Leeds City Council argued that, for five properties within their area, the owner of the property should always be held liable for the council tax charge from the date of vacation of the tenants.
The landlord of the property contended that the tenants had signed agreements of 6 months or more which then continued to roll-on as a contractual tenancy under an agreement written in to the contract. As per the Local Government Finance Act 1992, they would become the ‘owner’ for council tax purposes and remain liable for the council tax until such time as the tenancy agreement ended. This would occur even if they were ‘non-resident’.
The Valuation Tribunal found that the situation in question was not substantially different from earlier cases they had heard. They made the decision that the tenants remained liable as the ‘non-resident owner’ after vacation (until the end of the tenancy) and therefore found in favour of the landlord’s appeal.
High Court decision
The High Court found in support of the Valuation Tribunal decisions. They confirmed that the tenants remained liable after vacation (until the end of the tenancy) as the ‘non-resident owner’ and therefore found in favour of the landlord.
Court of Appeal decision
The Court of Appeal hearing on 16 November 2016 found in support of both the High Court and Valuation Tribunal decisions. They confirmed that the tenants in this particular situation, a 6 month fixed term that continued under a contractual agreement, remained liable after vacation (until the end of the tenancy) as the ‘non-resident owner’ and therefore again found in favour of the landlord.
They found that;
- Where the tenants vacate but they still have an ongoing tenancy (signed for a period of 6 month or more and which is still within the fixed term or the fixed term has ended and the tenancy continues under a contractual agreement) then the tenants retain the ‘material interest’ after vacation. They are regarded as the ‘non-resident owners’ for Council Tax purposes. The ‘non-resident owners’ are responsible for the Council Tax charge, even when not resident, until the end of the tenancy.
- If the fixed term of the tenancy was not for a period of 6 months or more (or the fixed term, of 6 months or more, has ended and the tenancy passed to a periodic monthly tenancy), then the Council Tax liability ends when the tenants vacate. The tenants can not be regarded as the ‘non-resident owners’ and therefore cease to be liable on vacation. This means that the Council Tax liability had ended even where the actual rental liability continued.
What has changed regarding Council Tax liability ?
Nothing has actually changed as a result of this decision. The Tribunal and the Courts have simply confirmed that the current interpretation of legislation is correct and the way it was applied in this case is the way it should have always been applied (the legislation in question has not changed since the introduction of council tax on 1 April 1993).
How the Council Tax liability of tenants stands
Use our quick flowchart (for a tenancy of 6 months or longer) by clicking below for an indication of Council Tax liability. For this purpose a periodic tenancy is a statutory, (usually) monthly, tenancy which runs after the fixed term has ended unless a contractual agreement has been put in place to determine how the tenancy will continue after the fixed term ended.
What if the property was still occupied ?
If the property was still occupied after the tenant vacated – for example they were a joint tenant and the other tenants remained – then they would cease being jointly liable when the property ceased being their ‘sole or main residence’.
If the other tenants then moved out and the property was left empty then the situation would need to be looked at again.
What if the tenancy was surrendered ?
If the tenancy was properly surrendered then the tenants cease being liable for Council Tax no later than that date.