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Who Pays the Council Tax on a Rental Property?

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The primary instrument for establishing who pays the tax on a rental property is the lease. The rental agreement between the landlord and the tenant should set out the terms of the tenancy and one of the points addressed will be who pays the utility bills and council tax charges.

In general, it is usual for the occupier of a building to be responsible for the utility bills and for council tax demands for the period that they occupy the property. Where a lease agreement is in place, this may define as and when such costs are payable, perhaps for the period of the lease, subject to any rights of termination that may exist. There are some exceptions, the primary one being where the Landlord owns a property recognised as a House in Multiple Occupation (HMO).

For the purpose of Council Tax liability, a ‘House in Multiple Occupation’ is:

built or adapted for occupation by people, but who don’t live as a single household.

Or

a dwelling which is occupied by people who have a tenancy or licence to live in only part of the a dwelling, or who pays rent or a license fee for only part of the dwelling.

If the whole property is let to full time students then the property is exempt from council tax and neither the landlord or tenant is required to pay.

Another time when a Landlord may be liable for Council Tax is when it is being renovated or refurbished or when a property becomes vacant and he is trying to re-let it. An empty property is exempt from council tax for 6 months, whilst a landlord with an empty furnished property will benefit from a 50% discount. An empty properties exemption only lasts for 6 months after which a 50% discount applies.

In the case of a property that is undergoing refurbishment works that means that it is uninhabitable; a property benefits from an exemption from council tax liability of up to 12 months. After this time the 50% empty property discount will apply.

This whole field is rather complicated, with different councils having different policies and understandings, but in general terms, once a Landlord has taken back formal possession, he will be responsible for any council tax payable on the property. Some reliefs as set out above, may apply.

For more information contact our lettings team on 01344 860121.

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