New Landlord in C T Distress

[chappington]

Hello all.

In September last year, we rented a property (having never done this before) to a group of students. We gave them Assured Shorthold Tenancy agreements (AST) downloaded from Property Hawk. the agreement states that the tenant agrees to pay Council Tax. The property (we have subsequently learned, after the Council sent us a CT bill) is an HMO.

One of our tenants is not actually a student, and attracts Council Tax, which under the terms of an HMO we have to pay on top of our own CT. He is on benefits, and despite raisng his rent to cover the CT, he says he can't afford to pay the extra (his parents are guarantors).

Do we change to Joint Tenancy mid-term? Do we press the parents to pay the extra rent as guarantors? The council will give us no advice despite asking - we are losing money and don't know what is best to do - we are afraid to do anything as following past advice from propertyHawk, the Council and other landlord friends has proved expensive.

HELP! Sorry to sound naiive, but we are really upset and frankly want out of the whole situation!

Many thanks,

C

[jeffrey]

You as L cannot change anything part-way through a fixed term letting.

[chappington]

Thank you for your prompt reply - does this mean that we can neither legally raise the rent to include council tax nor change to a JTA?

The AST that we appear to be bound by lists the CT as being the responsibility of the tenant...

"3.39 Immediately upon the signing hereof the tenant will have transferred to his name all services (where supplied to the property) for which he is liable including (but not limited to) Council Tax, water rates" etc.


It also states...

"RENT: xxx.xx per month subject to any increase in rent which the lanlord may hereafter be entitled subject to Section 13 of the Housing Act 1988"

Would this cover a rent increase wholly and solely to cover the Council Tax?

Or have we made a mistake that will inevitably cost us the full sum of the Council Tax until the AST expires?

Thanks for any clarification you can offer. If we truly can do nothing legally, so be it...

[jeffrey]

Between the Council and the parties: the Council determine whom to bill, by reference to legislation.
Between L and T: parties determine who must pay, by stating this in the Tenancy Agreement.

If there is a mismatch between (i) the person whom the Council bill and (ii) the person who the parties agreed must pay, person i:
a. pays the Council; and
b. recovers the ££ from person ii.

In your case, T is person ii. So L pays Council and T reimburses L. It's not a question of rent increase at all.

[Snorkerz]

Are the council looking for CT for the whole property?

I seem to remember that some LL who let HMOs will not let to non-students because it messes up the CT situation.

IIRC - 5 students = 0 CT

4 students & 1 non-student, equals an awful lot more than on fifth of usual CT.

It would seem unfair (although you migth be legally able to) to sue the offending Tenant for a full house worth of CT when he only has rights over a portion of it.

[jeffrey]

Are the council looking for CT for the whole property?

I seem to remember that some LL who let HMOs will not let to non-students because it messes up the CT situation.

IIRC - 5 students = 0 CT

4 students & 1 non-student, equals an awful lot more than on fifth of usual CT.

It would seem unfair (although you migth be legally able to) to sue the offending Tenant for a full house worth of CT when he only has rights over a portion of it.
If the occupants are one non-student plus any students, one disregards the students (as usual for C/Tax). There is therefore just one occupant, so a C/Tax discount of 25% applies. This affects merely how much C/Tax is payable- who actually pays it is a separate issue [see post #4].

[Wickerman]

Notwithstanding Jeffreys comments, in my experience this holds true:

1) The tenancy agreement states that the tenants are liable for council tax. The council may, however, try to bill you rather than the tenants (see Jeffreys post) and may refuse to accept that the bill should be in anyones name apart from the yours. This does depend on your relationship with the council - we have been bypassing the ridiculous "its a HMO therefore its the landlords responsibility" problem for a few years now.

2) One tenant is not eligible for student exemption therefore is liable for council tax on a single person discount, resulting in a 75% council tax bill.

3) Tell the council to put the bill in the name of the non student and apply the 25% discount. Provide them with exemption certificates for the students in the property as well as copies of the tenancy agreement. Do this in writing, sending copies (not originals).

If the tenants have moved out, or you do not have exemption certificates, you may not be able to get around this - put it down to experience and move on.

[Rodent1]

If property is let on a SINGLE ast then T has the problem. If it is let on seperate AST's then you have the problem.

[Emma1973]

If he's on benefits is he still paying the rent himself, or is he on Housing Benefits?

[Wickerman]

If property is let on a SINGLE ast then T has the problem. If it is let on seperate AST's then you have the problem.

As I (and others) have pointed out, that depends on the councils attitude. Some councils will bill the students, some will not. Ours will not unless you know who to speak to.