When Are Landlords Required To Pay Council Tax?

Council tax is typically paid by the tenants in most cases unless of course, the property is empty and in which case, the landlord will be liable for paying the council tax. Tenants on a low income may be entitled to a council tax reduction so you may have to pay more in council tax than your tenants dependant on their circumstances. Likewise, students are exempt from paying council tax (if you're a resident landlord, this may reduce your council tax bill).

With that being said, did you know that if the tenancy term is less than six months or the tenants move out or are evicted within 6 months, you're liable to pay any unpaid council tax? This can have implications on landlords who opt for short term lets and novice AirBnB hosts.

Leeds City Council took a landlord to court in 2016 (Leeds City Council VS Broadley 2016) to recover unpaid council tax that the tenants didn't pay but were on Statutory Periodic Tenancies. They argued that SPT tenancies were 1 month rolling contracts as they could be terminated at the end of any month, however, the landlord won the case because of a clause within his tenancy agreements of the ten properties the council were seeking council tax from stated "The tenancy will become a 6 monthly periodic tenancy after the end of the fixed term...". However, the council did take it all the way to the the high court arguing it took away from the statutory rights of an assured shorthold tenancy becoming a SPT automatically though each time, the courts argued an SPT is only formed automatically if there is no intention to neither renew nor evict or otherwise seek a fixed-term agreement with the tenants which, because of Broadley's clause, his AST tenancies remained fixed-term agreements once the fixed term initially ended.

It is reported that landlords in Dudley are actively chasing landlords for council tax on properties that are tenanted by tenants on a SPT.

In another part of the same court case mentioned earlier, Leeds City Council were chasing Mr Broadley for council tax on 5 of his ten homes which were empty because the tenants vacated the property before the end of their fixed term AST. Broadley argued the tenants agreed to remain for the full term and likewise agreed to pay the council tax for that amount and he is therefore not liable. He won this battle too.

Finally, landlords are responsible for council tax if the property is a House in Multiple Occupation (HMO). tenants living in Houses in Multiple Occupation may have their rent increased in line with inflation and council tax increases but it is important for landlords and property investors to bear in mind that rent can only be risen once per year in most circumstances.

In conclusion, if your property is a HMO or the tenancy agreement or fixed term is less than 6 months (including SPT unless there is a clause in your tenancy agreement as noted above), the landlord will be liable for the council tax. The landlord may be liable for council tax where a tenancy has been formally ended (via notice or eviction) and the property remains empty or for any void periods. By following this by no means exhaustive guide, landlords, property investors and tenants should find themselves better understanding their council tax liabilities in England.

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