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Understanding Council Tax Liability When Tenants Leave in the UK

Updated: Dec 4, 2023

In the UK, understanding who is responsible for council tax when a tenant leaves a property can be complex. This article aims to clarify the obligations of tenants and landlords in such situations, focusing on the UK context.


Understanding Council Tax Liability When Tenants Leave in the UK


Council Tax Liability Basics

Council tax is a local taxation system in the UK, imposed on households to fund local authority services. Responsibility for this tax hinges on the occupancy and rental agreement of the property.


Tenant's Responsibility


  • Fixed-Term Tenancies: A tenant with a fixed-term agreement of six months or more remains liable for council tax until the end of their agreement, even after leaving the property. This holds true if the property is vacant because the tenant left before the end of their fixed term.

  • Statutory vs. Contractual Periodic Tenancy: The responsibility changes depending on whether the tenancy becomes statutory or contractual periodic at the end of the fixed term. If the agreement specifies a continuation clause, the tenant remains liable during the periodic term. Without such a clause, a new statutory periodic tenancy arises, typically making the landlord responsible if the property is empty.

  • Leeds City Council v Broadley [2016]: This High Court case established that tenants of assured shorthold tenancies with a continuation clause remain responsible for council tax during periods when the property is unoccupied, provided they have not properly terminated the tenancy.


Landlord's Responsibility


  • Empty Properties: When a property becomes empty, the landlord generally becomes liable for council tax. This responsibility can shift back to the tenant if they are still within their tenancy period or have not given proper notice​.

  • Insurance and Utility Considerations: Landlords should check their insurance policies, as some have clauses that invalidate coverage if the property is vacant for more than 30 days. Additionally, landlords become responsible for utility bills during vacant periods and should ensure meter readings are taken when tenants vacate​​.


Practical Scenarios


  • Early Departure: If a tenant leaves before their notice period ends but after providing proper notice, they remain liable until the notice period expires.

  • Abandonment Without Notice: Tenants who abandon the property without any notice continue to be liable until the landlord legally reclaims the property or the tenancy is formally ended.

  • Invalid Notice Period: When a tenant gives invalid notice and leaves, they remain liable until the landlord accepts the termination or the property is re-let.


Council Tax Exemptions and Discounts


Some local councils offer exemptions or discounts for properties that remain empty and unfurnished for up to six months. This varies by council and should be verified by the landlord once the property becomes vacant.


The responsibility for council tax when a tenant leaves a UK property depends on various factors, including the type of tenancy, the terms of the tenancy agreement, and whether proper notice was given. Both tenants and landlords should be aware of their obligations to avoid legal and financial complications.



Legal Framework and Case Studies of Council Tax Liability in the UK


Legal Framework Governing Council Tax Liability


Understanding the legal framework is crucial in determining council tax liability when a tenant leaves a property in the UK.

  • Residency and Liability: Council tax is generally payable by the resident, defined as someone aged 18 or over who lives in the property. Liability follows a hierarchy, with the primary responsibility falling to residents with a freehold or leasehold interest in the property.

  • Houses in Multiple Occupations (HMOs): In HMOs, landlords bear the council tax responsibility, not the tenants. An HMO is treated as a single dwelling for council tax billing.

  • Empty Properties: When a property is empty, the owner is liable unless the property is exempt. This includes freehold or leasehold interests of six months or more.


Tenant's Liability in Different Tenancy Scenarios


  • Fixed Term Tenancy: During a fixed term tenancy of six months or more, the tenant remains liable for council tax even after leaving the property. The extent of this liability depends on whether the tenancy agreement transitions to a periodic tenancy at the end.

  • Contractual vs. Statutory Periodic Tenancy: If the tenancy becomes a contractual periodic tenancy, the tenant remains liable for council tax until the contractual tenancy ends. In contrast, if it becomes a statutory periodic tenancy, the tenant is not liable for council tax after leaving the property.

  • Periodic Tenancy from the Start: If the tenancy has been periodic from the beginning, the tenant's liability for council tax ends on the day they vacate the property.


Ending Tenancy and Council Tax Liability


  • Proper Termination of Tenancy: A tenant's council tax liability ends when they properly end their tenancy, either through a notice to quit or a surrender agreement. The way a tenancy is ended depends on the type of tenancy, with most private tenants having an assured shorthold tenancy.


Exemptions and Discounts for Empty Properties


  • Exempt Situations: Certain situations, such as when the tenant is in prison (excluding cases for non-payment of fines or council tax), the property being repossessed, or the tenant moving into a care home or hospital, may lead to council tax exemption for an empty property.

