What a liability!

justice_illustrationNovember 2016 will no doubt be remembered as a month of Earth shattering events. Internationally, the voters of the USA elected Donald J. Trump to the office of President of the United States and domestically the Chancellor of the Exchequer did little to cheer us up by announcing the impending ban of fees to tenants.

It is hardly surprising therefore that a High Court appeal concerning private tenancy agreements and the payment of Council Tax caused barely a ripple on the World Stage.


Never-the-less, it is worth taking note.

During that memorable penultimate month of 2016, the unquenchable drive by (many) local authorities to grab every penny that they can get from the private rented sector was dealt a blow in the Court of Appeal.

This assault on lettings businesses has been increasing in recent years; we have seen the removal of council tax exemption when landlords improve their properties. Even attempts by councils to charge business rates on student properties – where Council Tax exemptions are in place.

Bucking the trend,  the Court of Appeal has removed one of the cash raising enterprises, employed by a number of councils.

Increasingly over recent years authorities have pursued those letting property for unpaid Council Tax – rightfully owed by their tenants after they abandon a tenancy. These councils have charged landlords  when tenants leave a property in the middle of their tenancy.  This approach has  effectively added insult to injury, as usually by the time the Council becomes involved the tenant has stopped paying rent and abandoned the property.

Leeds City Council argued that a single tenancy cannot be both a fixed term and subsequently periodic in nature, meaning that the tenancy agreement favoured by the respondent was in fact a periodic tenancy with a fetter on the giving of notice before the passage of 6 months; consequently removing the tenants’ interest in the property and making their landlord liable for Council Tax if they vacate.

This was rejected by the High Court, re-affirming an earlier judgment handed down by Mr Justice Edis in July, which agreed that it is possible to create a tenancy whose terms comprise a fixed term, followed by a periodic contractual agreement which mirrors the terms of the original fixed term.

The ruling by the court of Appeal means that when a landlord and tenant have not formally ended a tenancy, even if it has become periodic,the Council Tax liability continues to lie with the tenant.



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