Council Tax – Who is liable if a tenant leaves early? Landlord or tenant?

So, your tenant ups and leaves before the end of their tenancy. Should they be liable to pay the council tax due on the property or is it the landlord’s responsibility?

In 2015 landlords were becoming increasingly concerned with a change in regulation that would mean they would be liable for the council tax when the tenant vacated the property.  Numerous landlords started to question their responsibility if the tenant was still legally deemed as responsible for the property under the terms of their tenancy agreement even if the tenancy was now a periodic tenancy which had not yet expired!

Many local authorities have pursued landlords for unpaid council tax that is owed by the tenant after they abandon a tenancy. These councils have charged landlords when tenants leave a property in the middle of their tenancy and usually by the time the Council becomes involved the tenant has ceased paying rent and have left the property. Some local councils pursue and issue landlords with a bill for the remaining council tax as soon as they are made aware of a change of address by the departing tenant.

 New Council Tax Liability Judgement

The judgement on the Leeds City Council 2016 case was released last week. The Court of Appeal ruled in favour of Landlords making the tenant liable for the payment of council tax. The High Court decision relates to the ‘person’ deemed liable for council tax, when the property is physically unoccupied but a periodic tenancy remains in force.  The court’s decision clarifies the position about which party, either landlord or tenant, holds the ‘material interest’ and is therefore liable for council tax.

The Judge agreed with the reasoning behind the landlord’s defence and held that the ‘wording’ of the agreement still allowed for the council to pursue the tenants for council tax even though they were no longer resident. The importance of the fixed term then continuing as a monthly periodic was the key to the landlord succeeding.  Unlike a statutory periodic tenancy, a ‘continuation’ periodic tenancy after the initial fixed removes the risk of a landlord being liable for council tax when a tenant leaves physically earlier than the legal ending of the tenancy itself.

Finally some good news for landlords, especially after all the recent assaults from local councils trying to charge business rates on student properties and the removal of the council tax exemption when landlords improve their properties.

Dan Hopkins

Working with property professionals for over 20 years providing advice and services to all property investors.


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