Compliance update: Council Tax liability

In a recent landmark Council Tax case, the Court of Appeal (Leeds City Council V Broadley 2016) upheld that the use of a tenancy agreement which contained a fixed-term and an agreed continuation periodic term thereafter until ended by either party, in protecting the landlord from Council Tax liability, in the event the tenant served notice to end the periodic term but physically left earlier than then notice expiry.

In most cases the amount of liability will not be in excess of one month’s council tax due, but across a landlord’s portfolio this could add up to substantial amount over a period of time.

Leeds City Council argued that a tenancy had to be either fixed-term or periodic, it could not be both. To be valid, an agreement must be "certain".

For a fixed-term agreement, it ends at the end of the fixed-term and this creates certainty. For a periodic agreement certainty is created because notice can be given in accordance with the Protection from Eviction Act and common law provisions (generally one month, ending at the end of a period). Leeds Council argued that by trying to put them together it created uncertainty.

The Court of Appeal decided that this was a perfectly valid form of agreement, as if there is certainty in the fixed-term and there is certainty during the periodic element, there is no reason to feel it creates uncertainty by joining them together. It would amount to saying that one act on its own is lawful, a second act is also lawful, but when together it is not lawful.

Therefore, using a tenancy which is constructed as described above (and this is how the Training for Professionals tenancy has been provided since 2010) can protect you’re the landlord from further costs.

*David d'Orton-Gibson is Managing Director of Training for Professionals