A Council Tax Win For Medway’s HMO Landlords

Hello Medway Property News Readers,

I’m just coming towards the end of a busy couple of weeks that included the first year’s anniversary of the Property Success Network; a monthly gathering for property investors to connect and learn.

It’s also been an interesting time what with Rishi Sunak now being instilled as our new Prime Minister and a fresh ‘budget’ which seems to have calmed the markets. Mortgage rates have dropped a little as a result, however, whilst the budget did not include much for landlords, it’s positive that it did not include anything wholly negative.

Council tax – what’s happening?

Something that caught my attention was a recent Government announcement regarding council tax banding for HMOs, where Dehenna Davidson, Parliamentary Under Secretary of State at DLUHC, told fellow MPs that a consultation to look into the problem of tenants being charged individually for council tax is to be launched in January.

This really is a win, because at present the Valuation Office Agency (VOA) has chosen to charge some HMO tenants individually for their council tax. Let’s hope that the consultation clearly addresses the problem as, for example, in Portsmouth, a significant number of HMOs have been re-banded meaning more money for the council, but this has created a challenging situation for tenants as well as landlords.

In a time where budgets are squeezed and councils are able to increase rates by up to 5% compared to the previous 2.99% cap, it’s no wonder this issue has finally surfaced in this way.

In her statement, Dehenna Davison explained that:

“Our clear intention is for HMOs to be classed as single dwellings, other than in exceptional circumstances.”

And that the consultation will:

“Look at situations where individual tenants can, in certain circumstances, be landed with their own council tax bill and will consider whether the valuation process needs to change.”

A sting in the tail

I understand that these changes will form part of the Levelling-Up and Regeneration Bill, however as with most good news for landlords there looks to be something of a sting in the tail.

There are no absolutes to the consultation outcome, apart from the aim of making the process clearer and fairer. However, the announcement highlighted that adjustments to reimburse councils for the ‘lost income’ would be made via regulations rather than waiting for the bill to go through parliament.

Could this be more regulation that will cost investors more, leading to higher rents and a more challenging environment…? It’s something of a ridiculous statement to throw out there highlighting how regulation is there to make up lost revenue!

What do you think about this announcement, and would it potentially affect you if you have an HMO where council tax is charged per room? I’d be interested to hear your thoughts.

As usual, I will keep you updated on this interesting turn of events, and it will be interesting to look back on the announcement when we have the full details made available.

Hasan

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