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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Property Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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Hi. We are a property investment company and unfortunately

Customer Question

Hi. We are a property investment company and unfortunately have a large number of vacant properties with a number of them even derelict and the council tax liabilities on these properties run into thousands of pounds and are choking us. We have been offered by someone to take these properties on a one year lease or longer in his limited company at a peppercorn rent, my question is if he takes over full liability for these properties for the duration of the lease could there be any comeback to us if he can't make a go of it and doesn't pay the council tax?
Submitted: 3 years ago.
Category: Property Law
Expert:  UKSolicitorJA replied 3 years ago.
Hello,

Is it a condition that he should pay council tax arrears that have aleady arisen?
Customer: replied 3 years ago.

There are no arrears currently on any of the properties.

Expert:  UKSolicitorJA replied 3 years ago.
Thank you. What kind of properties are these?
Customer: replied 3 years ago.

Residential.

Expert:  UKSolicitorJA replied 3 years ago.
Council tax is payable by the occupier of the property usually e.g.

  • Resident freeholder, e.g. an owner occupier.
  • Resident leaseholder, e.g. an owner occupier who is paying a ground rent.
  • Resident statutory or secure tenant, e.g. a council or private tenant.
  • Resident licensee, e.g. the landlord of a public house who lives on the premises.
  • Other resident, e.g. a squatter.
  • Non-resident owner.

You may ask for security or an indemnity of some sort from whoever you will lease the property to to cover you for council tax in the event of non payment.

 

As you see, your liability comes last in the above list as the non-resident owner, the people at the top of the list downwards are the ones who are liable to pay the council tax in that order.

 

Hope this helps

Customer: replied 3 years ago.

You have not answered my question at all.

Expert:  UKSolicitorJA replied 3 years ago.
Yes, there may be comeback to you if the person disappears and does not pay council tax.

Hope this clarifies.
Customer: replied 3 years ago.

If a tenant leaves a property without paying council tax there is no comeback to me as it's his liability for the duration of his lease. My question was if the leaseholder company will stand in place of the freeholder company as being classified as the legal owner for the duration of the lease. If we were to sell the property with arrears of council tax the purchaser would not be liable for our arrears hence my original question.

Expert:  UKSolicitorJA replied 3 years ago.
In your case you are not selling the property but leasing it on a one year lease, so you are carrying the risk of comeback to you.

Hope this clarifies.
Customer: replied 3 years ago.

I'm very unhappy with your answer as I find its skirting the main issue and are not answering the specific question.

Expert:  UKSolicitorJA replied 3 years ago.
I would refer you to the Local Government Finance Act 1992 which provides as follows:


6 Persons liable to pay council tax.

(1)The person who is liable to pay council tax in respect of any chargeable dwelling and any day is the person who falls within the first paragraph of subsection (2) below to apply, taking paragraph (a) of that subsection first, paragraph (b) next, and so on.

(2)A person falls within this subsection in relation to any chargeable dwelling and any day if, on that day—

(a)he is a resident of the dwelling and has a freehold interest in the whole or any part of it;

(b)he is such a resident and has a leasehold interest in the whole or any part of the dwelling which is not inferior to another such interest held by another such resident;

(c)he is both such a resident and a statutory [F1, secure or introductory tenant]of the whole or any part of the dwelling;

(d)he is such a resident and has a contractual licence to occupy the whole or any part of the dwelling;

(e)he is such a resident; or

(f)he is the owner of the dwelling.

(3)Where, in relation to any chargeable dwelling and any day, two or more persons fall within the first paragraph of subsection (2) above to apply, they shall each be jointly and severally liable to pay the council tax in respect of the dwelling and that day.

(4)Subsection (3) above shall not apply as respects any day on which one or more of the persons there mentioned fall to be disregarded for the purposes of discount by virtue of [F2paragraph 2 (severely mentally impaired) or 4 (students etc.) of Schedule 1 to this Act]F2 and one or more of them do not; and liability to pay the council tax in respect of the dwelling and that day shall be determined as follows—

(a)if only one of those persons does not fall to be so disregarded, he shall be solely liable;

(b)if two or more of those persons do not fall to be so disregarded, they shall each be jointly and severally liable.

(5)In this Part, unless the context otherwise requires—

“owner”, in relation to any dwelling, means the person as regards whom the following conditions are fulfilled—

(a)he has a material interest in the whole or any part of the dwelling; and
(b)at least part of the dwelling or, as the case may be, of the part concerned is not subject to a material interest inferior to his interest;
“resident”, in relation to any dwelling, means an individual who has attained the age of 18 years and has his sole or main residence in the dwelling.

(6)In this section—
[F3“introductory tenant" means a tenant under an introductory tenancy within the meaning of Chapter I of Part V of the Housing Act 1996;]
“material interest” means a freehold interest or a leasehold interest which was granted for a term of six months or more;
“secure tenant” means a tenant under a secure tenancy within the meaning of Part IV of the M1Housing Act 1985;
“statutory tenant” means a statutory tenant within the meaning of the M2Rent Act 1977 or the M3Rent (Agriculture) Act 1976.

The primary people responsible for paying council tax are residents/occupiers of the property, if there are no such residents, then liability falls to the owner of the building as per the definition of owner above.

Hope this clarifies.

Customer: replied 3 years ago.

if so do paragraph 5 & 6 imply that if there is a lease in place for more than 6 months the leaseholder will be liable?


 


could you please explain the following: (b)at least part of the dwelling or, as the case may be, of the part concerned is not subject to a material interest inferior to his interest

Expert:  UKSolicitorJA replied 3 years ago.
Yes, that is what it implies.

The inferior interest arises where a leaseholder may have sublet the premises to someone else e.g. Leaseholder has 12 months interest and he sublets for 9 months to a third party.

I trust this answers your questions.