Tenancy renewal - no interim Council Tax liability?

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  • bagus
    started a topic Tenancy renewal - no interim Council Tax liability?

    Tenancy renewal - no interim Council Tax liability?

    I understand that the Landlord is liable for Council Tax on the last day of a tenancy, even if a new tenancy commences the following day, because it is deemed that someone other that the outgoing or incoming Tenants could potentially stay in the property overnight (which is spurious and improbable).

    I have just received a demand for one day's Council Tax based on this premise. However, this particular instance raises the question of whether the adopted practice could also be applied to the last day of all tenancies, even if they renew.

    My property was occupied by two joint Tenants until one moved out on 10/11/2018 and the remaining Tenant started a new tenancy on her own from 11/11/2018. Therefore the Local Authority sent me a bill for the last day of the old tenancy. Actually, I think the bill is written incorrectly, because it states that my liability is from 10/11/2018 to 10/11/2018, instead of 10/11/2018 to 11/11/2018. Of course, when I suggested to the LA that there should be no interim bill, since the Tenant was living at the property throughout the period, they disagreed. From their point of view, they have correctly charged the full rate while two adults occupied the property and then applied a new discounted rate for the single occupant, which commenced the day after the second Tenant left, and I am liable for the last day of that tenancy.

    So is this actually correct, assuming that the remaining Tenant has legally enjoyed uninterrupted occupation of the property throughout this period? If this is indeed the case, then does it also follow that any tenancy renewal should trigger a chargeable event for the Landlord? The LA is not privy to the length of tenancies enjoyed by their Taxpayers, so presumably the Landlord would then have to inform the Authorities whenever his Tenants renewed their tenancies.

    Is there a clear ruling on this, or is it just ridiculous?


  • MdeB
    replied
    What KTC says.

    Leave a comment:


  • jpkeates
    replied
    Originally posted by bagus View Post
    At midnight, the first tenancy ends and the new tenancy begins, simple as that. There is no interim period at all. Surely, this is how all renewals work. An insurance renewal comes into effect when the old policy expires, commonly at the stroke of midnight - one policy lapses at midnight and the new one commences seamlessly after that. Liability is determined to the exact second.
    Legal time is not the same as real time.
    Things don't just happen at the same time, they happen in a sequence at the same time.

    It doesn't matter in the insurance policy example, but it does in a complex series of transactions (like selling a house).

    However, I have to agree with KTC.
    Even if the person wasn't a tenanct at the end of the day, they were definitely a resident throughout.
    So the sequence of events doesn't matter in this case.

    Leave a comment:


  • bagus
    replied
    Thanks for that. You've made me start to feel sorry for tenants now, having not previously considered how unfair it is/should be for them to pay two lots of Council Tax as well as two lots of rent on the day they move.

    I'll bow to your encyclopedic recall and go lick my wounds for now. Might still peep over the parapet again though!

    Leave a comment:


  • KTC
    replied
    Originally posted by bagus View Post
    In the vast majority of cases, the Tenant will be an adult using the dwelling as their main residence.
    While they're living there, yes. We are talking about the end of the day their tenancy ends where on that day or before, they have moved out. Since they have moved out, they are resident elsewhere at the end of that day, they are no longer resident here.

    An Assured Shorthold Tenancy confirms the 'material interest' de facto, since by definition it has a minimum duration of 6 months.
    That's not the definition, nor is it a requirement of assured shorthold tenancy. There haven't been a minimum six months term required for AST that is not a replacement tenancy since 1997, and there was never such a minimum term where the tenancy's a replacement tenancy.

    If the tenancy, assured or otherwise, is a fixed term of at least six months, then it's a material interest. If it has an initial definite term of at least six months which then continues contractually periodically, then it's a material interest. If the tenancy is periodic from the start, where the period is less than six months*, then it's not a material interest for the purpose of council tax.

    I have plenty of Tenants on Periodic Tenancies, but these tenancies have only ever commenced when a fixed term AST has lapsed, so how could I become the liable person before the tenancy has ended?
    A statutory periodic tenancy, i.e. one that arise after the end of a fixed term tenancy in accordance with s5 of the Housing Act 1988, is a new and seperate tenancy to the fixed term that preceded it. Accordingly, assuming a period of the SPT is less than six months, it is not a material interest for the purpose of council tax.

    Originally posted by bagus View Post
    I'm sure you don't mind me playing the Devil's (or Landlord's) Advocate here.


    * Depending on how the term/periods are expressed, the tenancy may not be determinable before the end of the second period, and thus it may be arguable that a quartrely periodic tenancy can be a material interest.

    Leave a comment:


  • bagus
    replied
    I'm sure you don't mind me playing the Devil's (or Landlord's) Advocate here.

    Leave a comment:


  • bagus
    replied
    In the vast majority of cases, the Tenant will be an adult using the dwelling as their main residence.

    An Assured Shorthold Tenancy confirms the 'material interest' de facto, since by definition it has a minimum duration of 6 months.

