High Court clarifies council tax assessment for HMOs

High Court clarifies council tax assessment for HMOs

The High Court has delivered a significant ruling clarifying the assessment of council tax for houses in multiple occupation (HMOs), a decision that could have wide-ranging implications for landlords and tenants across the UK. The case, Stanuszek vs Bunyan, involved the assessment of a property on Twyford Abbey Road, Park Royal, London, where each bedroom was let to a separate tenant.

The appellant, Michael Stanuszek, argued that the entire property should be assessed as a single dwelling for council tax purposes. However, the respondent, Dawn Bunyan, the Listing Officer, contended that each bedroom should be treated as a separate dwelling, leading to individual council tax assessments for each room.

In his judgment, Mr Justice Saini upheld the decision of the Valuation Tribunal for England (VTE), which had previously found that each room in the property constituted a separate hereditament. The court relied on established legal principles, particularly the geographical and functional tests for determining hereditaments, as outlined in the landmark case of Woolway (VO) v Mazars.

The court's decision was based on the fact that each room was separately occupied under an assured shorthold tenancy, with exclusive possession granted to individual tenants. This arrangement meant that each room met the criteria for being a separate hereditament, as it was capable of physical definition and had a distinct occupier.

Mr Justice Saini emphasised that the shared use of common areas, such as kitchens and living spaces, did not affect the assessment of the individual rooms as separate hereditaments. He noted that similar arrangements are common in multi-let office buildings and shopping malls, where shared facilities do not prevent the separate assessment of individual units.

The judgment also addressed the appellant's argument that the VTE had improperly conducted a 'review' rather than a fresh assessment of the merits. Mr Justice Saini dismissed this claim, stating that the VTE had correctly applied the legal principles and reached a decision consistent with previous case law.

This ruling provides clarity for landlords and tenants in HMOs, confirming that individual rooms can be assessed separately for council tax purposes. This decision aligns with the approach taken in other VTE cases involving similar properties, reinforcing the principle that separate occupation leads to separate assessments.

For landlords, this decision underscores the importance of understanding the implications of letting properties as HMOs, particularly regarding council tax liability. Tenants in HMOs should also be aware of their potential responsibility for council tax on their individual rooms.

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For more information on housing law, see BeCivil's guide to UK Housing Law.