Landlords should decide whether they or their tenants are liable for the new High Value Council Tax Surcharge (HVCTS) to avoid the risk of them quitting the sector, according to Propertymark.

The proposed £2,500 surcharge for properties worth over £2 million and a £7,500 surcharge for properties worth over £5 million would apply to residential properties in England valued at £2 million or more from April 2028. Although this is fewer than 1% of homes, it would particularly impact institutional landlords who rent out high-value property in central London, says the agent body. It believes this could cost these companies hundreds of thousands of pounds and reduce the availability of rental property at the high-end of the market.

It fears there aren’t enough qualified valuers to verify the estimated 165,000 homes expected to be impacted by 2028/29 and warns that confusion around responsibility for paying could undermine the government's goal of raising revenue to pay for local government services.

Tenant

It explains: “Typically, in the private rented sector, council tax is passed onto the tenant, but this is not always the case as it can be included with rent payments. Propertymark would recommend that the responsibility for HVCTS should be under the discretion of the landlord, in the same way council tax is.

“Should the HVCTS be used to fund local authority services, these are clearly benefits to the tenant rather than the landlord who may not live in the local area. Allowing the landlord to choose who is responsible for HVCTS is currently how liability for paying council tax is organised - rather than expecting the tenant or landlord to pay in all circumstances.”

Liability

It adds that liability for the new charge should sit with leaseholders when the lease has been granted for more than 21 years. However, if the property is rented out, then it should be up to the discretion of the leaseholder if they or the tenants pay.

Meanwhile, a petition calling on the government to commission a full, independent review of council tax and stamp duty will be considered for a Parliamentary debate after it attracted 101,907 signatures. Set up by campaign group Fairer Share, it wants to replace council tax and stamp duty with a single Proportional Property Tax of 0.48% on the current value of a property, paid annually by owners, not tenants. Exemptions on second homes would be scrapped.

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