Whether you’re looking to rent or buy a new home in London, be sure to check out the latest increase in council tax across London boroughs. Here, we discuss this in full detail and provide advice on how to handle this situation.
What is council tax?
Council Tax is something that the vast majority of homeowners and renters in Britain have to pay. It’s an annual fee for the local services they provide, like rubbish collection and public libraries.
Normally a homeowner would pay council tax in 10 monthly installments, followed by two months of not making any payments. The amount one pays is based on:
• your circumstances;
• the valuation band of your property;
• how much the council needs to fund its services.
If someone is renting a property, they generally cover the costs of the months they are living in that property.
A full Council Tax bill is based on at least 2 adults living in a home. Spouses and partners who live together are jointly responsible for paying the bill.
It’s important to be fully informed on all the costs involved in your move, so always include Council Tax when calculating the cost of moving house.
- When renting, the tax is not usually included in the monthly rental fee, as it is paid directly to the local council, rather than the landlord;
- If a homeowner leaves it empty, council tax must still be paid; if you are currently renting and leave that home, you are no longer obligated to pay the council tax;
- If you plan to stay in the area and pay the same local authority, you can use the same direct debit arrangement. If you decide to relocate, you’ll need to create a new account.
Who Pays Council Tax When Renting?
Most renters in the United Kingdom are required to pay Council Tax. However, in some cases, property or individuals are exempt from paying it.
Here is the hierarchy that explains who pays council tax, and what the specifications are:
- A resident owner-occupier who owns either the leasehold or freehold of all or part of the property
- A resident tenant
- A resident who lives in the property and who is a licensee. This means that they are not a tenant, but have permission to stay there
- Any resident living in the property, for example, a squatter
- An owner of the property where no one is resident.
As a result, whoever is highest on the table above is responsible for the Council Tax bill. Liability is shared equally if there are an equivalent number of residents on the same level. The special cases where the landlord will be responsible for paying Council Tax could be: if you are under 18, the main function of the property in question, temporary rentals, among other options.
People living in the London boroughs of Westminster, Wandsworth and the City of London, however, pay £829, £845 and £1,049.
The IFS said this is likely to be a minimum requirement, and a 5 per cent rise, equivalent to £220, could be necessary to ensure councils can continue to provide services at a pre-pandemic level.
In Kensington and Chelsea, council tax is going up by 4.99 per cent – the highest allowed without a referendum. However, it will still be one of the lowest in the country.
If you are thinking of finding an area to live in, you might consider the borough of Kensington and Chelsea as an option. Check more about it in part I and part II of our blog series. This local area offers a rich immersion into the best of London’s culture, as well as having lower council taxes. At Rickman Properties we can help you find a property option to suit your budget.