Paying council tax for rented properties: landlord guide

Landlords usually don’t pay council tax on rental properties, except for HMOs and vacant properties. Learn about discounts, exemptions, and potential charges.

Angelina

4 minute read

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Updated on 18 Sep 2023

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Laws

Council tax applies to all residential properties in the United Kingdom. It funds local services, such as waste collection, policing, and education. But who pays the council tax: tenant or landlord? We'll discuss that in this article and explore the answers to commonly asked questions about council tax for rented properties.

The responsibility for paying council tax when renting depends on the type of occupancy of the property: single occupancy or HMOs.

Single household occupancy

If your property is occupied by a single household (e.g. family) or up to 2 unrelated tenants, the tenants are responsible for paying council tax. They’ll receive the bills directly from the council and pay them without your involvement.

If it’s a fixed tenancy contract of 6 months or more, the tenant is responsible for paying the council tax until the end of their tenancy. Once their contract ends, the landlord must take over paying the tax.

For agreements less than 6 months, tenants are only responsible while living in the property and the landlord takes over if they leave early.

If the tenancy becomes a statutory periodic tenancy after the fixed-term contract has ended, the tenant can leave whenever they like and the landlord will be responsible for paying council tax. To avoid this, your contract must state that the tenancy will continue after the fixed term ends, making it a contractual periodic tenancy. This will keep the tenant responsible for paying council tax until they end their tenancy and leave after their notice period.

Tenants who live solo should apply for a 25% discount on their tax bill.

HMOs council tax

If a property is officially considered an HMO (house in multiple occupations), the landlord pays council tax. However, to cover the cost, you should adjust the rental price accordingly.

Remember that a property is only considered an HMO if it’s occupied by 3 or more tenants forming more than 1 household.

Landlords pay council tax only when a property is empty for over 7 days.

But let’s get a closer look at each situation.

Property is vacant for up to 7 days

No one has to pay tax for an unoccupied and unfurnished property for up to 7 days.

Property is vacant for more than 7 days

If the property remains empty for over 7 days, such as during void periods, the landlord must pay council tax for the entire vacancy duration.

Property is vacant for 2 years or more

If your home has been vacant for 2 years or more, you may pay extra council tax (premium), which will keep increasing the longer the property remains unoccupied. If the property is vacant for over 10 years, your premium can be up to 4 times the regular council tax.

You usually receive council tax bills in April and must pay in 10 instalments. If required, you can ask to pay in 12 instalments instead. Some councils may accept weekly or fortnightly payments. Others may reduce the total bill if it is paid all at once, at the beginning of the year.

Pay your council tax online.

Your council tax bill is calculated based on several factors:

• Valuation band: Each property in the UK is assigned a valuation band by the Valuation Office Agency (VOA) based on its value as of April 1, 1991. The valuation bands range from A to H, where A band pays the least and H pays the most tax.

• Local authority: Each local authority sets its own council tax rate for each valuation band. The tax rate changes each year.

• Discounts and exemptions: Some households may be entitled to discounts or exemptions on their council tax, such as single occupier discount, student exemption, or disability reduction.

Find out the council tax band for a home in England or Wales by looking up its address or postcode.

If you or your tenant are eligible for a discount or exemption, you still must apply for it. You must pay the council tax bill until you hear the decision from your local authority.

Landlords of HMOs should always check tenants' circumstances to ensure they're paying the correct amount. Be ready to provide paperwork to prove your tenant's eligibility. If a discount is given incorrectly or a tenant moves out, you should rectify the situation immediately to avoid fines.

Typically, reductions to the council tax bill are implemented according to the following rules:

• If every member of the household is considered disregarded, you will receive a 50% reduction on the council tax bill.
• If a tenant lives alone or everyone else in the household is disregarded, the bill can be discounted by 25%.
• If every adult in the household is a full-time student, they are exempt from paying council tax. However, if at least one adult is not a student, the discount won’t apply.
• A discount is not valid if 2 or more adults living in a property aren’t disregarded.

These categories of people are considered disregarded:

• full-time students above 18
• under 18 years old
• student nurses
• foreign language assistants
• disabled and severely mentally impaired people
• armed forces personnel
• live-in carers or care workers
• diplomats
• persons under 25 years old who get funding from the Education and Skills Funding Agency (apprentices, youth trainees, foreign language assistants and school-leavers)

Check whether you or your tenant qualify for a discount or exception.

To ensure you stay on top of your council tax responsibilities and avoid any unexpected bills, follow these simple tips:

1. Determine who is responsible for paying council tax in the tenancy agreement.
2. Notify your local authority at each change of tenancy and provide the names of new tenants.
3. Factor the council tax cost into the rent price for HMO properties.
4. Check for any council tax discounts or exemptions you or your tenants may be eligible for.
5. Council tax is an allowable expense, so if you pay it yourself, claim this cost in your tax return.
6. Minimise void periods between tenants to avoid paying council tax.

At HousingAnywhere, tenants usually book their accommodation 2–3 months ahead of time. This gives you ample time to pick the perfect candidate, fill up your property in time, and save money on council tax and utilities. Join our platform today to find your next tenant!

This article is for informational purposes only. Please consult the appropriate authorities for the latest developments or a lawyer for legal advice.

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