HMOs set for Council Tax Valuation Shake Up

HMO Council Tax Re-evaluation Consultation 2023

Following lobbying from many high profile landlords and property groups such as the National Landlord Association, the government launched a consultation on the re-evaluation of Council Tax on HMOs.

There is currently disparity across the UK as to how HMOs are being assessed. A lot of HMOs are banded correctly, as one house, however in many areas around the UK the valuation office is banding rooms as dwellings which increases the cost for landlords who in turn are passing these bills on to the tenants.

We have also seen many instances where large commercial conversions of old hotels or retail units into large scale HMOs of 15 beds and more, that have also been rebanded by the room.

This consultation seeks feedback from the public on the proposal that HMOs should be banded as one dwelling irrespective of the number of rooms within the building unless in exceptional circumstances.

Topic of this consultation:

This consultation seeks views on the council tax valuation of Houses in Multiple Occupation (HMOs). It covers the scope of the issue, the current landscape for the valuation of HMOs and the government’s proposals to achieving these objectives.

Geographical scope:

These proposals relate to England only.


This consultation will last for 6 weeks until 31 March.

How to respond:

You can email your response to the questions in this consultation to

If you are responding in writing, please make it clear which questions you are responding to.

Written responses should be sent to:

Council Tax Team LGF – Local Taxation
Department for Levelling Up, Housing and Communities
SE Quarter – 2nd Floor, Fry Building
2 Marsham Street

When you reply, it would be very useful if you confirm whether you are replying as an individual or submitting an official response on behalf of an organisation and include:

  • your name,
  • your position (if applicable),
  • the name of organisation (if applicable),
  • an address (including postcode),
  • an email address, and
  • a contact telephone number


  1. This consultation seeks views on the way that Homes in Multiple Occupation (HMOs) in England are valued for council tax, and on proposed changes to that process to ensure that HMOs are banded as one property and have one council tax band, other than in exceptional circumstances.
  2. HMOs form an important part of the housing market, often providing cheaper accommodation for people whose housing options are limited. It is estimated that there are 500,000 HMOs in England. The nature of HMOs has continued to evolve over time, with improvements in quality and variation in size and types of properties. HMOs can provide affordable housing options for some of the most vulnerable and disadvantaged groups, such as those on low incomes. HMOs are also contributing to the regeneration of our high streets, with high quality HMOs being used to provide affordable accommodation for young professionals.
  3. HMOs, as with all domestic property, are given a council tax band by the Valuation Office Agency (VOA). This is used to inform the calculation of the council tax due. Historically, HMOs have generally been valued as having one council tax band. In those situations, the owner of the HMO is liable for the council tax due on the property.
  4. With changes in the quality of offer in some HMOs, there is a risk that legislation has not kept up with the improvements in the quality of HMO accommodation and how such properties should be treated for council tax. As a result, some HMO properties are being assessed in such a way as to attract a council tax band for each individual unit. This may discourage HMO landlords from making improvements to their properties, as well as acting as a deterrent to new landlords entering the HMO market.
  5. The government wants to provide greater certainty and consistency in the way that accommodation in the HMO sector is banded for council tax, and to ensure that HMOs are banded as one property and have one council tax band, other than in exceptional circumstances. This consultation explores the scope of the issue, the current landscape for the valuation of HMOs and seeks views on proposed alternative approaches to achieving these objectives. It provides an opportunity for respondents to comment on whether the current legislative framework is appropriate and helps to deliver consistent outcomes, or whether a different approach is merited and, if so, how that might work and be targeted effectively.
  6. Subject to the responses to this consultation, the government’s objective is to deliver a framework which will ensure that HMOs are valued as a single dwelling other than in exceptional circumstances. This would help to ensure that liability for council tax remains with the HMO landlord, and their tenants do not become subject to individual council tax bills. The consultation suggests alternative approaches through amendments to existing regulations. The consultation also provides an opportunity to reflect on how any potential changes might impact on other properties with shared living space and how government can mitigate any unintended consequences from any changes.


What is an HMO?

  1. Generally, an HMO can be considered to be a property rented out by at least 3 people who are not from 1 ‘household’ (for example a family) but share facilities like the bathroom and kitchen.
  2. A household is either a single person or members of the same family who live together. A family includes people who are:
  • married or living together – including people in same-sex relationships
  • relatives or half-relatives, for example grandparents, aunts, uncles, siblings
  • step-parents and step-children

The current legislative framework

The banding of Houses in Multiple Occupation

  1. The VOA is responsible, amongst other things, for banding homes for the purposes of council tax. It does not set the level of council tax, nor collect the amount due. Both are the responsibility of the relevant local authorities. Whether a council tax band is applied to a unit, and the band that is applied, will inform the level of council tax due and from whom.
  2. The VOA is responsible for ensuring that each domestic property is correctly assessed and placed in the appropriate council tax band. The VOA applies legislation and case law to decide whether an individual unit of property should have its own council tax band. It undertakes this process for HMOs, as well as other types of properties with a degree of shared living (such as care homes and annexes).
  3. For HMOs, the landlord would generally be liable for council tax (although they may factor in the cost of council tax as part of the rental agreement). Where each unit within an HMO merits its own council tax band, each tenant will be liable for council tax (rather than the landlord).
  4. In carrying out its valuation work, the VOA consider what is a “dwelling” and is therefore liable for council tax. The definition of a dwelling for council tax purposes is contained within section 3 of the Local Government Finance Act 1992. In broad terms, a dwelling is domestic property which would have constituted a separate hereditament under section 115 (1) of the General Rate Act 1967. The list of legislation on the meaning of “dwelling” is in Annex A.
  5. When looking at a ‘property’, the VOA will consider whether it is a “hereditament”. If the test for a hereditament is satisfied, then each unit will be considered a “dwelling” and capable of having its own council tax band. This means each unit could have a separate council tax band even if it is not self-contained and shares some facilities with others.
  6. The starting point of valuing every ‘dwelling’ is that each separately occupied part qualifies with its own band, whether or not it is self-contained. Article 4 of the Council Tax (Chargeable Dwellings) Order 1992 gives the Listing Officer a discretion in certain circumstances to treat a property which would otherwise form multiple dwellings as a single dwelling. The VOA can, and do, decide to amalgamate the bands into one single council tax band.
  7. In exercising their discretion, the listing officer is required to have regard to all the circumstances of the case, including the extent, if any, to which the parts of the property separately occupied have been structurally altered. Examples of factors considered by Listing Officers and examples of how different types of HMOs may be banded can be found at Annex B.

