What HMO landlords need to know about HMO council tax

For students and young professionals, HMOs are a popular housing choice. An HMO (or House in Multiple Occupation) lets people rent individual bedrooms, while sharing communal areas like kitchens. But HMO council tax is a significant consideration for York landlords to be aware of.

We took a closer look at HMOs in a previous article, and they’re an excellent choice as build to rent continues to grow in popularity. It’s expected to reach £50 billion by 2020, representing a 200% increase since 2016. We’ve created this companion article to help you understand some of the admin surrounding HMOs (and HMO council tax) in York.

If you’ve already got some HMO questions, don’t be afraid to get in touch! You can email us, or call us on 01904 631 631.

HMO council tax

At Quantum, we pride ourselves on our property knowledge. However, legal advice is not our primary skillset. We recommend contacting HMRC if you have any further tax questions.

In your typical rental property, the tenant is responsible for paying council tax. However, HMOs work a little differently. York landlords must pay the council tax on these properties whether they’re occupied or unoccupied.

What about HMO Capital Allowance?

HMO with key communal areas

A landlord might cite Section 35 of the Capital Allowances Act to save money. However, it doesn’t apply to traditional HMOs. The law classifies these houses as “single dwellings” regardless of how many people live in them.

HMOs where each floor is self-contained

In larger properties it’s possible to create several self-contained living areas (each floor has individual bedrooms, shared kitchens, shared bathrooms and so on). This property would be classed as multiple dwellings. You can claim HMO allowable expenses on necessary communal areas, like corridors, stairs, halls and landings.

You can claim capital allowances for floor coverings, lighting and similar items in your properties. However, the majority of buy-to-let HMOs (and similar properties) do not qualify for capital allowances.

HMO licences in York

Since the 1st of October 2018, landlords have required a licence to operate HMOs. York City Council requires a fee from licence applicants, as well as the following documents:

1. Gas safety certificate

2. Electrical safety certificate

3. Energy performance certificate

4. Written fire risk assessment

5. Portable appliance test certificate (for appliances supplied with the property)

6. Plan of the property showing the number of rooms, room sizes, windows and doors

The exact fee you pay varies depending on your tax band; this is determined by how many occupants you have in the property.
York’s HMO bands start at Tax Band A (with 5 or 6 occupants at £31,095) and conclude at Tax Band D (with 15 or more occupants at £1,575).

You can view the full list at the York City Council website. We also recommend consulting this to see if there are any new updates or regulations you should be aware of.

Exemptions to the HMO licences

As you might expect, there are some exceptions to the rules. You can avoid applying for a licence if you only have two households or two lodgers in your property. You may also be able to avoid applying if you’re running the property as a student hall of residence.

Another exception is if a public body runs the building. Examples include local housing authorities, registered social landlords and emergency services. If a religious community is the principal occupiers of the building (and uses it for prayer, education or similar purposes) that can provide an exemption too.

Finally, you can avoid applying for an HMO licence if the building is regulated under certain statutory provisions. Schedule 1 to SI 2006 Number 373 applies in this situation.

How popular are HMOs?

The latest briefing from parliament (from September 2019) says:

“The private rented sector, of which Houses in Multiple Occupation
(HMOs) form part, has undergone significant growth. It is now the
second largest tenure in the UK and houses around 4.5 million
households in England. HMOs offer accommodation that is typically
cheaper than other private rental options.”

HMO landlords can enjoy some fantastic opportunities, especially in the York area. We hope you understand HMO council tax better after reading our guide.

If you’d like to explore your options further as an HMO landlord—or a new landlord in York—our team of letting agents in York can advise you at every stage. Give us a call today on 01904 631 631 to discuss York’s HMO opportunities.

Where to find HMO information

You can find even more details on HMOs by using the following links:

Government advice on renting out a property

National Landlords Association

Council Tax info from York City Council

Apply for an HMO licence from York City Council

HMO licensing guidance

HMO licensing fees

House of Commons, Number 0708, 30 September 2019 Houses in Multiple Occupation (HMOs) England and Wales

The Evolving Private Rented Sector: Its Contribution and Potential


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