HMO Council Tax: How Landlords have BEATEN the UK Government

There have been a lot of changes when it comes to property regulation recently, and now it is HMO council tax’s turn! The government have proposed a new law that would help many people who own HMO properties. While it is just a proposal at the moment going through the consultation stage, I believe it will become law. If you are an HMO landlord or are planning on becoming one, you need to understand this HMO council tax change.

I highly recommend watching the full video (above) until the end, as it contains a full breakdown of the HMO council tax proposals. In this article, I will summarise the current law, explain the proposed changes and tell you about the government’s position on HMOs. Please consider sharing this article on social media to let other landlords know about the upcoming rule changes.

1. HMO Council Tax

The current rules about HMO council tax are complicated and interpreted differently, by different councils. This has allowed councils to define individual rooms as separate dwellings. In some local authority areas, having an ensuite is enough to have a room defined as an independent dwelling! When this happens, it means that council tax has to be paid on each room, rather than the house as a single property.

This often means that landlords who provide fewer facilities to their tenants have to pay less HMO council tax than those that provide more! There is also uneven enforcement of the rules. Some properties will be taxed as a single unit, others by the room in the same council area. This creates confusion and doesn’t allow landlords to plan for their costs accurately.

2. Proposed HMO Council Tax Change

The government is now trying to put things right. They have now proposed that HMO properties be taxed per property, not per room. This is a logical step that will help both landlords and tenants.

The government points out that “landlords may be deterred from making improvements if a consequence might be the creation, for council tax purposes, of multiple properties”. The government is, of course, correct here. In areas where an ensuite room is likely to be considered a separate dwelling by the council, I have advised my students against installing them. Where rooms with kitchenettes are likely to be considered a separate dwelling, I have likewise advised against them.

3. Government Supporting HMOs

While HMOs have often been seen as a negative in the past, the reality is they provide high-quality, affordable accommodation. The government is now beginning to understand the important service HMOs provide, writing “HMOs form an important part of the housing market, often providing cheaper accommodation for people whose housing options are limited”. They further note that “[t]he nature of HMOs has continued to evolve over time, with improvements in quality and variation in size and types of properties”.

HMOs provide affordable accommodation to people, without the worry of variable bills each month. Without this service, many people would have a hard time finding housing. It is great to see the government finally acknowledge the importance of HMOs and attempt to correct the current unjust HMO council tax system!

If you want to get into property and take advantage of the new HMO council tax rules, why not book on to my next training event?

On the course, you will learn how to:

  • Become a property investor using other people’s money so that you can get started straight away

  • Utilise the 5 different types of raised finance so that you know exactly what to offer and when

  • Find the perfect properties for the BRR strategy

  • Recycle your money so that you can ‘rinse and repeat’

  • Build a power team you can trust, so that you can save time and money

  • And much more!

Tickets are only £1, and you can get yours here. If you are ready to take action, I hope to see you very soon!

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