  • Local Authority Policies: Local authorities may have specific policies for council tax discounts on empty properties, which landlords should investigate when their property becomes vacant.


Case Studies and Implications


  1. Leeds City Council v Broadley [2016]: This case established that tenants of assured shorthold tenancies with a continuation clause remain responsible for council tax during unoccupied periods, provided they have not properly terminated the tenancy.

  2. Practical Implications for Landlords and Tenants: Both parties must understand their legal obligations and rights regarding council tax liability. Tenants should ensure they properly terminate their tenancies to avoid continued liability, and landlords must be aware of their responsibilities, especially in situations like HMOs or when the property becomes empty.


The responsibility for council tax in the UK when a tenant leaves a property is multifaceted, depending on the type of tenancy, the specific terms of the tenancy agreement, and the circumstances of the tenant’s departure. Both tenants and landlords must navigate these complexities to ensure compliance and avoid unnecessary financial burdens.



Practical Guidance for Managing Council Tax Liability


For Tenants


  1. Understanding Liability: Generally, the occupant of a property is responsible for paying the council tax. This hierarchy places a resident tenant second, only after a resident owner-occupier. Therefore, in most cases, tenants are liable for the council tax​​.

  2. Special Circumstances: There are exceptions where tenants may not be responsible for council tax, such as in HMOs, or if all occupants are under 18, asylum seekers, or living temporarily due to emergency work on their main residence.

  3. Facing Financial Difficulties: If you are unable to pay your council tax, it's crucial to address this issue promptly by contacting your local authority and seeking advice. Ignoring the problem can lead to recovery actions from the council.

  4. Eligibility for Discounts: Council tax discounts may be available depending on the number and status of adult occupants. Categories like full-time students, severely mentally impaired individuals, and those under 18 may be eligible for discounts or exemptions.


For Landlords


  1. Clarifying Responsibility in Tenancy Agreements: Ensure your tenancy agreement clearly stipulates that the tenant is responsible for council tax. This removes any ambiguity and places the onus on the tenant.

  2. Informing the Local Authority: At the start of every tenancy, inform your local council about the new occupants. This ensures council tax bills are directed to the tenant and not you.

  3. Responsibility During Void Periods: Be aware that you become liable for council tax during any void periods between tenancies, even for just a few days. Factor this into your financial planning.

  4. Practical Steps for Landlords:

  • Always determine who is responsible for council tax in the tenancy agreement.

  • Notify your local authority at each change of tenancy.

  • For HMO properties, include the council tax cost in the rent price.

  • Check for any council tax discounts or exemptions.

  • Claim council tax as an allowable expense in your tax return if you pay it.

  • Minimize void periods to avoid additional council tax payments.


Managing council tax liability efficiently requires both tenants and landlords to be well-informed about their responsibilities and rights. Tenants should understand when they are liable and what to do in case of financial difficulties, including seeking discounts. Landlords need to be clear about their role, particularly during void periods and in special accommodation types like HMOs. By following these guidelines, both parties can ensure compliance and avoid unnecessary financial burdens.


Real-Life Example of Council Tax Liability Management: The Case of Leeds City Council v Broadley


Real-Life Example of Council Tax Liability Management: The Case of Leeds City Council v Broadley


Background

In the case of Leeds City Council v Broadley [2016], a significant legal precedent was set regarding council tax liability when tenants leave a property in the UK. This case involved a landlord, Mr. Broadley, and five rental properties, each under an assured shorthold tenancy (AST) with specific clauses relating to their continuation as contractual periodic tenancies.


The Tenancy Agreements

Each tenancy agreement provided for a fixed term of 6 or 12 months, after which the tenancy would continue on a monthly basis unless terminated by either party with a full calendar month's notice. This clause meant that at the end of the fixed term, the tenancy would not automatically end; instead, it would continue as a contractual periodic tenancy.


Issue at Hand

The issue arose when tenants of these properties vacated before the end of their tenancy terms. The question was whether the landlord or the tenants were liable for council tax for the periods the properties were unoccupied. Under the Local Government Finance Act 1992, the hierarchy of liability for council tax was central to determining responsibility.


Court's Decision and Implications


The High Court ruled in favor of the landlord, establishing that:

  • During the fixed term of an AST (a minimum contracted term of 6 months), the tenant remains liable for council tax for the full term, even if they leave without notice.

  • Where the AST specifies a contractual periodic tenancy post the fixed term, the tenant retains a "material interest" and remains liable for council tax if they leave early or until a valid notice to quit is served and expires.

