Council Tax Liability for Tenants

In the case of Stanuszek v Bunyan the High Court has clarified the test in respect of the liability for tenants and landlords/owners of Houses in Multiple Occupation (HMOs). Individual rooms in HMOs cannot be banded separately for council tax.

In Stanuszek, a HMO with 6 rooms was changed in the rating list from a single dwelling, for which the landlord was liable for council tax, into 6 separate dwellings for which each tenant was liable. The landlord appealed the decision first in the Valuation Tribunal for England (VTE) and then in the High Court.

The meaning of “dwelling” in section 3 of the Local Government Finance Act 1992 was crucial, as was the meaning of “hereditament” in the General Rate Act 1967 and the applicability of the Supreme Court 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 this argument and 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 combined 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.

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If you have any questions please contact Phillip Coburn, Partner, MSB Solicitors at