Council Tax for HMOs: Who’s Liable, and What Changed

“Am I liable for council tax on my HMO, or are my tenants?”

It sounds like a simple question, but the answer depends on how the property is occupied. The 2023 rule change is sometimes summarised as “landlords now pay council tax on HMOs”, but that is too broad.

In many room-by-room HMOs, the owner is liable. Where a group rents the whole property together under one joint tenancy, the tenants will usually remain liable themselves.

Jurisdiction note: This guide covers council tax rules for HMOs in England. Different rules apply elsewhere in the UK.

What changed for HMO council tax in 2023?

The Council Tax (Chargeable Dwellings and Liability for Owners) (Amendment) (England) Regulations 2023 came into force on 1 December 2023.

They made two important changes.

Most HMOs are now treated as a single dwelling for council tax purposes. Before the change, the Valuation Office Agency could sometimes split a shared property into separately banded rooms. Since December 2023, qualifying HMOs are generally banded as one dwelling instead.

The owner-liability rules were also widened. This means more room-by-room HMOs now fall within the category where the owner, rather than the individual occupiers, is responsible for the council tax bill.

That does not mean every HMO landlord became liable overnight. The actual occupation arrangement still matters.

If you want the general rules first, our guide to how council tax works for rental properties covers the wider picture.

Are you liable for council tax on your HMO, or are your tenants?

A useful starting point is to look at what rights the occupiers actually have.

So, if five friends rent the whole house together under one joint tenancy, they will normally sit within the usual council tax liability hierarchy as resident tenants.

If the same five-bedroom house is instead let room by room, with each occupier having their own agreement for part of the property, the owner will generally be liable for the single council tax bill.

That is why the wording of the tenancy agreement matters, but it is not the only thing a council can look at. The real occupation arrangement and the rights granted to each tenant are important too.

If you’re still deciding how to structure the tenancy, our guide to joint and individual HMO tenancy agreements covers the wider consequences of each approach.

Is the “HMO” definition the same as your licensing definition?

No.

The council tax definition of an HMO comes from different legislation from the Housing Act 2004 definition used for HMO licensing.

That means a property can be an HMO for council tax purposes without necessarily requiring an HMO licence, and vice versa.

For example, a smaller shared property let room by room may fall within the council tax HMO rules even if it sits below the national mandatory HMO licensing threshold.

So do not assume that checking your licensing position automatically answers the council tax question.

Our guide to HMO licensing requirements covers that test separately.

How is your HMO’s council tax band worked out now?

Since the 2023 change, qualifying HMOs are generally treated as a single dwelling for council tax banding rather than being split into separate room bands.

That means the Valuation Office Agency normally assigns one council tax band to the property as a whole.

There are important exceptions.

Separate self-contained flats can still have their own individual council tax bands where they are separate dwellings in their own right.

Certain section 257 HMOs are also excluded from the 2023 single-dwelling treatment. These are particular buildings converted into self-contained flats that did not meet the relevant building standards when converted.

If your HMO still appears on the council tax list as several individually banded rooms from before December 2023, you can ask the VOA to review it under the current rules.

Keep copies of any correspondence and reference numbers while the review is ongoing.

Should you include council tax in the rent?

Where the landlord is legally liable for council tax, many HMO landlords simply factor that cost into the rent they charge.

That is usually much cleaner than trying to add a separate council tax charge to the tenant.

Under the Tenant Fees Act 2019, a landlord cannot require a tenant to make a separate council tax payment to the landlord where that payment is not a permitted payment.

So, if the landlord is the person liable to the council, the safest practical approach is normally to price the rent so that the council tax cost is already accounted for.

This matters for cash flow too.

If you move from single lets into room-by-room HMOs, council tax can become a landlord cost that was not part of your previous rental model. Build it into your calculations before setting the rent rather than discovering the extra expense once the bill arrives.

What if you disagree with your HMO’s council tax band or liability?

There are two different routes depending on what you think is wrong.

If you think the wrong person has been billed, contact the local council. Council tax liability is decided by the billing authority.

If you think the property has the wrong band, or has been treated as the wrong number of dwellings, contact the Valuation Office Agency.

Those are separate issues, so it helps to be clear which one you are challenging.

This can become particularly important if the way the property is occupied changes.

For example, a house might begin with one joint tenancy for the whole property, then gradually move to separate room agreements as tenants leave and are replaced. In that situation, the council tax position can change partway through ownership.

If the letting structure changes, update the council rather than assuming its records will automatically catch up.

Your HMO council tax checklist

• Confirm how the property is actually occupied: one joint tenancy for the whole dwelling, or separate room agreements.
• Check that the person receiving the council tax bill matches the actual occupation arrangement.
• Check the property’s current VOA band, particularly if rooms were individually banded before December 2023.
• If the landlord is liable, build the council tax cost into your rent calculations rather than charging tenants a separate council tax fee.
• Contact the council for liability disputes and the VOA for banding or valuation issues.
• Update the council if the tenancy structure changes.

The one-line version

The 2023 changes did not make every HMO landlord liable for council tax.

Room-by-room HMOs will often leave the owner responsible for the bill, while tenants who jointly rent the whole property will generally remain liable themselves.

The important thing is to check the actual occupation arrangement, not just whether the property is called an HMO.

If you’re weighing this up alongside the wider tax position for your HMOs, our guide to tax for HMO landlords covers the broader picture.