Who pays council tax – tenant or landlord?

Surely the tenant who is residing in your property is the person responsible for paying the council tax? This isn’t always the case and it depends on the location of your property.

Let’s take a glance at who pays council tax on your rental property and which councils differ in policy.

What is council tax?

The council tax you pay is considered local tax which helps the council pay for services they provide to citizens. The council tax system is used in England, Scotland and Wales on domestic property. The council tax system was introduced 1993 by the Local Government Finance Act 1992 and replaced the short-lived community charge.

Who is liable for council tax in a rented property?

Different councils have different rules on council tax. It depends on the location of your property as to who pays. There is a mix across the UK of landlord responsibility and tenant responsibility. In Cambridge for example, there is a strict HMO (home of multiple occupancy) policy for the landlord to pay council tax on the property.

Whilst in London if tenants have taken out an assured shorthold tenancy (AST) agreement for six months or longer, they are considered the ‘owner’ of the property and are liable to pay council tax. This is even implemented if the tenant has not lived in the property for a period of time within the AST start and finish date.

If you’d like to check your local council’s policy on council tax, check here at Gov UK.

Tell your local council about a change in tenancy

It’s important that you notify your council of the change of tenancy so they know whose name to place on the bill. In recent months, there have been changes to the tax levels set out by councils.

As a landlord, it’s key to stay knowledgeable about local council tax adjustments and to understand the impact they will have on you. You can read more about council tax levels here.

How much council tax do you have to pay?

You’ll be familiar with the banding of council tax from your first property. Council tax is a charge on residential properties which are separated into different bands, A to H. You can check which band your property sits in by going to Valuation Office Agency (VOA) for more advice and guidance.

Your property is placed into its band based on its value. The value is based on the price the property would have sold for on the open market on 1st April 1991 in England and 1st April 2003 in Wales.

‘In March 2022 Band D council tax set by local authorities in England for 2022-23 has moved to £1,966, which is an increase of £67 or 3.5% on the 2021-22 figure of £1,898’ says the Department for Levelling Up, Housing and Communities.

Making sure you’re in the right band for council tax should be on your priority list when becoming a landlord. There’s no need to stretch those overheads even further by not taking the time out to do research. Similarly, if you’re found to be underpaying or more detrimentally refusing to pay, you could find yourself in a financial and legal mess.

What are the consequences of not paying Council Tax?

You’ll certainly know that the rates of council tax are some of the highest bills you’ll be facing as a landlord. And with the current financial climate, landlords are facing swift changes within the tenant market due to spiralling financial troubles. With tenants having to break tenancy agreements early, landlords can certainly feel left in the lurch. Having your landlord insurance in place will certainly give you peace of mind should you need unpaid rent covered.

If your tenants aren’t paying council tax (and they are required to), they will be held responsible and taken to court – make sure you check who is responsible to pay council tax with your local council before taking on any tenants.

However, if the property is empty, the responsibility falls to you to foot the bill. With a hefty bill weighing in, it can all start to feel a bit daunting.

With your insurance all set up, CIA might just be able to help if the unforeseen happens. Request a call back now.

If you ignore council tax arrears it is likely that your local council will bring you to court and order the amount in one lump sum. You would be liable for the court fees as well as any bailiff fees.

With thorough credit checks, right-to-rent checks and getting a reference, you should safeguard yourself against problematic tenants who can’t pay their essential bills such as council tax.

Do you have to pay council tax on an empty property? 

Unfortunately, landlords do have to pay the council tax on an empty property. As there is no resident at home to pay, the responsibility will fall to you.

There are plenty of different options of insurance for landlords too, if your requirements are particularly unique – just get in touch with CIA Landlords today to find out more. Call 01788 818 670, request a callback online, or get yourself a personalised quote.