Is Council Tax Banding for HMO Properties Outdated?

Date Published 20 April 2023

HMO stands for house in multiple occupation, this is where a property is rented out by at least 3 people who are not from 1 ‘household' but share facilities like the bathroom and kitchen, often known as a ‘house share'.

Some HMOs are banded for council tax purposes per room rather than the whole household, implying that some tenants in shared housing will be responsible for paying council tax on a room. Many property companies have asked the UK Government to look into this as a case-by-case basis where there should be a clearer guidance for valuation officers to distinguish the different council tax between an HMO and self-contained units.

Currently there are several factors which valuation officers assess properties. These include the size, layout, character, location, change in use and property value on 1st April 1991. Propertymark and other companies are asking the UK Government to review the current factors and take out, replace or add other factors.

The changes to the banding system which needs to come into place need to be modernised to cater towards the modern adaptations. As properties are becoming more energy efficient in goals set to reach certain EPC bandings within the next decade, this should be taken into account on how much council tax you pay. If a property is Band A as a small house or flat, this cannot be comparable to a studio flat or room in a shared house. Also, in general all properties should be banded differently based on a more up to date valuation as the current date which is included, factors in April 1991 valuation which is outdated.

With these changes and improvements made this should allow for a fairer system on modern council tax banding. As well as this under new regulations, Landlords should be given the authority to appeal a council tax banding if they deem a valuation to be unfair.