High Court clarifies test for Council Tax liability for tenants and owners of HMOs

The High Court has brought welcome clarification as to how council tax applies to tenants and owners of Houses in Multiple Occupation (HMOs).

In Stanuszek v Bunyan (LO), an HMO with 6 rooms was changed in the rating list from a single dwelling for which the owner was liable for council tax to 6 individual dwellings where each of the tenants were liable. Mr Stanuszek, the landlord, appealed the VOA’s decision first in the Valuation Tribunal for England and then in the High Court.

The case turned on the meaning of “dwelling” in section 3 of the Local Government Finance Act 1992 and “hereditament” in the General Rate Act 1967 and the applicability of the Supreme Court’s decision in Woolway (VO) v Mazars LLP [2015] AC 1862 (Mazars).

The VOA argued that Mazars, being a case about distinct spaces under common occupation, was of limited assistance in other situations. At first instance, the VOA contended that what defined a “dwelling” was whether the markers of rateable occupation could be established.

The High Court rejected that argument. It found that while the pattern of occupation can be relevant in identifying the space that is occupied, Mazars gave authoritative guidance on what constitutes a dwelling, and that the VTE had conflated the concepts of rateable occupation and dwelling.

The High Court’s decision has the potential to affect a great many tenants in HMOs, who may be entitled to claim back wrongly paid council tax. It is yet to be seen how the VTE will apply Mazars in future cases involving HMOs, and this matter will be remitted to the VTE for further hearing.

Andrew was instructed by Nick Waldron at Streathers Solicitors LLP.

20th Dec 2023

Andrew Carter

Call 2018