Who Pays Council Tax in an HMO? A Guide for Tenants and Landlords

Houses in multiple occupation — HMOs — are a growing part of the private rental market in England and Wales. But council tax in an HMO does not follow the same rules as a normal rental property, and both tenants and landlords can end up confused about who is responsible for the bill.

Getting it wrong can mean unexpected arrears, incorrect bills, or tenants paying more than they should. This guide sets out the rules clearly.

What Is an HMO?

For council tax purposes, a house in multiple occupation is a property where the residents do not form a single household. This typically means:

• The property has multiple tenants who each have individual tenancy agreements with the landlord
• The residents are not all related or a single family unit
• Common areas (kitchen, bathroom, living room) are shared

The legal definition for council tax purposes differs slightly from the HMO licensing definition used in housing law, but in practice most shared houses where individual rooms are let separately are treated as HMOs for council tax.

The Basic Rule: Who Is Liable?

Under the Council Tax (Liability for Owners) Regulations 1992, the liability for council tax in an HMO falls on the owner (the landlord), not the tenants. This is a specific exception to the normal rule, which is that the resident is liable.

The key trigger is the nature of the tenancies. If tenants each have their own individual tenancy agreement for their room rather than a joint tenancy for the whole property, the property is almost always treated as an HMO for council tax, and the landlord is billed directly.

When Are Tenants Liable Instead?

Tenants can be liable for council tax in a shared house if they hold a joint tenancy agreement covering the whole property. In that case, the residents collectively are treated as a single household for council tax purposes, and the bill falls to them — jointly and severally. This means each tenant is individually responsible for the full amount if the others do not pay.

If you are unsure whether your tenancy is individual or joint, check your tenancy agreement. Individual room agreements mean the landlord pays; a joint tenancy agreement for the whole property typically means tenants pay.

What If Some Tenants Are Students?

This is where it gets more complex. Student status does not automatically exempt an HMO from council tax, but it does affect the bill:

• If all residents of the HMO are full-time students, the property is fully exempt from council tax.
• If some but not all residents are students, the non-student occupants are liable (and if the landlord is liable under HMO rules, the landlord must pay but may factor this into rent).
• Students are still disregarded for the purpose of calculating the number of adults — which can reduce the bill significantly in mixed properties.

Landlords of student HMOs should ensure all student residents provide up-to-date certificates of student status from their institution.

The Practical Impact for Landlords

Landlords of HMOs where individual rooms are let separately are responsible for paying the council tax and must register with the local council as the liable party. This is an ongoing cost to factor into rental pricing.

Many HMO landlords include council tax in the rent and deal with the council directly. Others attempt to pass the obligation on in tenancy agreements. However, passing council tax liability to tenants via a tenancy clause does not change the legal position with the council — the landlord remains liable to the council regardless of any internal agreement with tenants.

What Band and Bill Applies?

An HMO is valued and banded in the same way as any other residential property. The Valuation Office Agency (VOA) assigns a council tax band based on the estimated open market value as at 1 April 1991 (or 1 April 2003 in Wales). The band and the resulting bill are based on the property as a whole, not on individual rooms.

If you believe your HMO is in the wrong band — for example, because the property is large and shares many features with Band E or F properties in the area — you can challenge the banding through the VOA.

Moving In and Out: Who Tells the Council?

In HMOs where the landlord is liable, it is the landlord’s responsibility to keep the council updated. If all tenants leave and the property is empty, the landlord must notify the council. Empty property rules apply, and the landlord may face empty property premiums after a period.

Tenants in an HMO do not usually need to register with the council individually for council tax — the landlord handles the account.

Disputes Between Landlords and Councils

Sometimes councils wrongly bill tenants in an HMO, or landlords dispute whether their property qualifies as an HMO for council tax purposes. If you receive a bill you believe is incorrectly addressed:

1. Write to the council’s revenues department explaining the tenancy arrangements.
2. Provide copies of the tenancy agreements as evidence.
3. If the council does not accept this, you can appeal to the Valuation Tribunal for England (or equivalent in Wales).

Summary

1. In most HMOs where rooms are individually let, the landlord is liable for council tax — not the tenants
2. Where a joint tenancy covers the whole property, tenants may be liable collectively
3. Student exemptions can still apply if all residents are full-time students
4. Landlords cannot transfer their legal liability to the council onto tenants by contract alone
5. Disputes over liability can be appealed to the Valuation Tribunal

If you are a landlord or tenant unsure about who should be paying council tax in your property, contact Council Tax Advisors for free specialist guidance.

Disclaimer: This article is for general information only and does not constitute legal or financial advice. Rules vary between local authorities. Seek independent advice for your specific situation.