As you likely know, council tax is a type of tax set by local authorities in order to raise money for local services. This includes rubbish collection, road repairs, funding charities, and much more. Council Tax is collected on a monthly basis, with the amount varying due to the size of the property and its location. In this piece, we’ll specifically be looking at paying council tax for residential rental properties and not commercial properties. The additional cost represented by council tax is a necessary consideration for landlords during the conveyancing process.
Paying council tax as a tenant
If it’s your responsibility as a tenant to pay council tax, the bill will likely be in your name. As council tax covers the entire property, anyone included in the lease will be required to contribute to the total tax amount. It will either be the landlord or the tenant that has to notify the local council of who is paying the bill. Although new landlords will have to contact the council to establish which tax band the property falls under if this hasn’t been advertised on any property listings.
If you are a tenant paying council tax, there are a range of discounts that you might be able to access depending on your situation. With the support of a professional conveyancing solicitor, you’ll have all the information you need to complete property purchases and sales that align with your goals and budget.
Paying council tax as a landlord
Although not the norm for rental properties, there are a few scenarios where it is expected that the landlord will pay the council tax on the property. These include when:
- Occupants under the age of 18.
- It’s for short-stay or holiday homes.
- The property is a HMO (house in multiple occupation).
As a landlord, you will receive council tax bills directly from the local authority. These will then be paid without the involvement of any tenants. This arrangement can change depending on the nature of the tenancy contract. For instance, once a fixed term tenancy contract comes to an end the landlord will again be responsible for any council tax payments. Read about the ‘Tax considerations when buying commercial property’ for more insights.
Who’s responsible for paying council tax on a rented property?
The amount of council tax that must be paid on a property depends on its location and the rates of the relevant local authority. For example, the Newcastle count tax bands for the 2024/25 financial year are based on the value of the property taken from April 1st 1991. As is the case with most councils, the bands range from A-H to include varying charges.
When it comes to who pays council tax on rental properties, this will depend on the type of tenancy agreement and the occupancy status of the property. In most cases though, it will fall to the tenants to pay the council tax bill for the property. Tenants who are full-time students do not have to pay council tax, although properties occupied by both students and non-students will lead to tax being paid according to the individuals’ status. You will also be required to pay council tax if any the following is true:
- You own the property – this applies regardless of whether you live in the property yourself or it is completely unoccupied.
- You are renting the entire property – if you are the sole tenant it will be your responsibility to pay council tax unless stated by the landlord.
- You’re a licensee – if the property is a mixed use property (one that is both lived in and used for business purposes) such as a pub, you are responsible for ensuring the council tax bill is paid. This applies even if you only run the business in the property and don’t pay rent.
Expertise in property conveyancing
When researching for a property purchase, it’s often difficult to think ahead to factors that come into play once the property is being used. This includes legal requirements such as council tax payments and the potential to make structural alterations. We offer fixed fee conveyancing services to review lease agreements, advise buyers, instruct property surveys, and much more. Get started with online conveyancing by contacting Toomey Legal today.