25 Mar 2022

Landlords whose HMOs are split up into separate units for council tax purposes are losing court challenges, while a lawyer has remarked that their cases are “unwinnable”, The Telegraph reports.

‘Disaggregation’ is where an HMO is charged council tax for every separate unit, while it can happen when each floor of the house has shared facilities, or if rooms have their own kitchenette.

Julian Wilson, who owns around 10 buy-to-lets in London, spent £3,000 appealing against a decision by the Valuation Office Agency that split two HMOs up for council tax purposes.

The VOA split one property into six dwellings, quadrupling the council tax bill from £1,742 to £6,968.

Meanwhile Daryn Brewer, another landlord who has been very vocal about the issue in the press, had his Portsmouth HMO disaggregated, causing his council tax bill to jump from £1,821 to £7,287.

In both cases the landlords lost their appeals.

Chris Daniel of Possession Friend, a housing consultancy, told The Telegraph: “The appeals at tribunal are unwinnable.”

This is a slight exaggeration, but winning appeals against disaggregation is very rare.

Alan Murdie, a housing lawyer and council tax specialist, detailed two cases where the landlords won. One was after going to High Court, while the other was for a wealthy London which was disaggregated due to having separate living quarters for staff.

It was estimated that 500 appeals to the tribunal against disaggregation have been dismissed since 2016, suggesting the odds are stacked against landlords.

Protecting yourself

If you’re worried about your council tax spiralling, you can issue your tenants with joint tenancies. This can be effective for a group of friends who trust one another, as they are put on the same tenancy agreement.

Landlords can boost their chances by having a shared living area across the entire HMO, rather than individual floors.

Meanwhile you reduce the risk if you don’t make excessive structural changes to the property.

This online guidance – see the ‘Banding of houses in multiple occupation’ section – outlines what Valuation Office Agency listings officers refer to when deciding whether to split up HMOs for council tax.

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