Sunday, 06 January 2019 09:33

Should Student Halls Pay Council Tax?

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Should Student Halls Pay Council Tax?

Here at the PDPLA we have long argued against the unfair treatment student landlords receive from Portsmouth City Council – we get hounded for every possible penny of council tax whereas student halls, which are directly comparable, pay nothing.

There was some good news last month when a valuation tribunal rejected an appeal from a student letting agency which effectively gave Leicester City Council (and all other councils) the ability to treat each student room as a separate dwelling and to charge council tax on that dwelling in exactly the same way they charge us.

We have raised this with local councillors and the appropriate council officers and whilst councillors are keen to ensure that the we are treated fairly compared to our competitors, we still have some way to go with council staff.

The response we received from the council tax team at PCC was:

“Exemptions from council tax are defined in regulation, and are not subject to local determination. As such Portsmouth City Council has a responsibility to apply the law in relation to those exemptions relating to student accommodation, and has no flexibility to amend the regulation through the application of local policy decisions.

If of interest, The Council Tax (Exempt Dwellings) Order 1992 provides more information, but generally the council tax exemptions relating to student property are:

Exemption Class M

Exemption Class M relates to halls of residence provided predominately for the accommodation of students which is either owned or managed by a prescribed educational establishment; or is the subject of an agreement allowing such an institution to nominate persons to occupy all the accommodation provided.

Halls of residence for students are therefore exempt from Council Tax as long as the accommodation is owned or managed by an educational establishment (such as a college or university), or where an educational establishment nominates the majority of the student residents.

Whilst the accommodation must be provided predominantly for students, it does not prevent part of the accommodation being used permanently, or temporarily, for staff or other people.

In essence this is, assuming the criteria is met, an exemption in respect of the property. 

Exemption Class N

Exemption Class N relates to a dwelling which is either occupied by one or more residents all of whom are full time students.

As such the property is only exempt where all residents meet the qualifying conditions. There are two main categories of students for council tax purposes as follows:

  • Students under the age of 20 years in part time or full time education.
  • Students aged 20 or more in full time education. Full time education is considered a course that lasts for at least one academic year, or where the establishment does not have academic years, for at least one calendar year. Study should be for at least 24 weeks per year for at least 21 hours per week of study, tuition, work experience or a combination of these.

In essence this is, assuming the criteria is met, an exemption in respect of the occupants of the property.

In Portsmouth recently we have seen a number of developments of self-contained blocks of flats for students, which typically do not meet the criteria of class M exemption, as they are individual dwellings in the valuation list, and not a student halls of residence for council tax purposes. As a consequence the class N exemption will apply where the qualifying conditions are met, that is the flat is occupied by one or more full time student.

Whilst I accept that the position is different in relation to properties that attract class M and class N exemptions, and I understand the frustration that this may cause, I regret Portsmouth City Council has no powers to change the legislation that determines eligibility for these exemptions.

Whilst it may be a cause of frustration, I would also advise that in discharging its responsibilities to the council tax payers of Portsmouth, it is appropriate that Portsmouth City Council ensure that Class N exemptions are only applied where the qualifying conditions are met, and as such there will typically be periods over the summer months where the property owner will be liable for council tax and subsequently billed in respect of this liability.”

The PDPLA will be sending a ‘Freedom Of Information’ request to ascertain which of the current halls fall into the Class N category – our view is that most of the new ones should and all of those currently being built will. We will then be arguing that we need to be treated in exactly the same manner, for council tax purposes, as the Class N halls. Currently, PCC are suggesting that a Class N property may get a couple of months Council Tax bill during the summer, whereas we all know that we get a bill from when the 1st tenants course ends or completes (often March) through to the day the last student starts the next year (often late September).  There is also the issue of why Leicester have legally proven that each class N student room can be treated separately (so they can bill the providers in the same way they bill us) yet PCC appear to want to take a more laissez faire approach and only send a 2 month token bill for the whole property.

Last modified on Sunday, 06 January 2019 09:36

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