Council Tax and Houses in Multiple Occupancy (HMO)

Owners of a House in Multiple Occupancy (HMO) are legally liable for payment of the Council Tax, not the tenants. This is regardless of any provision which might be included in the lease about Council Tax payment.

Definition of an HMO for Council Tax purposes

The Council Tax (Liability of Owners) (Scotland) Regulations 1992 (as amended in 2003) prescribes classes of dwellings where the owner is liable for Council Tax. HMO’s are one of those prescribed dwellings. An HMO is defined in the regulation as:

“A dwelling occupied, or which could be occupied, by persons who do not constitute a single household, and which is occupied by one or more persons each of whom:

(a) is a tenant of, or has a licence to occupy, part only of the dwelling; or

(b) has a licence to occupy but is not liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of the dwelling as a whole”

So, for Council Tax purposes, the property only needs to be occupied, or be capable of being occupied, by two or more households to meet the criteria of an HMO. It does not need to be licenced as an HMO to be classed as such for Council Tax. The licensing of an HMO has its own legal requirements under the Housing (Scotland) Act 2006, but this has no bearing on Council Tax.

Further details of all legislation can be found at www.legislation.gov.uk

Lease agreements

Council Tax legislation supersedes any lease agreement. So, even if a lease includes a provision which stipulates that the tenant of the HMO is responsible for Council Tax, that is not legally enforceable. The landlord will still be held liable for Council Tax.

Most common example of an HMO

The most common example of an HMO is where individual rooms in a property are being rented out, with each household (each individual or family), having their own lease agreement for their room, and any shared facilities.

Council Tax exemption and discount

Even though the owner is liable for Council Tax, the council will consider any application for discount or exemption based on the circumstances of the tenants (for example, students). However, the total number of adults in the property (not each individual room) will be taken into consideration when determining if discount or exemption can be awarded.

Council Tax Reduction (CTR)

Council Tax Reduction (CTR) can only be applied for by those who are liable for Council Tax and living in the property. As tenants cannot be held liable for Council Tax in an HMO, they are not eligible to apply for Council Tax Reduction.

Notifying the council of an HMO

Landlords should notify the council immediately if they are renting out individual rooms, to allow us to determine if the property meets the criteria of an HMO for Council Tax. Similarly, tenants renting an individual room in a property who are being billed for Council Tax should notify us immediately.

Backdating of HMO status

If we are made aware that a property has been rented out as an HMO, as defined by Council Tax legislation, we will hold the landlord liable for Council Tax from the date it was used as such, even if this means retrospectively billing them for past periods.