Landlords being made responsible for Council Tax

Landlords being made responsible for Council Tax


– Interestingly then, the new
thing that’s on everybody’s tongue that nobody seems
to know about, council tax. So at the moment, do we know who is liable for the council tax in arranging property? The tenant. Is that in all cases? Not in an HMO. What if a tenancy was three months? Would the tenant be responsible
for the council tax? Do we all think yes? Cause I did. I didn’t think that the
duration of the tenancy had any bearing for who was responsible
for the council tax. But actually, if the tenancy agreement is less than six months,
the landlord is responsible for the council tax in the eyes of the council tax regulations. So any landlords out there
doing three month tenancies, four month tenancies, landlords could be deemed liable for that council tax. So in this case, what happened? These are the facts about this case that has brought this to the forefront of everybody’s minds at the moment. A guy called Mr. Broadley
was a bitellate landlord in Leeds, and he owned five properties which were all let on 6 to 12 month ASTs. So bearing in mind what
I’ve just told you, a tenant is liable for the council tax if a tenancy is for six months minimum. In this case, the tenants should all be responsible for the council tax. What happened was all of the
tenancies became rolling. Do we all know rolling contracts, SPT? That what’s we call it. Statutory Periodic Tendencies. When a fixed term ends and
neither party is given notice the tenancy goes onto a rolling contract. Do we all remember Super
Stripe v. Rodriguez which was the big, big, big
case about deposit regulations? Well in that court case,
if you all remember, what they decided was that
when a tenancy became rolling, in effect what we were creating
was a whole new tenancy. Do you remember that? And that’s why we have to
register the deposit again, issue the prescribed information again, because those are the requirements when entering a new tenancy. Eventually, they ironed
out all of those problems to the Deregulation Act apart from one which was the fact that they said, every time a contract goes
rolling into an SPT contract, it is still deemed a new tenancy, so that still stands. So if a contract goes rolling SPT, and it’s now month by month, how long is the duration of that contract? One month. So therefore who’s liable
for the council tax? The landlord. So this is a big problem. This was a big problem. Particularly for Mr. Broadley
who owned five properties and Leeds Council was going
after all five houses, and he wanted the council tax. Now, if you’ve got a tenant in there and the tenant is paying the council tax, I can guarantee you most certainly they’re not going to say to the tenant, just to let you know we’re not
going to charge you anymore, we are going to charge your landlord. But in this case what happened, all of the tenants were on housing benefit. Do housing benefit
applicants pay council tax? So are the Council getting their council tax out of these five properties? Do you think that they thought to themselves, I know what we can do. Well we’re not gonna get
it out of the tenants, then now we’re new
tenancies, what we’ll do is we’ll get it out of the
landlord cause he’s rich. He’ll pay us, and then
we’ll be getting our money because you know the
Councils are all about income, income, income. So they that’s exactly what they did. They went after Mr.
Broadley for council tax on all five of his properties. Now Mr. Broadley was very clever, and he perhaps shouldv’e stood here because what he had done within his AST, he put a provision in their that stated, after the expiry of
the initial fixed term, so we’ve got the start
date and the expiry date, he had a clause in there
that just simply said, and becomth monthly periodic tenancies after the end of the fixed term. So it’s quite a simple clause, it’s not gone into statutory periodic, it’s gone into a monthly rolling contract, but with that clause, what that done was saved him having to
pay that council tax. However, it was quite a long journey. It didn’t happen straight away. The Council sought
council tax from him under the six month rule for
periods where the tenants had left but they had not formally ended the contractual periodic tenancy, but he had to go through
the whole of this process to get to the point where they eventually, couldn’t charge him the council tax. So the facts of the argument
were that the Council claimed that the tenancy couldn’t
be both fixed and periodic, and the agreement failed for uncertainty. The Council also argued
that the fixed term of periodic tenancy, that the
new periodic tenancy was again a new tenancy following
the ruling in Super Strike, as we’ve said, but this gentleman, he took it to the valuation tribunal. It was rejected. It then went to the High Court, which was rejected. Leeds Council then appealed again. They were taking this all the way because you imagine how many benefit tenants there are out there
that their not- pardon? And students where they
are not getting council tax paid on their properties,
and they’re now thinking this is great we can get
it off the landlords. So they did take it all the way, and the final Court of
Appeal, they rejected it, and it was ruled that he wasn’t
liable for the council tax, but only because of that clause. So what should we learn from today? There’s two things that
we should learn from today because we certainly learned from this, and immediately we went back to the office and we made amendments to our contract. Sally spoke too earlier about
thinking ahead, thinking ahead of these regulation
changes, these game changes. We also sat there and we
thought, well we’ve got tenancies that have been going on for ages, how are we going to get
that clause in there now because it wasn’t in there before? Every tenancy that we do now will be safe because it’s a new tenancy,
and it will be in there. We made the changes about
a month ago, six weeks ago. So any new tenancies
will have it in there. But just think, when you guys, if you guys let your contracts go rolling, is that the right choice,
bearing this in mind. Should you maybe do a renewal of contract for a further fixed term,
get that clause in there, and then next time you’ll be safe? So the clause is just that
the tenancy becomes monthly periodic tenancies after
the end of the fixed term. There’s further details than that. It is a little bit more detailed. There’s another section that we’ve put in, which I’m happy to share with you all. You’re all landlord clients of ours. It will be in the new contracts anyway, so if any of you want that
just drop me an email, and I will send it to
you, but it is important that you make sure that this is in there. Otherwise, you could find
yourself, particularly if you ran into, as Sally said, students, housing benefit tenants, which
I know some of us in here do that you don’t fall foul of these. It’s quite interesting because not even the Council
have heard of this case. I’ve had several arguments
with Wolverhampton Council because they don’t know about this case, and when I tell them or when
I send them some details, they’re like oh okay
then we won’t chase you because other problems that you find is when tenants vacate the
properties prior to the end of the fixed term but claim
they’re not responsible because they left three weeks before, it doesn’t matter that my
contract didn’t end ’til then I wasn’t living there, I
was living somewhere else because what they say is
tenants can’t pay council tax on two properties, but why
should you as landlords then? I’m presuming you’re all
paying council tax on the properties you live in, so why should you have to pay more? Sally? – [Sally] Just want to point out, talking to an agent in
Halzoun that Dudley Council is actively pursuing landlords in Dudley, so if you have any properties in Dudley, jump on this straight
away. They’re active. – So they’re only up the road then? – So basically if you’ve got an SPT, get it renewed, get it recontracted now. – Again what we’re going to be doing within the management department, we are going to be
running off a list of all our contracts that are
in rolling contracts, speaking to the landlords,
speaking to the tenants and trying to tie them
into another fixed term just to protect yourself because
this could become costly. Especially if you’ve got
more than one property.

2 comments

  1. I was charged for council tax
    after only 3months short term
    tenancy which i ended at 3 months
    evil councils

  2. Housing benefit claimants do pay Council Tax. It's wrong to force landlords to pay it but doesn't this place tenants in only month long insecure tenancies?

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