Council Tax on HMO
I have a 4-bedroom house in which the rooms are rented individually and the tenants share a kitchen, bathroom, sitting room, etc. Each tenant has their own separate contract. The tenancy agreement includes a clause to say that the tenant must Pay for all electricity, gas and phone bills, water charges and Council Tax relating to the property that apply during the period of the tenancy. It is an RLA standard form that I use.
The council class the house as a HMO for council tax purposes because the rooms are (or can be) separately rented, so they send me the bills and insist on me being responsible for payment. The property is basically a 'student house'. Full time students are exempt from council tax and it is therefore my job to collect the exemption certificates from each of them (provided by the university) and submit them to the council.
However, occasionally we have tenants who are non-students. If there are any non-students in the property council tax becomes payable on the whole property, not just on their bit of it. In this case the arrangement has always been that I pay the council tax and then recharge the non-student(s). If more than one non-student at any time, it is shared out amongst them. We have had as many as three.
I have a former tenant who has left owing rent and council tax, and has gone to the CAB for advice. The CAB have written to me and challenged my right to recharge the tenant for council tax. They want me to repay the council tax that has been paid. They say I am responsible for paying the tax and can't pass on this responsibility. To quote from their latest letter:
...this does not override your statutory obligation and liability to pay Council Tax for this property...Should you have wished to pass this charge onto your residents this amount should have been included when fixing the rental liability and cannot be charged for separately.
It would be difficult to add the council tax onto the rent, as they suggest, for various reasons:
1.The number of non-students can vary and fixing the amount in the rent could end up with me recovering too much or too little.
2.The rate of council tax changes each April which is invariably part way through the tenancy.
3.Tenants can start off as students and change status, e.g. they stay on after finishing their course, or jack the course in.
4.Tenants claim to be exempt students at the start of their tenancy and subsequently turn out not to be, e.g. they don't do enough hours to qualify as full-time. This has happened several times, sometimes I suspect they are being economical with the truth and others I think they are genuinely confused.
Whilst I acknowledge that I have the primary responsibility for paying council tax, I don't see why I should not be able to recharge it to the tenants where relevant. My stance is that the tenant is contractually obliged to pay the council tax. Although the contract doesn't specify who they should pay it to, it makes it clear that they must pay it, and since I have already paid the council they should pay me.
The tenant knew perfectly well when they moved in that they were expected to pay the council tax to me, and roughly how much it was. They paid it for several months without complaint. I don't see why they, as a non-student in full time employment, should get away with not having to pay council tax at all, while I have to pay it for them!
Any comments, suggestions, advice or alternative views will be welcome.
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