Understanding Council Tax Responsibilities in Student Tenancies

For landlords renting properties to student tenants, council tax responsibilities can sometimes become a point of confusion, particularly when tenants cease to be students partway through their tenancy. This article explores the key considerations landlords should keep in mind when dealing with council tax liability.  

Council tax  (CT) liability varies based on the type of tenancy agreement:

- Joint Tenancy Agreements: In shared houses where students are on a joint contract, council tax liability typically falls on the tenants. If all tenants remain full-time students, an exemption applies. However, if one or more tenants cease to be students, the Local Authority may issue a council tax demand to the entire group.

We have reported before that this approach works well with students NOT in their final year, it often being possible to get a CT exemption for the whole year if they return to the property for their next year. However, we have also highlighted that should one member cease to be a student, for example drops out or changes course specifics such that he or she drops below the required hours then council tax on the property will be levied from the date this first occurs.  This is particularly an issue with a house full of  students where one is on a course that is listed as ending in say, February, as some do - as CT would then be levied on the whole house from the date of the end of course of the 1st final year student to complete.  

If CT is levied due to a change in circumstance of just one student, the bill can be reduced by claiming the single person discount.

- Individual Tenancy Agreements: When tenants hold individual contracts, responsibility for council tax shifts to the landlord. If an exemption applies, the landlord does not need to pay council tax. However, if a tenant ceases to be a student, the landlord receives the council tax demand but can seek reimbursement from the individual tenant if a relevant clause exists in the tenancy agreement. All of the above comments about status changes and courses ending apply equally in this situation.

Some landlords include clauses in tenancy agreements stating that tenants are responsible for council tax payments if they stop being full-time students. In cases where the Local Authority issues a demand due to a tenant's changed status, landlords may request reimbursement from the affected tenant.

However, landlords often encounter difficulties when verifying student status changes. Universities and Local Authorities cite GDPR restrictions when declining to disclose which tenant is no longer eligible for an exemption. This creates a scenario where landlords receive a council tax demand without knowing which tenant should be liable for repayment. 

 Local Authorities do not have jurisdiction over private tenancy agreements. If a legally constructed contract stipulates that tenants must cover council tax if they are no longer students, neither the Local Authority nor external advisors can instruct tenants to ignore their contractual obligations.

Landlords should ensure their agreements clearly outline council tax liability and any circumstances under which tenants must cover costs. We have an example clause used by a number of members here.

Addressing Challenges with Universities and Local Authorities

Landlords facing difficulties obtaining student status information should:

1. Communicate directly with tenants – Encourage transparency so tenants inform landlords if their student status changes.

2. Request confirmation from tenants – Some landlords ask tenants to periodically provide proof of student status to avoid unexpected council tax charges.

3. Highlight contractual obligations – If disputes arise, landlords may remind tenants that legally binding agreements require compliance with council tax clauses.

As PDPLA member Neil P said, "I worry about the distinction the University and PCC are making on part-time courses and (I have been caught out in the past) pre-degree courses. I will forward you a reply I received from the accommodation department at the university which contains some 'reasonable' advise.

My personal thoughts are that as a student landlord I am still going to be caught out with individual tenancies (as a necessity for a large HMO) and almost have to accept this."

The advice he received was:

The registration is done online in August, and then there is an in person ID check at the start of term.

A landlord only needs the council tax exemption certificate to give to the city council if they ask for this.

A student would ordinarily give their confirmation of acceptance of studies to the landlord to prove their student status, and the CAS will state if the course is full time or not. This should be sufficient to offer the tenancy, as all full time students are exempt from council tax for the period of their study. 

To mitigate council tax-related issues, landlords should structure tenancy agreements carefully, communicate expectations clearly, and advocate for improved transparency from universities and Local Authorities. By ensuring contracts explicitly outline responsibilities, landlords can protect themselves from unexpected liabilities and disputes.