Watch: How to protect your HMO from council tax rebanding

I am Darren Brewer. I am the founder of ProPods. We are co-living specialist based in Hampshire, Portsmouth in Hampshire. However, Wendy and I are co-founders of the HMO and Council Tax Reform Group. So this is all about, can you protect yourself from the council tax rebanding? And you’ll see our little logo up on the left-hand side of the screen. I have worked with clients and the VOA in the last 18 months.

I haven’t received letters in Stoke, but I have received letters about Portsmouth. And we’ve just decided to start bringing people together to address this major tax, which really is a tax on tenants, but it’s also a tax on landlords. I own about 75 bedrooms in Portsmouth under the brand of Propods. I have never written a book. I actually struggle probably to read a book, let alone write a book. But it is all about for me, HMOs, co-living, how can co-living help?

What I think is the next generation, Generation Z in the UK, 21 to 35. That is where we believe co-living is probably going to move forward. And I am a political lobbyist like Wendy. So Wendy’s done a little diagram, an original three bed house, family of five living there. Council tax, depending on where you are in the country would be a band B, maybe a band A, probably on the South Coast it could be a band C. And as you can see there,

What would have been maybe about £1440 a month is now £412 a month. So we think as a group, this is unfair, it’s inconsistent, and it’s definitely very confusing to the individual, and mainly it’s confusing to the tenant. So where are we seeing this? Well, Wendy’s put a star up by Manchester, and then the stars, that’s me, by the way, down on that bottom right-hand side.

and then all of sudden it starts to get a bit like this. But interestingly, probably about five years ago it looked like that.

Darren Brewer (02:12.599)

So there’s been a few books on it. Council Tax Handbook. We actually have a barrister within the HMO lobbying group, Alan Murdy. The guy wrote the book, rewrote the book, wrote it again, added to it. He’s probably the well-known barrister in the UK on Council Tax. He represents a lot of clients. He’s represented myself. And again, he’s part of the group that’s trying to obviously fight and change this with the government. Very quickly, this just gives you an idea of what dwellings…

We use the word dwellings now, placed in eight bands. You’ll probably see most H and Mo’s before they get rebanded, a B, C and D, depending on the size. Now you’ll start seeing your bedrooms all being banded as band A. It’s based upon, how does this happen? So some bands are based upon theoretical value of 1st of April, 1991. For those of you that are old enough in the room to remember, in 1990, the council tax was, it was known then as the poll tax.

In 1991, I think we saw riots out on the streets of London. And then Maggie basically turned around and said, Christ, we’ve got to sort this problem out. And then within 18 months, they created the council tax, which sits under the Local Government Finance Act of 1992. The valuations were retrospective. They’ve never seen so many estate agents in 92 run around so many streets, driving down streets, trying to work out what houses were worth. And then all of a sudden, they started giving wider powers to the valuation office, but more

wider powers to the listing offices and we’ll come back onto that in a minute. So what can we do? So myths, what works? Well, avoid en suites. Well, actually we’re now seeing that rooms without en suites are getting rebanded. Stick to four beds or less. We’ve actually got a few people within the group now who’s got three and four bedrooms rebanded. Stick to converting residential property. I can tell you now our portfolio of 11, four of them are houses and they’ve all been rebanded. Don’t put locks on the door.

makes no difference. Get planning permission, that definitely doesn’t help. Don’t get planning permission, that definitely doesn’t help. Using joint and several liability tenancy agreement. That one there is a little bit of a grey area. That probably helps with student houses. I’m struggling to find any providers who are professional landlords or renting to professional landlords using a joint and several liability tenancy agreement.

Darren Brewer (04:37.174)

I think that has its own place in law. You’ve probably seen 90 % of bedrooms or professionals renting bedrooms have their own tenancy agreement now. Use a license agreement. So this is something that I’ve been an advocate for for about the last 12 months. It’s not liked in law. It’s definitely not liked in the VOA. We’ve just created a super license that the VOA have just basically said, we’re ignoring your super license.

I would like to basically, it doesn’t really matter what we show you anymore. So these are myths that people think do work. I can tell you now, there’s really nothing at the moment that is working. Truth is all types of HMOs are affected. That is definite. You must be prepared. You must be prepared. That is the only way of putting that really. This is a minefield. If you think it becomes a minefield when your bedrooms are being talked about rebounding.

