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Council tax for landlords

Up until the new tax year started on 1 April 2013, most landlords in the UK could enjoy a council tax exemption for up to six months during rental voids or when the property was empty for a major repair or refurbishment. There were a few details to this rule that I won’t go into because, well, it’s no longer the rule.

This isn’t to say that the opposite is now true; council tax rules for landlords now depend more on location than other factors, but there are still some variations. Broadly speaking, in terms of council tax, there are three categories of residential landlord:

Landlords with houses of multiple occupancy (HMOs)

Nothing has changed here; if you let an HMO, you have to pay council tax on it. Your local authority will assess your property to decide if it’s an HMO for tax purposes; you can see what ‘band’ your property falls under here. If you want to challenge a decision made by your local authority, the gov.uk website tells you how to make an appeal.

There are more things to bear in mind if you let an HMO – visit our HMO page for more information.

Landlords with student tenants

If you let a property to student sharers, neither you nor your students have to pay council tax. The onus is on you to prove the exemption if the student property is an HMO, as you would otherwise have been eligible. Ask your tenants to provide you with exemption certificates.

Things become more complicated if some of the tenants are not students, or if your student tenants are only studying part-time. Generally, a portion of council tax will be payable depending on the amount of the property occupied for full-time study. Again, if your property is an HMO, you will be responsible for finding out how much council tax is payable and also notifying your local authority if there is a change in your tenants’ circumstances.

Other landlords

Landlords letting non-HMO properties to non-student tenants do not need to worry about council tax whilst the property is occupied. However, depending on your local authority, you may have to pay council tax whilst the property is empty.

It’s now up to your local authority to decide how much council tax to charge on an empty property, and this will be determined by their budget. Some will offer a grace period and some will charge a discounted rate, whilst others will charge the full amount from the moment your property becomes unoccupied.

You may also be able to get a discount if your property is undergoing major structural changes or repairs, such as if the roof is being replaced or the walls altered. Your local authority will send you a completion notice when they deem that the work has been completed, and council tax will become payable from that date.

Your best bet is to find out what council tax will be payable ahead of time. If you know that you are about to have an empty property, use this tool to find your local authority and give them a call.

It might also be a good idea to increase the amount that you set aside for voids in your budget.

Avoiding voids

Read our guide on marketing your rental property for tips on how to market your property and find new tenants quickly. Also remember that happy tenants stay put for longer – good landlords enjoy longer tenancies, and can keep council tax bills off the doormat for a few more precious months.

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Amelia Vargo is an online marketing executive for CT Capital. Amelia writes for Turnkey Mortgages, Turnkey Landlords, TurnKey Bridging, TurnKey Life and Commercial Trust.