January 14, 2023

Who Pays The Council Tax on a Rental Property?

Who pays the council tax on a rental property?

The question of who pays the council tax on a rental property is one that is commonly asked by both landlords and tenants. The answer to the question actually varies depending on certain circumstances, and rental property types.

What is council tax?

Council tax is set by the local authority and is graded according to the value of the property. The fees cover services provided by the council, including refuse collection and highways maintenance. It is usually paid in either 10 or 12 monthly instalments.

The amount of council tax you pay depends upon the value of your property and where you live. There are 8 bands valued A to H which have been calculated by HM Revenue and Customs Valuation Office.

So, who pays the council tax on a rental property?

On a basic level, it is the responsibility of the occupier of the property to pay the council tax. However, if there are several people living in the property, in other words if the property is a house in multiple occupation (HMO), then a hierarchy of liability determines who should pay. This is as follows:

  1. A resident owner – an occupier who owns either the leasehold, freehold or all / part of the property
  2. A resident tenant
  3. A resident who is a licensee – which means they are not the tenant, but have permission to live in the property
  4. Any resident living in the property
  5. The owner of the property who isn’t living there

Important points to note are that firstly, if there are several residents all on the same level, then the responsibility for paying the council tax is shared equally.

Secondly, this hierarchy does not affect houses in multiple occupation in which residents hold separate tenancy agreements. In this case, the property owner takes full responsibility for paying the council tax bill.

Is anyone exempt from paying council tax?

There are certain groups of people and some property types which are exempt from council tax. They are:

  • Full time students
  • Tenants below the age of 18
  • Live-in carers
  • Unfurnished properties – these can be exempt for 6 months in some circumstances
  • Recently repaired properties – these may also be exempt for 6 months in some situations

Single occupants receive a 25% discount on the applicable standard council tax rate.

When is a landlord responsible for paying council tax?

When considering the question who pays the council tax on a property, it’s worth noting when a landlord is responsible.

The landlord must pay the council tax whenever the property is vacant. Every local authority is different, and some may charge extra if a property has been empty for a certain period of time. When budgeting for void periods, it is therefore important to factor this in.

As a landlord, you should check the rules with your local authority, and enquire as to whether there are any discounts relating to your tenants, for example students or live-in carers. It is your responsibility to specify who will be paying for the council tax in the tenancy agreement so that everyone is clear on who pays what.

Looking for added-value help with your landlord responsibilities?

City Borough Housing offers a rent guarantee scheme to landlords in London and parts of Kent and Surrey. The scheme is backed by an exclusive service promise and comprehensive professional property management. This means that in addition to peace of mind that your rent will be paid on the same day every month, even during void periods, you’ll also know that your property is in the best hands.

Property management, everyday repairs and maintenance, quarterly property inspections and a guarantee that your property will be returned to you in its pre-let condition at the end of the agreement, allowing for fair wear and tear, are all included.

If you’d like to discover for yourself how our rent guarantee scheme could ease your landlord responsibilities, please get in touch with our helpful team. Why not request your free rental valuation today?

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