The current system allows some HMOs to be banded for council tax purposes per room, meaning that some tenants will be liable for council tax on a room in a shared house. Whereas in other areas council tax liability is applied to the whole HMO as a single property.
Propertymark appreciates that all properties must be looked at on a case-by-case basis. However, the UK Government should look at creating clear guidance for valuation officers and clear definitions to distinguish between an HMO and self-contained units so everyone understands the requirements.
An HMO is comprised of rooms with shared facilities, whereas self-contained units are more like small flats or studio apartments, and should be banded as individual units for council tax purposes.
Assessments are based on several factors, such as a property’s:
- size
- layout
- character
- location
- change in use
- value on 1 April 1991 (England) or 1 April 2003 (Wales)
Propertymark believes that the current Council Tax banding system is outdated and needs to be reviewed as currently it looks at several factors to establish a band.
This banding system needs to be modernised to account for modern adaptations (including energy efficiency measures) and modern property values. The bandings need to be changed to reflect that a Band A property which could be a small house or flat is not comparable to a studio flat or a room in a shared house. This is another reason why we don't support HMOs being banded per room.
We know from our member agents that there is currently a lack of uniformaty in banding assessments that doesn’t take into account current property valuations and modern adaptations taking place within the sector such as energy efficiency improvements. We are supportive of the UK Government’s objective to deliver consistency of outcomes in HMO banding assessments.
Agents and their landlords, tenants and local authorities will benefit from having one cumulated Council Tax band for an entire property. We will work to ensure the sector understands any changes to the law and how it impacts them.
