A contentious system which has seen council tax bills soar for HMO landlords could be abandoned after pressure from Private Rented Sector groups. Disaggregation is a process used by the Valuation Office (VOA), which is responsible for setting Council Tax Banding on behalf of local authorities. The VOA can choose to use disaggregation to split an HMO into single units taking the Council Tax bill from a single charge to the number of rooms times band A less a 25% discount. HMO rooms do need not have self-contained washing or cooking facilities to be disaggregated.
The VOA has not consistently applied disaggregation, meaning two comparable properties can have very different Council Tax bills. HMO landlords cannot appeal disaggregation, leaving them in a difficult position when other comparable properties have not been disaggregated. HMO landlords cannot increase rent to cover the disaggregation if similar rooms are available locally at a lower rent.
After talks with the NRLA and the HMO Council Tax Reform Group, the Government announced a consultation on 17 February 2023 to end disaggregation.
The Department For Levelling Up, Housing and Communities has recognised the difficulties that disaggregation causes and has suggested amendments to the Council Tax regulations. There is a consultation on two options for modifications, which will result in HMOs being treated as single dwellings for Council Tax purposes. Disaggregation will only apply when a property is split into distinct, self-contained units.
The consultation will last until 31 March 2023 and can be commented on here. We'd urge anyone involved in HMO management or HMO lettings to comment and support the proposed changes.