Council tax in an HMO is the tenant's responsibility, not the landlord's
In a House in Multiple Occupation (HMO), each tenant pays their own council tax to the local authority. The landlord does not pay it. Council tax is a property tax based on the property's band and the number of liable residents, and it follows the person living there, not the owner. If your property is an HMO with multiple unrelated tenants, each one is individually liable for their share or their portion of the bill.
The key distinction is that council tax is a personal liability tied to residency, similar to a utility bill. The local authority sends the bill to the person or people living in the property. If you are a landlord, you are not liable unless you also live there as a resident. If you are a tenant in an HMO, you are liable from the moment you move in, regardless of what your tenancy agreement says.
However, the practical arrangement between landlord and tenants often differs. Some landlords collect council tax from tenants as part of the rent, while others leave tenants to pay the council directly. This is a matter of agreement between you and your tenants, but it does not change who is legally liable to the council.
Key Takeaways
- Each tenant in an HMO is individually liable to pay council tax to the local authority, not the landlord.
- Council tax liability is based on residency and is a personal debt owed to the council, similar to a utility bill.
- A landlord can arrange to collect council tax from tenants as part of rent, but this does not remove the tenant's legal liability to the council.
- If a tenant does not pay council tax, the council pursues the tenant directly, and the debt can affect their credit record and lead to court action.
- The local authority needs the names and dates of birth of all residents to set the council tax band and bill correctly.
How council tax liability works in an HMO
Council tax is assessed on a property, but the bill goes to the person or people living there. In an HMO with multiple unrelated tenants, the local authority treats each tenant as a separate liable person. This means the council will bill each tenant individually for their share, or it may bill one tenant (usually the one whose name is on the tenancy agreement) and expect that tenant to collect from the others.
The local authority needs to know who lives in the property and for how long. When a new tenant moves in, they should notify the council. If they do not, the council may bill the previous tenant or the person listed on the council tax record. This is why it is important for tenants to register with the council as soon as they move into an HMO.
The council tax band is set based on the property's value as of April 1991, not the current market rent. A three-bedroom terraced house in one area might be Band B, while the same property in another area might be Band C. The band determines the base amount, and the number of liable residents can affect discounts or exemptions.
What happens if a tenant does not pay
If a tenant does not pay their council tax, the debt is between that tenant and the local authority. The landlord is not responsible for collecting it or paying it on the tenant's behalf, unless the landlord has voluntarily agreed to do so. The council will pursue the tenant through reminder notices, court action, and potentially bailiff enforcement.
Non-payment of council tax can result in a court judgment against the tenant, a charge on the property (in some cases), and damage to their credit record. The tenant may also face a liability order, which allows the council to take further action. This is a serious debt and should not be ignored.
As a landlord, you have no legal obligation to pay a tenant's council tax arrears. However, if you have agreed in writing to collect council tax from tenants and pay it to the council yourself, you become liable if you do not pass the money on. This is why many landlords prefer to let tenants pay the council directly.
Landlord responsibilities regarding council tax
A landlord's main responsibility is to may support that the property is registered with the local authority as an HMO if it meets the definition. The council needs to know the property is an HMO so it can bill tenants correctly. If the property is not registered and the council discovers it later, the landlord may face enforcement action or fines.
Beyond registration, the landlord must provide tenants with information about council tax and make clear who is responsible for paying it. This should be set out in the tenancy agreement or a separate document given to the tenant before they move in. If the landlord is collecting council tax from tenants, this arrangement must be documented and transparent.
A landlord should also keep records of which tenants are living in the property and when they moved in and out. This helps if there is a dispute with the council about who should be billed. Some councils ask landlords to notify them of changes in occupancy, though this is not always a legal requirement.
Council tax discounts and exemptions in HMOs
Council tax discounts and exemptions are based on who lives in the property and their circumstances. In an HMO, most discounts do not explore because the residents are unrelated. A single-occupancy discount (25 per cent) applies only if there is one adult living in the property; in an HMO with multiple adults, no discount is given.
