This is part one of a three-part guide on HMOs and council tax and what you need to know as a landlord.

The rules governing who is liable to pay council tax when the property is a house in multiple occupation (HMO) are complex. The definition of HMO for council tax purposes is different to that contained in the Housing Act 2004 and used in the context of residential property licensing. Whether or not your property is an HMO for council tax purposes is important because where the property is an HMO, the owner is liable to pay council tax.

The law sets out a hierarchy of who is liable to pay council tax on a property. Usually the person liable to pay is the adult resident. However, the owner will always be liable to pay council tax when the property is an HMO. Under the council tax rules, a property is classed as an HMO if

  • It was originally constructed, or subsequently adapted, for occupation by persons who do not constitute a single household; or
  • Each person who inhabits it is either: – A tenant or licensee able to occupy part only of the dwelling; or – A licensee who is not liable to pay rent or a licence fee on the whole of the dwelling.

The way the council tax test is applied means that a property may be an HMO and require a licence under the Housing Act 2004 but not be an HMO for council tax liability purposes. On the other hand, a property may be an HMO for council tax purposes but not be an HMO under the Housing Act 2004.

This guide aims to assist landlords in understanding whether the property is an HMO for council tax purposes and the circumstances when they will be liable to pay.