    I have plenty of Tenants on Periodic Tenancies, but these tenancies have only ever commenced when a fixed term AST has lapsed, so how could I become the liable person before the tenancy has ended?

    Leave a comment:


  • KTC
    replied
    Because

    “resident”, in relation to any dwelling, means an individual who has attained the age of 18 years and has his sole or main residence in the dwelling.
    “material interest” means a freehold interest or a leasehold interest which was granted for a term of six months or more;
    If the tenancy in question is a statutory periodic tenancy or a contractual periodic tenancy from the start with no initial definite term, then the tenant does not have a material interest. And if they have moved out, then they're no longer a resident. So come the end of the day, the liable person is the "owner of the dwelling".

    Leave a comment:


  • bagus
    replied

    In answer to the original question, KTC referred to the hierarchy of liability, as detailed in Section 6 of the Local Government Finance Act 1992. Why doesn't this then persist in determining the liability at the end of all assured tenancies, if the Tenant is entitled to remain in the property until midnight on the last day of the tenancy? Surely, the Tenant falls into category 2b until midnight.

    Also, Section 2 (2) "state of affairs subsisting at the end of the day had subsisted throughout the day" is satisfied, since nobody else has a right to occupy the property until after the end of the day.

    Leave a comment:


  • KTC
    replied
    Originally posted by bagus View Post
    I'm not concerned about paying a small charge
    That ^ answer this ->

    and get away with it?

    Leave a comment:


  • KTC
    replied
    Originally posted by bagus View Post
    In that case, how is it that all three of the LAs that I deal with, consistently apply the wrong interpretation and get away with it? They all deem that the Landlord is liable for the last day of a tenancy, because the property is presumed to have been vacated before the evening, leaving it available for occupancy overnight.
    Your original question, and my answer relates strictly to the case you set out. That is, where there was a tenancy with two joint tenants, and then a sole tenant (being one of the joint tenant) on a new tenancy the next day, where she remained in residence throughout.

    An answer to the more general question of who is liable for council tax on the last day of a tenancy where the tenant moves out on or before that date depends on how that tenancy ends thus determining whether the tenancy ended on the end of the day or earlier, and whether the tenancy in question constitute a material interest for the purpose of council tax.

    Leave a comment:


  • bagus
    replied
    Just to add, I'm not concerned about paying a small charge, but I am constantly riled by the Local Authority's insistence on wasting their funds policing trivial issues with little people, instead of focusing on real objectives.

    They seem to like referring to the book, but are not good at interpreting it. The Council Tax manual needs to address scenarios like this specifically.

    Leave a comment:


  • bagus
    replied
    Thank you KTC. That does seem like the correct and logical conclusion.

    In that case, how is it that all three of the LAs that I deal with, consistently apply the wrong interpretation and get away with it? They all deem that the Landlord is liable for the last day of a tenancy, because the property is presumed to have been vacated before the evening, leaving it available for occupancy overnight.

    Leave a comment:


  • KTC
    replied
    I did already answered the question for OP's case.... but let me expand on it.

    What you are interested is s6 of the Local Government Finance Act 1992 as amended. Ignoring things like council tax HMO, subsection (2) set out who is liable for to pay council tax for a chargeable dwelling. Whoever is highest on that list is the one liable, jointly and severally if there are more than one person on the same level.

    The OP, being non-resident, is bottom of the list in (f). So if there's anyone that qualify higher on the list, the OP cannot be liable. Regardless of what time the first tenancy ended or the second tenancy started, the remaining tenant was a resident throughout. That would be the case even if she was not legally a tenant, jointly or otherwise, at the important moment in time. It may be that for the important moment in time she was a resident with a leasehold interest along with the other joint tenant from the first tenancy, which would place them in (b), or she's in (b) as a sole resident with a leasehold interest under the second tenancy, or no tenancy existed at the important moment in time (which I cannot possibly agree with but hey ho) in which case the lowest she can be placed is (e).

    In any of the possible scenario, the remaining tenant always place higher than the OP. Whether she's liable for the discounted amount as a resident, or whether she's liable jointly and severally with the former joint tenant for the full amount is something you can leave for them and the council to argue it out if they want but as far as the OP is concerned, the OP is not liable for that day.

    Leave a comment:


  • bagus
    replied
    Originally posted by jpkeates View Post
    It's the lovely legal midnight sequence of events.

    At midnight, the first tenancy ends.
    The landlord is then liable for the council tax because at the end of that day the previous interest holder isn't residing in the property.
    At midnight the next tenancy also began.
    The new tenant is now liable for the council tax at the end of the first day.
    At midnight, the first tenancy ends and the new tenancy begins, simple as that. There is no interim period at all. Surely, this is how all renewals work. An insurance renewal comes into effect when the old policy expires, commonly at the stroke of midnight - one policy lapses at midnight and the new one commences seamlessly after that. Liability is determined to the exact second.

    Leave a comment:

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