A mortgage chief points the finger at local authorities and accuses them of treating landlords as cash cows.

The chief exec of the lender, Justin May made his views known when commenting on the government’s consultation on council tax changes on HMOs which has just closed.

Currently the Valuation Office Agency has the power to decide upon splitting up an HMO so as to create multiple council tax bills for the property. The VOA will have enough ‘reason’ to allow multiple council tax bills when landlords lets rooms separately in an HMO , even if the rooms are not self-contained in any shape or form.

The chief says this current system is making landlords quit the sector because it is ridiculously unfair, May says: “This is another example of Local Authorities seeing landlords as some kind of cash machine to support shortfalls elsewhere in their budgets.

“With such a heavy reliance on private landlords to provide adequate housing for people on benefits, as well as private tenants, why drive these landlords out of the market and make that environment unattractive for investment? For HMO investment, the mortgage deals in this market are not a million miles away from the early 2022 costs, but increasing other taxes and associated costs just makes the effort unrewarded.”

Another finance mortgage chief, agrees and adds: “HMOs are being treated differently from one Local Authority to the next, and now that's happening in taxation and banding. This issue is not a new challenge for landlords, it's a battle that has been going on for years in some areas, with lengthy appeals and legal challenges.

“These costs are ultimately passed onto the tenant in the form of rent increases at the worst time for both single-unit tenants and landlords under pressure from rising interest rates. Landlords are already being tempted away with more lucrative property strategies, such as service accommodation, putting more stress and strain on the entity that needs single-unit availability the most: the Local Authority.”

The government's current consultation  recommends changes to the council tax regulations offering two options whereby HMOs are taxed as a single dwelling for council tax purposes, but not in the case where a property has been ‘physically’ split into self-contained living quarters.

The first option on ‘offer’ is to change the Council Tax (Chargeable Dwellings) Order 1992, making listing officers treat an HMO as a single property, unless it has been made into a property with distinct self-contained living units.