Please note the below case relates to a statutory periodic tenancy only. For a continuing tenancy at the end of the term (like our tenancy agreements) see the case: Leeds City Council v Broadley [2016] EWHC 1839
Introduction
CT v Horsham District Council (HB) [2013] UKUT 617 (AAC) is a significantly important Council Tax case.
In Oyston v Leeds City Council – Valuation Tribunal for England – 4720M67692/244C which was a First-Tier Tribunal case, it was held that a tenant remained liable for council tax if they failed to give proper notice or abandoned as long as at some point in the past a fixed term of at least six months had been granted. This was because the periodic tenancy after the fixed term was a “continuation” of the original tenancy. However, in the High Court, MacAttram v. London Borough of Camden [2012] EWHC 1033 the opposite was held because they said the periodic tenancy after the fixed term in that case was a brand new tenancy and so was NOT a “continuation” but was in fact a brand new tenancy.
A tenant only remains liable for council tax if the tenancy they are on is one which “was granted for a term of 6 months or more”. If a periodic tenancy is a brand new tenancy then it wasn’t granted for six months or more but if it was a continuation of the original, then it was / is.
Background
This case related to council tax benefit and whether a claimant was entitled to benefit to cover a period whilst not occupying a property.
The Council contends, in reliance on the decision of a Valuation Tribunal in the case of Oyston v Leeds City Council (27 July 2011), that the interest which the Claimant had under her periodic tenancy was a “material interest”, as it had originally been granted for a term of six months or more. In that case there appears to have been an initial grant of an assured tenancy for a term of six months, followed by a periodic assured tenancy arising under the 1988 Act, followed when the tenant ceased to reside in the property by a periodic tenancy which was not an assured tenancy. The Tribunal held, contrary to the council’s contention in that case, that the periodic tenancies were “a continuation of the original agreement and not three separate and different agreements and it therefore followed that the tenant had a material interest …”
However, the Upper Tribunal has preferred the reasoning given in MacAttram v. London Borough of Camden [2012] EWHC 1033 and has stated:
… The Judge held that the periodic tenancy which arose after the fixed term was a new tenancy or leasehold interest rather than a continuation of the fixed term. That seems to me to be correct. By s.5(3) of the 1988 Act the periodic tenancy is “deemed to have been granted by the person who was the landlord under the fixed term tenancy immediately before it came to an end to the person who was then the tenant under that tenancy.” The statutory periodic tenancy is not in my judgment some sort of continuation of the fixed term, and therefore it cannot be said that the periodic tenancy was one which was “granted for a term of six months or more.”
And continued …
… the definition of “material interest” requires one to ask whether the leasehold interest which the tenant has at the relevant time (i.e. the time when liability for council tax is being considered) was an interest which was granted for a term of six months or more. That in my judgment requires one to look at the time when that leasehold interest was granted. A yearly periodic tenancy would appear to suffice, in that the initial grant will have been for a term of least a year. However, the periodic tenancy in the present case will have been either a monthly or weekly one (see s.5(3)(d) of the 1988 Act), and therefore it in my judgment was not a tenancy granted for a term of at least 6 months.
Comment
That settles this question now once and for all because this combined with Superstrike further confirms a statutory periodic tenancy created by section 5 Housing Act 1988 is a brand new tenancy.
It is to be noted that in this case, the Upper Tribunal was unable to locate a transcript of MacAttram and seems to have assumed it was an assured shorthold tenancy which is not correct. In that case, the tenancy was a contractual tenancy which can be different upon expiry.
However, despite this, there has been clear consideration of the question and so I don’t think that’s relevant and this is now settled law.
Members using our tenancy agreements since June last year are unaffected by this decision because as long as the fixed term is initially for six months or more, the tenant will continue to be liable for council tax if they abandon or fail to give proper notice because they will have a “material interest”. This is because our current agreements do not “end” and there is no new tenancy granted. The periodic tenancy is simply a continuation and no statutory periodic tenancy is created. *Update 1 August 2014 – The Valuation Tribunal have agreed as at this date with this statement.
If however you are using a tenancy agreement which after the fixed term ends a statuary periodic tenancy is created (which is the majority of tenancies not provided by us or TFP) then, if a tenant vacates a property without proper notice, the landlord will nonetheless be liable to pay the council tax during this period of non-occupancy because the landlord will have the material interest and not the tenant.
If you haven’t yet upgraded to our current assured shorthold tenancies, this case provides yet further reasons to do so on all future lets.
Very interesting article. But makes me ask, if a tenant abandons and he is found liable for the council tax, for how long are they liable? I would assume until the end of the tenancy agreement. But your new tenancy agreements do not have an end date, so what then?
Hello
The person liable is determined by the hierarchy of liability so as soon as someone moves in for example they would become the liable person. Or, if the landlord accepted the tenancy at an end by some act (e.g. ripping out the kitchen etc.) then the landlord would become liable as the tenancy would be at an end. (A landlord should always be careful accepting keys back unless you want the tenancy to be at an end).
In theory though, it could be forever but presumably that would mean the landlord was not receiving rent forever too!
Who has the material interest only matters when the property is unoccupied, otherwise it doesn’t really change anything.
Many thanks
Guild of Residential Landlords
Dear Guild
We have numerous tenancies where the 6 mth Asuured Shorthold Tenancy has come to an end after the 6 months, They are now on periodic tenancies, Do we have to renew the tenancy ? with the new ones as advised in your article or as the tenancy has come to an end and they are already on periodic we can leave them as they are, we have some tenants that have been with us on periodic for 10/20 years for instance
Regards
Paul
Lord Denning must be turning in his grave. There are technical differences between the cases, that appear to have been overlooked. I gained the impression that the judge in the Camden case took a dislike to the claimant (or perhaps landlords generally) when she made her judgement. It has also been suggested that the judgement was made without reference to previously existing law. It seems possible that the judgement could be used to support the contention of landlords being responsible for Council tax at the end of the initial tenancy period, whenever the property remained occupied by the tenant anyway. It’s been demonstrated to the cost of landlords previously that a tenant who is not properly terminated their tenancy, can successfully sue a landlord who has re-let the property. It’s absurd that a landlord is held accountable for Council tax, for a property to which they do not have a legal right even to enter (harassment/impinging on the tenant’s rights to quiet enjoyment of the property). We have been charged Council tax for properties to which the tenants still hold the keys and continue to store belongings in the house. Notwithstanding the above, the writing is on the wall. Regardless of ethics, justice (and probably the law itself), the taxing authorities will have their pound of flesh, come what may. Another illustration perhaps that the law really is a cross bred quadruped.
Sadly the question was not decided once and for all. I have just had to take Shropshire Council to the VTE because they refused to accept that in a contractual periodic agreement following an initial term of six months the tenant remaoned liable for council tax until the end of their tenancy regardless of whether they were resident. (Appeal number 3245M131738/176C) Thankfully I won and the VTE upheld my arguments. I used your article in my submission because of the clear way you had set the arguments. Hopefully it is not decided once and for all.
I mean hopefully it is now decided once and for all.
Well done with the case and I’m pleased our site was useful.
Hi,
Great article.
Would this be relevant for housing benefit in terms of rent as well?