Huge change to council tax will see the bills of millions of households cut by £1,000 a year – will you benefit?

A HUGE change to council tax rules will see the bills of millions of households cut by up to £1,000 a year.

The government will end the practice of banding individual rooms in shared houses separately for council tax purposes.

This will effectively end the practice of forcing tenants of shared housing to foot large council tax bills.

Following a long-running campaign by the National Residential Landlords Association (NRLA), the decision will mean houses of multiple occupation (HMOs) will be classed as a single property, reducing costs and simplifying administration.

An HMO is a property that is rented out by at least 3 people who are not from one 'household' - like a family.

People in HMOs share facilities like the bathroom and kitchen. 

It is also known as a 'house share'.

It is estimated that there are 500,000 HMOs in England and over 4.5million people live in these properties across the UK.

As a result of this announcement, the NRLA estimates that the average HMO tenant currently charged council tax on single rooms stands to save up to £1,000 a year.

Ben Beadle, Chief Executive at the National Residential Landlords Association, said: "We are delighted that the Government has listened to NRLA and others and will end the unjust practice of charging council tax on individual rooms.

"Not only will it save tenants money, it means landlords will once again be able to let rooms inclusive of council tax, making it easier for renters to budget.

"We look forward to the necessary changes being implemented without delay."

How will the change work in practice?

Many HMOs were originally built as large houses but are now occupied by multiple households.

Usually, each separately let part qualifies as a separate dwelling with its own council tax band, whether or not it is self-contained. 

So if you sign a tenancy agreement for one room in the property it'll likely come with its own tax band.

The landlord is usually liable for paying the council tax bill if the HMO has one council tax bill and the tenants are let on a room-only basis.

This usually means that rents are adjusted to take this into account and those in smaller units could end up paying more than they need to.

In some cases, landlords may be able to transfer some or all of the council tax liability to these tenants as long as it is in the tenancy agreement.

This often means individual tenants might end up paying more in council tax than those who share the bill and live in a property that has a single band.

This is the case in HMOs where the tenants share facilities on a joint tenancy - the valuation officer usually applies a single band to the whole property.

However, the government will now amend the legislation to ensure that all HMOs are valued as a single property for the purposes of council tax.

The change will mean that the average tenant affected could save up to £1,000 a year.

Why do I have to pay council tax?

Council tax is a levy paid to your local authority to cover the cost of services in your area.

This includes rubbish collection, the upkeep of roads and libraries, as well as support for vulnerable children and adults, schools, and the local police and fire service.

The amount you pay depends on which council tax band your home falls under.

The rate of the tax varies across the country as it is set by the local council.

To work out how much your bill will be, you need to find the valuation band for your home.

You should then look up how much your local council charges for that band.

Some people are eligible for a council tax discount, which will reduce the total amount you have to pay.