(The above definition was inserted by The Council Tax (Liability for Owners) (Amendment) Regulations 1993 which was further amended (by replacing “and” with “or”) by The Council Tax (Liability for Owners and Additional Provisions for Discount Disregards) (Amendment) Regulations 1995.)

These regulations provide that the owner is always liable if the circumstances set out above are met.

Note that r.2 (a) states that the owner is liable where the dwelling was originally constructed or subsequently adapted for occupation by persons who do not constitute a single household.

In Hayes v Humberside Valuation Tribunal [1998] R.A. 37, H owned a property which he let to six students. One of them ceased to be a student. Each of the students’ rooms had its own door with a separate security lock. The valuation tribunal found that the installation of the security locks amounted to adaptation of the premises within the meaning of the Council Tax (Liability for Owners) Regulations 1992 Reg.2 (as amended) and that accordingly the owner was liable for council tax on the property notwithstanding that he was not living there and that others were. The High Court dismissed H’s appeal and he appealed to the Court of Appeal.

Held, dismissing the appeal, that the tribunal had applied its mind to the question whether the installation of locks could be an adaptation of the premises and had reached a finding of fact which could not be described as perverse. Barnes v Sheffield City Council (1995) 27 H.L.R. 719 CA (Civ Div), Maddox v Storer [1963] 1 Q.B. 451 DC, R. v Formosa (John) [1991] 2 Q.B. 1 CA (Crim Div), Taylor v Mead [1961] 1 W.L.R. 435 DC considered

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