The High Court has brought welcome clarification as to how council tax applies to tenants and owners of Houses in Multiple Occupation (HMOs).
In Stanuszek v Bunyan (LO), an HMO with 6 rooms was changed in the rating list from a single dwelling for which the owner was liable for council tax to 6 individual dwellings where each of the tenants were liable. Mr Stanuszek, the landlord, appealed the VOA’s decision first in the Valuation Tribunal for England and then in the High Court.
The case turned on the meaning of “dwelling” in section 3 of the Local Government Finance Act 1992 and “hereditament” in the General Rate Act 1967 and the applicability of the Supreme Court’s decision in Woolway (VO) v Mazars LLP [2015] AC 1862 (Mazars).
The VOA argued that Mazars, being a case about distinct spaces under common occupation, was of limited assistance in other situations. At first instance, the VOA contended that what defined a “dwelling” was whether the markers of rateable occupation could be established.
The High Court rejected that argument. It found that while the pattern of occupation can be relevant in identifying the space that is occupied, Mazars gave authoritative guidance on what constitutes a dwelling, and that the VTE had conflated the concepts of rateable occupation and dwelling.
The High Court’s decision has the potential to affect a great many tenants in HMOs, who may be entitled to claim back wrongly paid council tax. It is yet to be seen how the VTE will apply Mazars in future cases involving HMOs, and this matter will be remitted to the VTE for further hearing.
Andrew Carter from 42BR barristers was instructed by Nick Waldron at Streathers Solicitors LLP.
Daryn is the founder of Propods - a co-living business based in Portsmouth. His interest in HMOs and Council Tax was evoked by a re-banding of one of his co-living properties in the Portsmouth area.
Wendy is an HMO landlord and author. She became involved in the fight against room re-banding in 2021 as a result of supporting one of her clients with an appeal which saw his 6 bed HMO initially re-banded room by room, and then after a successful challenge, returned into a single banding.
Alan Murdie is a specialist in council tax, housing and debt law issues dating back to 1989, including many test cases in the lower and higher courts. He is director of Council Tax Legal Services and Nucleus Legal Advice in Earl's Court, London. He has been involved with the Council Tax since its inception in 1992, editing eight editions of the Council Tax Handbook since 1998 and co-author of The Enforcement of Local Taxation (2001) with Ian Wise QC.
London-based HMO landlord and founder of nevoliving.com, which creates tech to improve communication between self-employed landlords and tenants. Formerly worked for ComRes, a political consultancy firm.
Matt is a specialist in co-living developments within the HMO industry. He created a £5 million property portfolio in his first 4 years of investment, using the majority of investor finance. Matt’s wider vision is to have a positive impact on shared living communities across the globe to create lifelong peace of mind and well-being for both tenant and landlord.
He has experienced the re-banding of one of his own HMOs firsthand.
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