21 Jan 2020
David Rice has seen the council tax bill for the former Waggon and Horses in Bentilee rise from £1,143 to £12,573
A landlord has been hit with a 1,100 per cent council tax hike – after converting a pub into 11 bedsits.
David Rice has been letting out rooms at the former Waggon and Horses in Bentilee since March, and originally paid just one £1,143 council tax bill for the whole property.
But Mr Rice has now been told that each room must have a separate bill, at the Band A rate, bringing the council tax for the whole building to an eyewatering £12,573 a year.
Mr Rice has invested £350,000 in the Dividy Road property, now called The Coach House, which is classed as a house in multiple occupation (HMO).
He says the tax hike will result in a 25 per cent increase in each tenant’s rent, and he fears this means they will leave for somewhere cheaper.
While Stoke-on-Trent City Council is collecting the tax, the decision to bill on a room-by-room basis was taken by the Valuation Office Agency, an arm of HM Revenue and Customs.
Mr Rice, from Surrey, says that if this rule is applied to all HMOs, it will effectively make them commercially unviable, eliminating a whole class of affordable housing.
He said: “For eight months I was paying council tax on a whole property basis, but then one day I found 11 council tax bills on my doormat, one for each room.
“This is something that is becoming more common. It’s just a way of letting councils raise more money after central government cut their funding, but it’s immoral and unfair for landlords, tenants, letting agents and council administration staff.
“It means that a tenant renting a ten square metre room is having to pay the same council tax as someone living in a two-bedroom town house with front and back gardens.
“The total bill for the Coach House is now four times what the pub was paying in business rates, and four times the highest council tax rate in Stoke-on-Trent.
“But this could backfire for the council, as they may have to pick up the bill for housing displaced tenants.
“The whole council tax system is not fit for purpose. It was devised 30 years ago, when HMOs weren’t even a thing. There needs to be more appropriate banding for HMOs.”
The once-popular Waggon and Horses pub closed suddenly in 2017 and was put up for sale.
Following the refurbishment, it now features 10 double bedrooms and one single room, all ensuite and fully-furnished, available for rent for £400 to £500 a month.
The building also includes a communal lounge and kitchen. Ten of the 11 rooms are currently occuped.
Mr Rice has complained to the VOA about the council tax decision and is still awaiting a formal response, but he is not holding out much hope for a positive outcome.
The landlord, who rents out three other properties in Stoke-on-Trent, has enlisted the help of Stoke-on-Trent Central MP Gareth Snell.
Mr Rice added: “For years private landlords have been doing what councils should have been doing: providing affordable housing for rent, at our own expense. But policies such as this will mean less investment from landlords in future.
“There is also an issue with this policy being rolled out on a piecemeal basis, rather than a ‘big bang’. It means tenants will move to HMOs which haven’t been hit with this yet, which is unfair to those landlords who have been targeted first, who will be left holding the baby.”
A VOA spokesman said: “We cannot comment on individual cases. If a taxpayer has concerns about their Council Tax band, they can contact the VOA at any time to explain why they think it might be wrong.”
Stoke-on-Trent City Council declined to comment.