Demand -vs- Reality

[Kevin Crocker]

In todays modern housing market house shares have become an affordable means of people renting in high demand areas, high cost areas. It would seem that people are happy to share kitchen space with their fellow housemates, however the intimacy of personal washing means that people are looking for their own personal en suite shower facilities. As a result I have seen a number of developments over the past 18 months that have included the provision of en suite showers in all bedrooms.

Whilst this meets the demands of the tenants an unforeseen cost has now become apparent.

In certain areas of the Country the Valuation Office Agency (VOA) have begun re-banding the property for Council Tax purposes. In a nut shell, if a room contains an en suite shower room it has the potential to be individually banded for Council Tax. This means that rather than paying a one off payment for the entire house, you could e paying Council Tax on EACH room. A cost that a number of landlords and investors simple haven't factored into their costs. A guide to how these assessments are made can be found on the following link

https://www.gov.uk/government/publications/council-tax-banding-of-houses-in-multi-occupation

Their is of course an appeals process to this assessment and if you feel you have been unfairly banded then the advice is to follow this appeals process. A number of investors have already begun challenging this assessment so it's worth speaking amongst your network to see if anyone else has been affected by this.

 

[Nicholas Wallwork]

Great advice and useful link thanks @Kevin Crocker

We've recently been approached in Watford for exactly this. Ours is a C1 use class though (not C3) so I'm hopeful we can agree to pay normal business rates which will be cheaper than individual council tax banding!

I personally think these new proposals are incredibly unfair and yet another bash at landlords trying to provide good quality accommodation at a fair and affordable price.

Will this just push rents up further I wonder??

 

[Ricky Bhurji]

Hi @Kevin Crocker - what a fantastic post and topic this is.

This is very much being talked about in Reading - we have several customers and investors who we know who are quite worried about these new proposals. So much so that a number of investors who do not like the uncertainty of this have decided to invest in other neighbouring towns such as Swindon which has come up in conversations several times. Swindon, as you may or may not know has no article 4 direction areas and no talk (yet) about proposing council tax on a room by room basis instead of the entire dwelling.

A number of investors I know are on the fence to see the eventual outcome before they plough more money into area where these proposals are being considered.

@Nicholas Wallwork I can only imagine that Landlords will have no choice but to push up either a) the rents they are asking for or b) start charging tenants an administration fee to cover their costs!

Ricky

 

[KGeeson]

What sort of level of price increase will that mean (in terms of council tax for the entire property verses tax per individual room),are we talking substantially higher? I agree there would be little choice bu to increase costs to the tenant one way or another.

 

[Kevin Crocker]

Hi @Kevin Crocker - what a fantastic post and topic this is.

This is very much being talked about in Reading - we have several customers and investors who we know who are quite worried about these new proposals. So much so that a number of investors who do not like the uncertainty of this have decided to invest in other neighbouring towns such as Swindon which has come up in conversations several times. Swindon, as you may or may not know has no article 4 direction areas and no talk (yet) about proposing council tax on a room by room basis instead of the entire dwelling.

A number of investors I know are on the fence to see the eventual outcome before they plough more money into area where these proposals are being considered.

@Nicholas Wallwork I can only imagine that Landlords will have no choice but to push up either a) the rents they are asking for or b) start charging tenants an administration fee to cover their costs!

Ricky

Hi Ricky,
I glad you found the post useful.

I'm based in Swindon and I have seen a huge increase in demand from investors looking for HMO properties. I think this is linked to the railway improvements, the cheaper house prices and the restrictions in place in other areas such as Article 4 areas and Council Tax bandings. Interestingly, these restrictions are available to all local authorities and I wouldn't be surprised to see neighbouring towns and boroughs implementing these restrictions if the HMO market booms.

It's note worthy that the Council Tax banding is not a decision made by the local Council but rather the VOA who are following their own set of regulations to the letter. The easiest way to avoid the separate Council Tax banding is to stop installing en suite shower rooms, but of course this isn't what the market demands.

 

[Kevin Crocker]

What sort of level of price increase will that mean (in terms of council tax for the entire property verses tax per individual room),are we talking substantially higher? I agree there would be little choice bu to increase costs to the tenant one way or another.

Kelly,
Typically the VOA is banding each room as a band A (self contained unit). The actual cost of this will be dependant on the local Council but on average this will amount to about £1000 per room. In an HMO the tenant is liable for the Council Tax so in my experience landlords simply pass on this cost to the tenants either as a CT payment or in additional rent.

 

[nmb]

When are governments and local authorities going to realise that landlords in the UK continue to play a major role in addressing the U.K.’s massive housing problems. In light of George Osborne’s budget it seems as though politicians and local authorities are prepared to use any small print to move the goalposts and increase the cost of continued participation in the UK market. If we have this kind of tax regime under a “business friendly” Conservative government what might we expect if Jeremy Corbyn was to make it to Number 10?