It’s no secret the rules and regulations surrounding houses in multiple occupation (HMOs) are more complicated than standard rental properties.

Add HMO council tax to the mix, and it’s understandable why both landlords and HMO tenants may be unsure which bills they each need to pay. So, who pays council tax in an HMO? Let’s find out.

Who pays council tax in an HMO?

Unlike standard buy-to-let (BTL) properties where the sole tenant or household is usually wholly responsible for paying council tax, HMOs are, by definition, occupied by more than one household which can make assigning responsibility for council tax more complex.

Ultimately, it should be made clear in your HMO contract whether the tenant or landlord is liable for paying council tax alongside deciding who should be paying other bills including water, utilities and, in some cases, the property’s TV licence. However, if you’re drawing up an HMO contract and aren’t sure where the responsibility should lie with regards to paying council tax, we can assist.

To help you find out whether the landlord or tenant is liable for paying HMO council tax, we recommend checking out the latest council tax legislation. According to Regulation 2 from the Council Tax (Liability for Owners) Regulations 1992, the responsible party for paying council tax is dependent upon the type of HMO agreement.

The various types of HMO agreement and the party liable for paying council tax in each instance is outlined by the regulations, in short, as follows;

  1. If you let your HMO by the room (bedsits) then the landlord is responsible
  2. If you use Licence Agreements then the landlord is responsible
  3. If your HMO is let out on a Joint and Several contract to a group of tenants who share the whole house together, then the tenant is responsible
  4. If you let your HMO out by the room, and each room has its own Council Tax banding, then each room is a dwelling and the tenant will be responsible

In most cases, however, the owner or landlord of the property is most likely to be the party liable for paying HMO council tax. Generally, each tenant has their own tenancy agreement as many HMOs are traditionally let by the room (instance one from the Regulation 2). As a result, the landlord is often the one responsible for paying for the property’s council tax. If the rent is inclusive of council tax, then the landlord is responsible, otherwise, tenants are responsible to pay the council tax.

When deciding how much to charge tenants, the landlord should therefore take into consideration council tax costs alongside other shared bills and utilities they may also be required to cover. As HMOs typically house more than three tenants from separate households, these costs can be divided equally among each tenant and included as part of their monthly rent to cover these essential living costs.

At Mistoria Group, we specialise in student property lets in Salford, Manchester, Liverpool and Bolton and university students in our HMOs are exempted from paying council tax. As a result, the cost of council tax is factored into the rent for each tenant. Other letting agents and landlords may not factor council tax into the student HMO rent, in which case it would be made clear in the tenancy agreement that the tenants would be responsible for paying the council tax.

HMO property investments at Mistoria Group

At Mistoria Group, we offer a wide range of high-yield HMO investment opportunities that not only meet but exceed the expectations of our valued property investors. Our dedicated investment service is comprised of a variety of bespoke companies that allow us to do everything from sourcing suitable properties to taxation.

Ready to begin your next property investment venture in the UK?

Regardless of whether you’re searching for an armchair, merchant or joint venture opportunity, we have a variety of inviting and profitable property investment avenues for you to explore. For more information, advice or guidance regarding our full selection of property investment services, including buy-to-let investment and student property investment, please feel free to get in touch.

Thanks to our impressive in-house team of chartered accountants and property specialists, we’ve amassed 200 years of combined UK property investment and management experience.

Eager to contact one of our highly knowledgeable and experienced team members today for HMO guidance and advice? Please don’t hesitate to give us a call on 0800 500 3015! Alternatively, if you’d like to get in touch with us outside of our opening hours, you can either send your enquiry in an email to the address or use our handy online contact form and a member of our expert team will be happy to discuss your property investment requirements further.