Introduction
The current system has been in place since April 2013, with an average discount of around £65 per tenant. The Government tried to reform it as part of the Finance Act for 2019/20 but this was blocked by the House of Lords. Now, however, there is a new push to change things after complaints that landlords are able to cram more people into properties without having to pay higher bills themselves.
At present, if a property is rented out by individual tenants – whether through one HMO licence with one landlord or several different letting licences – each tenant can claim a 25% discount on their share of the council tax bill. This was a relatively late arrival when it came into force in April 2013.
At present, if a property is rented out by individual tenants – whether through one HMO licence with one landlord or several different letting licences – each tenant can claim a 25% discount on their share of the council tax bill. This was a relatively late arrival when it came into force in April 2013.
The discount was introduced to help tenants living in HMOs who are on low incomes and find it difficult to pay their share of the bill. The idea was that they might not be able to afford to live somewhere else because they would need to find another home that met all the requirements for a legal HMO (and possibly pay higher rent), or live under poor conditions if they did not have enough money left over at the end of each month after paying their rent and bills.
In reality, most people who live in private rented accommodation are young professionals who work full-time and earn quite well but cannot afford expensive private rental prices in London so choose instead to live in shared houses near where they grew up or went to school; some will also have moved away from home earlier than expected due to relationship breakdowns etc., leaving them unable to return now that their parents have sold up and moved away themselves!
The measure was designed to introduce some degree of fairness into the system by ensuring that single people did not have to pay any more than couples and families.
The measure was designed to introduce some degree of fairness into the system by ensuring that single people did not have to pay any more than couples and families. However, it is widely accepted that this has led to an unfair situation where many landlords are being penalised for having the ‘wrong’ number of tenants in their properties.
However, at the same time as establishing a level playing field, it actually encouraged the HMO market – with landlords able to accommodate more tenants without being hit by additional bills (especially if they could let all the rooms and claim multiple discounts).
However, at the same time as establishing a level playing field, it actually encouraged the HMO market – with landlords able to accommodate more tenants without being hit by additional bills (especially if they could let all the rooms and claim multiple discounts).
The council tax discount was introduced in 2013 and applied to all tenants living in a house in multiple occupation (HMO). The discount was 25% of the band D charge for each property, so that an individual paying full council tax would have paid less than half as much. It was available to all tenants living in a HMO who were not living with their partner or family. The purpose of this policy was mainly to ensure single people did not pay more than couples and families
Conclusion
The new measure is designed to discourage people from renting out their homes as HMOs, which should mean fewer properties being converted into shared dwellings that are not suitable for such use.