I did my tenancy agreements workshop yesterday and an interesting point was raised by one of the delegates.
It was following on from a discussion about Leeds City Council v Broadley, reported by Nearly Legal here which is about Council Tax liability and about whether a periodic tenancy is contractual or statutory.
Why does this matter? Because in the hierarchy of council tax liability, the tenant is liable for council tax so long as they are in occupation, or if they have a ‘material interest’ of 6 months or more, for the duration of the tenancy. Otherwise, it is the landlord who is liable (section 6 Local Government Finance Act 1992).
The Broadley case says (unless and until it is changed on appeal) that the tenant is liable (so far as the Council are concerned) if a periodic tenancy is contractual but not if it is statutory.
The point raised by the delegate was a different one, though. He asked – if the tenant is in a statutory periodic tenancy and is not liable for Council Tax under the Council Tax rules – wouldn’t any tenancy agreement clause requiring the tenant to pay Council tax be unfair?
Under the Unfair Terms rules (now part of the Consumer Rights Act 2015) any clause which materially changes the rights of a tenant for the worse is vulnerable to being found unfair and unenforceable.
This point is particularly significant for tenancy deposit adjudicators (the delegate was a tenancy deposit adjudicator!) as it will affect whether or not they allow deductions from the deposit for claims where landlords have had to pay Council Tax when the tenancy agreement clause provides for it to be paid by tenants.
The other problem is that Council Tax is generally lumped in with all the other utilities so if the clause is found invalid, this may affect the landlord’s right to claim for these also. So I am considering putting Council Tax liability in a completely separate clause.
I would be interested to hear what your views are on all this.
Lewis says
February 2, 2017 at 8:41 PMI had a tenner who hadn’t paid council tax. The council attempted to bill me. I simply stated there was a Tennant the asked for a forwarding address and some documents and I never heard back from them. I assume they chased the Tennant. So what’s the point putting a potentially unfair clause in your agreement when worst that can happen is some time copying some documents?
I should also add this was in the days before deposit protection. So have to ask if a deposit was paid to landlord for council tax. Could the scheme ensure the council tax was paid with the money? Other wise the Tennant could be on the hook twice which couldn’t be right?
Jack says
February 4, 2017 at 10:21 AMI don’t think that’s the usual experience Lewis. As the Broadley case makes clear, a statutory periodic tenant who is no longer in occupation isn’t liable for council tax so the council can’t chase them for it.
Jack says
February 4, 2017 at 10:31 AMI think a clause like this is always at risk of being considered unfair. It’s an entirely one sided clause which improves the landlord’s position and provides nothing for the tenant. Certainly, I think its wise to separate it out from the utilities clauses as you don’t want to undermine those as well.
But all this begs the question, why is the clause even necessary if you can avoid the whole issue by granting tenancies which include contractual periodic elements?
Roy Badami says
February 4, 2017 at 9:19 PM“The Broadley case says (unless and until it is changed on appeal) that the tenant is liable (so far as the Council are concerned) if a periodic tenancy is contractual but not if it is statutory.”
From my reading that’s not _quite_ what it says. What it says is that if you have a tenancy agreement which contemplates a fixed term of six months or more followed by a monthly periodic tenancy, then this constitutes a single continuous tenancy with a duration of at least 6 months, and hence the tenant is liable for council tax.
It’s not the fact that the tenancy is contractual that is important, per se. It’s the fact that this particular construction results in the continuation of the original tenancy beyond the initial term, rather than the creation of a new tenancy.
Splitting hairs? Perhaps. But looking at it this way makes the decision much easier to understand.
Nassar says
February 6, 2017 at 6:53 PMEven if your contract runs into periodic the original will state the same terms apply after the fixed period if the tenant continues to live there. Then if you give a renewal making refernce to the original contract signed by the same tenant for a new fixed period, that contract will also state that after the period is up the terms will continue to apply month-to-month. After that if notice is given by either party (1 month notice by tenant, 2 months by landlord) and the tenant stays until the last day of that notice then I fail to see how this should be a Landlord’s problem. They will already be paying CT elsewhere as proof they don’t live there.
David says
February 7, 2017 at 7:35 PMThe tenant signed the contract so should be liable for the council tax. Also the tenant should be liable for Gas, Electricity and water charges unless the landlord uses those services. And the tenant is liable for 5 months rent if they moved out at the end of the first month !
Why should landlords foot all the costs when tenants just take advantage of good landlords …