  • If the AST is silent on what happens post the fixed term, resulting in a statutory periodic tenancy, the landlord becomes liable for council tax from the day the tenant vacates​​.


Practical Management Examples


Based on this ruling, several scenarios illustrate the practical management of council tax liability:

  1. Valid Notice Given: If a tenant gives proper notice to leave but vacates the property earlier than the notice period, they remain liable for council tax until the end of the notice period.

  2. Abandonment Without Notice: A tenant who abandons the property without notice continues to be liable for council tax until the landlord either legally reclaims the property or obtains a court order.

  3. Invalid Notice Period: When a tenant gives invalid notice but leaves the property, they remain liable for council tax until the landlord accepts the termination or the property is re-let.

  4. Early Departure in Fixed Term: If a tenant leaves before the end of a six-month tenancy term, they are liable for council tax until the end of the term, irrespective of the tenancy’s status at the end of the term.

  5. Landlord's Role: Landlords must be cautious not to accept actions that imply the early termination of tenancy, such as accepting keys or failing to demand rent, as this could shift council tax liability to them.


The Leeds City Council v Broadley case exemplifies the complex nature of council tax liability management in the UK. It highlights the importance of tenancy agreement terms and the need for both landlords and tenants to understand their responsibilities clearly. This case serves as a crucial reference for landlords, tenants, and legal practitioners in similar situations.


20 FAQs about Council Tax Liability in the UK


1. Q: Who is primarily responsible for council tax in a shared rental property?

A: The highest-ranking occupant in the council tax hierarchy is responsible, starting with resident owner-occupiers, then resident tenants, and so on.


2. Q: Can a tenant be exempt from council tax during a tenancy?

A: Yes, under certain conditions, such as if all occupants are under 18, asylum seekers, or the property is an HMO.


3. Q: Is a landlord responsible for council tax during tenant changeovers?

A: Yes, landlords are liable for council tax during void periods, even if brief.


4. Q: How does council tax affect students living in rented accommodation?

A: Full-time students are typically exempt from council tax if they are the sole occupants or live with other full-time students.


5. Q: Can tenants in financial difficulty get help with council tax?

A: Yes, tenants should contact their local authority for assistance and may qualify for council tax reduction based on financial hardship.


6. Q: Are there penalties for non-payment of council tax?

A: Yes, local councils can take recovery action for unpaid council tax, including attachment of earnings or instructing bailiffs.


7. Q: How is council tax calculated?

A: Council tax is based on the property's valuation band, which is determined by its market value at a specific date.


8. Q: Can a landlord pass the council tax liability to tenants?

A: Yes, through the tenancy agreement, landlords can stipulate that tenants are responsible for council tax payments.


9. Q: What if a tenant moves out before their tenancy agreement ends?

A: They may still be liable for council tax until the end of their tenancy term or until they give proper notice.


10. Q: Are furnished rentals treated differently for council tax?

A: No, council tax liability is based on occupancy, not whether a property is furnished or unfurnished.


11. Q: How can I find out which council tax band my property is in?

A: You can check your council tax band on the UK government's website or your local council's website.


12. Q: Are landlords of HMOs always responsible for council tax?

A: Yes, landlords are typically responsible for council tax in HMOs, but they often include it in the rent.


13. Q: What happens if a property is left empty?

A: The owner is liable for council tax on an empty property, though exemptions or discounts may apply.


14. Q: Can council tax be included in rent?

A: Yes, landlords can include council tax in the rent, particularly in HMOs or short-term rentals.


15. Q: Are there discounts for single occupancy in rented properties?

A: Yes, a 25% discount is usually available for properties with a single adult occupant.


16. Q: How does council tax liability work for short-term rentals?

A: For short-term rentals, the landlord often pays the council tax and includes it in the rental price.


17. Q: What is the council tax 'disregarded person' category?

A: This category includes certain individuals like full-time students, under-18s, and those with severe mental impairments, exempt from council tax calculations.


18. Q: Can a tenant challenge their council tax band?

A: Yes, tenants can challenge their council tax band if they believe it's incorrect, but this is usually the property owner's responsibility.


19. Q: What are the implications of not informing the council of a tenancy change?A: Failure to inform the council can result in the landlord being incorrectly billed and held responsible for the tenant's council tax.


20. Q: Can a tenant get a council tax refund if they overpay?

A: Yes, if a tenant has overpaid council tax, they are entitled to a refund, typically processed through the local council.


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