Proposed changes

  1. HMOs form an important part of the housing sector. With the passage of time, the quality of the facilities available in the rental sector (including HMOs) is changing, improving both the quality of the housing stock, and the housing experience of the occupants. The government wants to ensure that such changes are not inhibited by the way such properties are treated for council tax.
  2. The government is aware of concerns that a consequence of some HMO properties not being aggregated for council tax valuation purposes is that tenants, who had not previously been liable for council tax, are now becoming liable and receiving bills significantly in excess of any sums they may have been charged had the liability remained with the landlord.
  3. This approach to banding may also impact on those landlords who wish to make improvements, either to existing HMOs or through conversions of existing properties. There is a risk that landlords may be deterred from making improvements if a consequence might be the creation, for council tax purposes, of multiple properties. That may then lead to tenants becoming liable for council tax and, therefore, potentially less able to afford the property. The government is keen to explore the extent to which the council tax valuation of HMOs is an issue and, if so, the appropriate approach to addressing this, with the intention that HMOs are banded as one property and have one council tax band, other than in exceptional circumstances.
  4. The decision on the valuation of properties rests with the VOA, reflecting the relevant legislation and case law. However, the government considers that greater consistency needs to be delivered in the outcomes of HMOs when it comes to council tax banding. Subject to the outcome of this consultation, the government is minded to introduce changes to the relevant regulations to ensure that, other than in exceptional circumstances, HMO properties should have one council tax band.


Consultation questions

To review the questions set out in the consultation, please follow this link.

Options for changes to regulations

Option 1

  1. The government could change the Council Tax (Chargeable Dwellings) Order 1992. This would amend article 4 of that Order to require listing officers, where they are assessing an HMO, to treat the property as if it were a single property. This would mean that the VOA would always amalgamate council tax bands for HMOs. HMOs would, for the purposes of council tax, be considered as one property, and have one council tax band, other than in exceptional circumstances. Such circumstances might include, for example, where there is self-contained accommodation within the HMO.

Option 2

  1. Alternatively, section 3(5) of the Local Government Finance Act 1992 provides that the Secretary of State may by order provide that anything which would be two or more dwellings shall be treated as one dwelling. The government could amend the Council Tax (Chargeable Dwellings) Order 1992 to specify that HMOs are treated as one dwelling and therefore subject to one council tax band, other than in exceptional circumstances.

Definition of HMO for purposes of banding changes

  1. There are a number of different definitions that can be applied to HMOs. The definition in legislation varies depending on whether it relates to council tax, housing, or planning. The government would welcome views on how HMOs should be defined for the purposes of council tax so that any change can be applied consistently.

Option 1

  1. It is proposed that changes could apply to HMOs as defined in sections 254 to 259 of the Housing Act 2004.

The Act states that a building, or part of a building, is an HMO if it satisfies:

  • the standard test;
  • the self-contained flat test;
  • the converted building test; or
  • if an HMO declaration is in force under section 255 of the 2004 Act; or
  • it is a converted block of flats to which section 257 applies.
  1. This would ensure consistency across the HMO sector by aligning the definition with existing housing legislation. The government are interested in the views of respondents as to which, if any, of those sections should be covered by the proposed changes. The government is not inclined to include properties covered by section 257 as this could mean that a converted block of flats with self-contained flats inside may only have one council tax band for the building.

Option 2

  1. The Council Tax (Liability for Owners) Regulations 1992 defines an HMO as:

“a dwelling which

(a) was originally constructed or subsequently adapted for occupation by persons who do not constitute a single household; or

(b) is inhabited by a person who, or by two or more persons each of whom either—

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

(ii) 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.”

Exceptional circumstances

  1. The HMO sector spans a wide range of size, type of properties and facilities. The government recognises that there may be circumstances where valuing HMOs as a single dwelling may not be appropriate. The government wishes to hear from respondents on whether the proposed approach – that HMOs are banded as one property and have one council tax band, other than in exceptional circumstances – should apply to all HMOs, or whether there might be some particular types of property, classified as HMOs, that might merit the Listing Officer retaining flexibility, under regulations and case law, on whether to aggregate. For example, some HMOs may be converted from a large building – such as converted hotels – and may contain large numbers of rooms.
  2. The government recognises that there may be some circumstances where the nature of the HMO would justify the creation of more than one hereditament. For example, a two storey HMO may have separate living, kitchen, bathroom and sleeping accommodation on each floor. In that scenario, the VOA may conclude that each floor comprises self-contained accommodation that merits its own council tax band.
  3. Some HMOs have been converted from very large-scale properties, containing a very large number of separately let rooms, sometimes over 20 rooms.


  1. If the government decides to take forward changes to the valuation of HMO properties, it proposes that HMO landlords should be able to make a proposal to alter their band from the VOA once any change has been implemented. This will open up a route for HMO landlords to request an appeal to the Valuation Tribunal.

The government will consider whether any changes may be necessary to regulations in response to any changes that may be made to the way that HMOs are banded for council tax.