Who pays council tax – the tenant or the landlord?

It’s a knotty question, but the answer is important. Council tax is payable on all residential properties in England and Wales, and councils are notoriously quick to follow up on unpaid bills.

A standard hierarchy of responsibility lists who should pay council tax bills. At the top of the list is any adult over the age of 18 who is occupying the property. In other words, non-resident landlords are not usually responsible for paying the council tax bill. But with landlords featuring further down the list, when is the landlord required to pay, and when is the tenant responsible?

If the whole property is rented out on a single contract

Tenants who are renting the whole property on a joint contract – whether family, friends or simply people who have ended up as signatories on the same rental agreement – are regarded as jointly responsible for paying the council tax bill.

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If the property is rented out to several tenants on separate tenancy agreements

When landlords subdivide their property and rent it out to tenants who all have separate rental agreements, the landlords become responsible for paying the council tax. So, if three people rent bedsits in the same flat on individual contracts, the landlord will be responsible for paying the council tax.

Discounts and exemptions

A wide range of people are either exempt from paying council tax or are eligible to pay it at a discounted rate. For example, a single person occupying a whole house or flat receives a 25% discount, while most full-time students and all members of the armed forces are examples of individuals who are completely exempt from the charge. Find out more about who has to pay council tax.

Landlords should take advantage of this and check their tenants’ employment status. For example, in the flat with three bedsits, suppose one tenant is a full-time student, one a private in the army, and one a young professional. The student and the private are exempt from paying council tax, which makes the young professional the sole adult in the property, entitling the landlord to a 25% discount on the council tax bill.

Do landlords pay council tax on empty properties?

Once there are no tenants in residence, the landlord becomes responsible for paying the council tax bill.

Councils have the right to decide how much of that bill to charge. Not long ago, many councils would have offered landlords as much as a 50% discount on the bill when their property lay empty but concerns about the growing number of empty properties has changed things. Some councils will charge even when a property lies empty for a short period between tenancies, or for as little as one night.

If a property is empty for two years, the landlord may even be asked for an extra 50% on top of the bill. However, councils do have discretion as to how much council tax they charge on a property which is empty because of refurbishment.

Council tax ‘rules’ for landlords

Specify who is responsible for paying council tax in the contract with tenants.

When the landlord is responsible for paying council tax:

  • Include the cost of council tax in the rent to recoup the cost.
  • Check the employment status of the tenants in case an exemption applies.
  • Budget for the cost of paying the tax between tenancies.
  • Check whether the council will reduce the amount owed during a refurbishment.

See our guide for letting property in Stoke Newington, Newington Green, Highbury, and Islington.