Disaggregation – Clarification is coming, but not this year
Members who attended our September meeting will be fully aware of the level of anger and dismay among landlords as ever more HMOs are disaggregated. (See the discussion from that meeting here and the Q&A here). Two items of good news from Parliament this month, firstly Gosport MP Dame Caroline Dineage proposed an amendment to the Rental Reform Bill that would outlaw disaggregation of HMOs and then Dehenna Davison MP, Parliamentary Under-Secretary of State for Levelling Up announced a consultation on the matter.
What Is Disaggregation
We covered that in some detail here but the short version: Put simply, a national government office known as the VOA (Valuation Office Agency) decides how properties are to be treated for council tax. When, say, an office block is converted into shops and flats, the VOA will define how many properties there are and what 'council tax band' each fall into.
Disaggregation is when, for whatever reason, a larger unit is redefined as a number of smaller units – for instance a Victorian semi which is in use as a 6-bed HMO, currently banded and taxed as a 'band E' unit and the VOA step in, look at the property and decide it is instead, 6 separate dwellings each of 'band A'.
What Happened In November?
Firstly, Dame Caroline Dineage MP proposed an amendment to the Levelling Up Bill which we detailed in an earlier article here, but then the Parliamentary Under Secretary at the Department of Levelling Up announced that there would be a consultation – see video right.
Dehanna Davison (the Under Secretary)'s exact words were: "I can announce that we will shortly be consulting on how houses in multiple occupation are valued for council tax purposes. The consultation, to be launched by January, will look at situations where individual tenants can, in certain circumstances, be landed with their own council tax bill and will consider whether the valuation process needs to change. Our clear intention is for HMOs to be classed as single dwellings, other than in exceptional circumstances."
(The highlighting is our own)
What Do We Deduce?
Amendments can have a mind of their own, so government departments always like to keep control of the proposal and to head off the arrival of random changes by trying to include what is needed in the Bill and thus avoid amendments.The final stages of the Bill in the Commons are the 'Report Stage' (when the Under Secretary made her remarks) and the 3rd reading which completes on 28th Nov.It then goes to the House of Lords where there are also 3 readings, a committee stage and a report stage before amendments are considered and it is sent for Royal Assent – at which point the Bill becomes a Statute and is law.
Given a Conservative member (Dame Caroline) submitted the amendment and other Conservative MP's showed concern that some councils may lose revenue if disaggregation of HMOs was stopped, it would appear that the proposed Consultation is an attempt to quantify the issue whilst avoiding battles within the Conservative Party which appears to be split on this issue.
It was nice to hear PDPLA member Daryn Brewer mentioned in the debate and to see his name immortalised in Hansard.
What Next?
Nothing is going to change until the Bill receives Royal Assent sometime next year. Our challenge is to ensure the need for Dame Caroline's amendment to be successful is clearly understood – so when the consultation starts anyone with a view or experience needs to take part and in the interim - keep the pressure on and DO get your affected tenants to understand why they are affected and to speak out about how it impacts them.