Some exemptions may explore in specific cases. For example, if a property is occupied entirely by full-time students, it may be exempt from council tax. However, this exemption applies to the whole property, not individual tenants. If even one resident is not a student, the exemption is lost and all residents become liable.
Tenants who are on certain benefits or have a disability may be may have access to to a council tax reduction, but this is separate from the HMO discount rules. These reductions are assessed on an individual basis and must be claimed directly with the council. A landlord cannot claim these on behalf of a tenant.
How to register an HMO with the council
Most councils require HMOs to be registered, though the definition of an HMO varies by local authority. Generally, an HMO is a property occupied by three or more unrelated people who share facilities such as a kitchen or bathroom. Some councils have a mandatory registration scheme; others do not.
To register, contact your local authority's council tax or housing department. You will need to provide the property address, the number of bedrooms, and details of the tenants (names and dates of birth). Some councils have an online registration form; others require a phone call or a visit in person.
Registration is usually free and takes a few weeks. Once registered, the council will send a council tax bill to the property. Make sure the council has the correct tenant names so the bill goes to the right people. If tenants change, notify the council so the bill can be updated.
Arranging council tax collection with tenants
Some landlords choose to collect council tax from tenants as part of the rent. This is a legitimate arrangement, but it must be clear and agreed in writing. The tenancy agreement should state that the rent includes council tax and that the landlord will pay the council on the tenant's behalf.
If you do this, you become responsible for paying the council on time. If you do not pay, the council will pursue you, not the tenant. You may also face interest and penalties. This is why many landlords prefer to let tenants pay the council directly and keep the arrangement separate from rent.
If you do collect council tax from tenants, keep records of what you have collected and what you have paid to the council. This protects you if there is a dispute. You should also make clear to tenants that they remain liable to the council if you do not pay, so they should keep evidence that they have paid you.
Common mistakes landlords make with council tax in HMOs
One common mistake is assuming that because you own the property, you are liable for council tax. You are not, unless you live there. Another mistake is not registering the property as an HMO with the council. This can lead to the council billing the wrong person or taking enforcement action against you.
Some landlords agree to collect council tax from tenants but then do not pay the council. This creates a debt in the landlord's name and can damage the landlord's credit record. It also leaves tenants at risk if the council pursues them for non-payment.
A third mistake is not making clear to tenants who is responsible for paying council tax. If the tenancy agreement does not mention it, tenants may assume the landlord pays it. This can lead to confusion and disputes. Always provide written information about council tax liability before a tenant moves in.
Frequently Asked Questions
Can a landlord refuse to let a tenant move in if they owe council tax arrears?
A landlord can refuse to let a property to anyone, but refusing based on council tax arrears alone may be difficult to enforce. Council tax debt is a personal liability of the tenant, not a reflection of their ability to pay rent. However, a landlord can ask for references and carry out credit checks, which may reveal council tax arrears. If arrears are discovered, the landlord can choose not to let the property to that person.
What if a tenant moves out and does not notify the council?
If a tenant moves out without notifying the council, the council may continue to bill them or the next tenant. The tenant who moved out remains liable for council tax until they notify the council of their departure date. It is the tenant's responsibility to do this, not the landlord's. However, as a landlord, you should notify the council when a tenant leaves so the bill can be updated.
Can council tax be included in the rent without the tenant's agreement?
No. If you want to collect council tax from tenants as part of the rent, this must be agreed in writing and clearly stated in the tenancy agreement. Tenants have a right to know what they are paying for. If council tax is not mentioned in the agreement, tenants may assume they are not responsible for it or that you are paying it.
What if the council sends the bill to the wrong person?
If the council bills the wrong person, that person should contact the council when ready and provide proof that they are not liable (for example, proof they do not live at the property). The council will then update its records and send the bill to the correct person. If you are a landlord and the council bills you, contact them with the names of the actual residents.
Are landlords liable for council tax if the property is empty?
If the property is empty and no one is living there, council tax is not payable. However, if the property is empty for more than a certain period (usually six months), the council may charge a premium. Once a tenant moves in, council tax becomes payable from the first day of occupation. The landlord is not liable unless they live there.