More often than not you will find a section in the tenancy agreement for rented property that requires the tenant to cover the cost of the council tax, along with other utility bills for the property. However, when it comes to houses in multiple occupation (HMO) and vacant periods, things to start to get a little bit confusing.

So, who foots the bill? Are there any discounts? What happens when the property is vacant? Our at a glance guide to council tax for landlords and tenants tells you everything you need to know about this tax.

What is Council Tax?

Council tax is an annual fee that your local council charges for the services it provides, like police and fire services, leisure and recreation facilities, refuse collection and highway maintenance. It is generally paid in either 10 or 12 monthly instalments.

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How is Council Tax calculated?

The amount of council tax you pay depends on the value of your home and where you live. There are eight different bands, A to H, and each band covers a price range into which a residential property will fall. These have been calculated by the government’s HM Revenue and Customs Valuation Office. Somewhat bizarrely, the band a property falls into in England depends on what it would be advertised for on the open market in April 1991. In Wales, that valuation figure is a bit more timely – April 2003.

The table below shows the council tax bands in Islington. As you will see the amount due has increased by six per cent over the past 12 months. For a Band A payer, for instance, the amount of council tax due has increased from £1,031.92 to £1,093.43. That’s a jump of more than £60. It’s an even bigger increase for Band G – from £2,579.80 to £2,733.57. That’s around a further £150 added to the bill.

Islington Council Tax Rates
Islington Council Tax Rates

Different local authorities have their own bands and rates, so you will need to find your local council and check their website. Enter your postcode into the Governments Pay your Council Tax page to be directed to your council’s website.

So, who pays Council Tax on rented property?

There is a hierarchy of liability that determines who has to pay the council tax.

  1. A resident owner-occupier who owns the freehold or leasehold
  2. A resident tenant on an assured tenancy agreement
  3. A resident who is a licensee, which means they are not a tenant but they do have permission to live there
  4. Any resident, for example a squatter
  5. The owner of the property who doesn’t live there

If there are several residents at the same level, liability is shared equally.

This hierarchy does not apply to houses in multiple occupation, that is where the residents have separate tenancy agreements. In this case, the property owner is liable for the council tax bill.

If the whole property is rented on a single tenancy agreement

Tenants renting out an entire house or apartment property on a joint tenancy agreement – regardless of whether they know each other, or only met at tenants – are regarded as jointly responsible for footing the council tax bill.

If the property is rented to more than one tenant on separate leases?

If a landlord has a number of tenants with individual tenancy agreements then he or she becomes responsible for paying the council tax. In other words, if there are four people each renting a room separately then the bill for the council tax will go to the landlord.

When is the landlord responsible for paying Council Tax?

Once there are no tenants living in the property then the landlord becomes responsible for paying the council tax bill.

The local authority has the right to decide how much of that bill to charge. There was a time when landlords would routinely have saved 50 per cent of the council tax bill when their property was vacant, but that’s not the case today – mainly because of the lack of available housing in the UK today.

If a property has no tenants for two years, the landlord may be asked to pay an extra 50% council tax. However, this is down to individual councils.

when is landlord responsible for council tax?

Are there Council Tax discounts available?

The original calculations for council tax was based on a couple living in the one house. As such, discounts, and even exemptions, are available for single person households, as well as other individuals.

For example, a single person occupying a whole house or flat receives a 25% discount. The majority of people in further education (ie students) don’t have to pay council tax, nor do Army, Navy, Airforce personnel and those in other armed forces such as the Marines and SAS.

Adults aged under 18, live-in carers, residents of a care home, foreign language assistants and anyone who is severely mentally impaired are also exempt. So too are long-term hospital patients and asylum seekers awaiting deportation. Diplomats don’t have to pay council tax either. Click here if you want to find out more about who is liable for council tax.

Landlords of HMO’s should take advantage of the discounts and check their tenants’ occupations. For example, if one person renting is at university, one a private in the army, and one a lawyer or other well-paid occupation, then the tenant in full-time education and the private are exempt from paying council tax, making the lawyer the sole adult in the property. In this case, the landlord could apply for a council tax reduction of 25%.

Be warned though – the local authority isn’t automatically going to apply a discount unless you inform them of your circumstances. And even then, they may ask for paperwork. This could take time but your discount will be backdated when it’s put through.

Meanwhile, if you have been given a discount erroneously because you are no longer a student, for example, but registered as one with the council, then you should rectify the situation ASAP. The same applies to a landlord if a tenant has moved out and the full council tax must be paid. In some cases, if the error isn’t reported with three weeks then a fine can be issued.

Is the landlord liable for unpaid council tax?

As long as the tenancy agreement requires the council tax to be paid by the tenants, any unpaid debts when the tenants leave are not the landlord’s responsibility.

If you find yourself in a situation where paying council tax is difficult, you should contact your local authority and ask for help. That’s because not paying council tax isn’t really an option. Even one missed payment will result in a reminder letter with a notice of seven days to pay. Failing to pay within the allotted time means you could lose the option to pay your council tax in instalments.

If you fail to pay your council tax, the local council may deduct it from your benefits if you receive any, impound your wages or even have bailiffs confiscate your goods for the amount owed.

Council tax advice for landlords

In summary, landlords should specify who is responsible for paying council tax in the tenancy agreement and budget for the cost of paying this tax between tenancies.

Landlords of HMO’s who are responsible for paying council tax should:

  • 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.


M&M Property are committed to excellent customer service for both our landlords and tenants. If you’d like to hear more about our service for landlords, or are looking for property to rent in Islington, Stoke Newington, Highbury, or Newington Green, please get in touch.