It’s definitely a minefield when you’re moving 68 tenants onto new tenancy agreements and having to tell all 68 tenants that they are now liable for the council tax. So the VOA don’t prepare you for that bit and no one prepares you for that bit. And there are some routes that have not been tested, such as commercial to C3 via PD, then C4. We haven’t tested that bit, but I’m getting to the stage where I’m not quite sure how old you would be once you’ve done all that in planning.

and whether you’d actually have a HMO by the end of it. That is one thing that we haven’t tested or I haven’t found has tested because you go commercial to C3, you get your council tax for C3, you then do your PD, you then apply for C4, you then apply for SUI Generous. I still think at the end of the day, the VOA will eventually come and find you. So what can I do? Probably sell up. No. Especially after this week. No.

What can I do? So I’m not quite sure why Wendy’s put this in, but I’m guessing it’s a bit of a knockout blow. First thing we’ve got is the HMO and Council Tax website. We’ve currently got, this was an idea Wendy and I came up with about 18 months ago. She was not happy with what’s going on. I definitely wasn’t happy what going on with our portfolio. For those of you who don’t know me, in 2020, our first commercial conversion got rebanded.

Darren Brewer (06:58.325)

Portsmouth City Council said to me, it’s just a mistake. We’ll send that back. They think it’s flats. I was like, okay, no worries. I had another beer. They then ring me up six weeks later and say, actually, I don’t think it’s a mistake. It’s not a mistake. This is what they’re doing. We appealed it. We lost the appeal. We went to tribunal. That’s when I first met Alan Murdy. Propods to date has the biggest…

what we believe tribunal to date, was nearly 360 pages of evidence. It took five and a half hours to be heard. And still they found in favor of the VOA, the tribunal. We then looked to take that to the high court. That’s when it got a little bit scary that the quote was coming back at 70,000 pounds of legals with no guarantee that we were gonna win. And then I basically met Wendy.

Wendy and I decided in between that time that we were going to create a group. The group went from two people on Facebook, which was me and Wendy. And to date we’ve got 1,150. Yeah, and we’re growing. I mean, in the last month, I think we’ve really put 10 % on top of that. So we’ve gone from 1,000 to 1,150. And every day I’m getting, can I join your group? Can I join your group? I think what’s even scarier is the amount of emails that I’m getting now. Yeah, what can I do? What can I do? Can you help me? I’m stuck.

And these are not just from landlords anymore, these are from tenants. And that’s where the worry comes. So we encourage everybody to join this. On Sunday, I’m at the party political conference with Wendy, as long as Wendy’s back’s okay. That’s why she’s not here today. We’re hoping we can lobby government. Trouble is we can’t find a housing minister that stays in the role for more than five minutes. So that is a problem. But…

We have got wording in with the levelling up committee. We are trying to get this policy changed. The policy is that we’re trying to get changes that a bedroom cannot be classified as a dwelling. If we can get that wording changed, then everyone is home and dry. But I’ll be honest with you guys, not just everyone in this room, everyone in the country is affected by this. Whether you have a HMO and you think, my God, I’m not going to put my head above the parapet. I can tell you now the train has left the platform and it really, or the station, and it really depends on what platform you’re on, it is coming along the tracks.

Darren Brewer (09:21.003)

And it’s not a great talk to do. You know, there is no joy with this. To give you some idea, our 68 rooms is generating about £73,000 a year for the local authority. What is really scary is, is that every time a bedroom gets added to council tax, that bedroom gets added to the UK housing number. Now that’s a scary thought. To give you some idea, there’s 497,000 technically HMOs in the UK. They’re averaging six bedrooms of HMO. We have three million sharers in the UK.

That’s three million dwellings that potentially the valuation office and the government could convert to technically dwellings that don’t meet any planning law, any building legislation. This is a law to itself and unfortunately the law has to be changed. It’s a 30-year policy and the policy is out of date. So I encourage any of you to jump on this website, join our group on the Facebook page. If you want to put your hand in your pocket, by all means we have donations. I’m not here for that but it’s not cheap to be lobbying government.

And I think that’s the end of the talk. Apologies if I’ve rambled on, but I’m happy to take any questions.