I rise to speak to new clause 7, which is tabled in my name. I thank Members from across the House for supporting it and the Minister for the listening to my pleas. In short, new clause 7 intends to prevent the imposition of council tax on individual tenants of a room in a house with shared facilities, or in a licensed house of multiple occupancy.
This issue came to light in my Gosport constituency where the high street, like so many others up and down the country, is in decline. A local businessman, Daryn Brewer, identified an opportunity to breathe new life into our high streets and at the same time create affordable accommodation for young professionals. He is doing that by buying up empty disused shops, redeveloping them and bringing local independent traders into the shop space while converting the spaces above into high quality shared living accommodation. The residents have high-spec individual ensuite bedrooms, but shared kitchen, laundry and workspaces. They are effectively professional houses of multiple occupation and are known as Pro Pods. This is levelling up in its most pure form: reimagining our high streets as places where we do not just shop, but live, work, socialise and spend our time. At a stroke, it makes low-cost, high quality affordable living accommodation and takes some of the strain off the housing market.
Generally speaking, HMOs are in band C or D for council tax and are therefore classed as one dwelling, meaning the landlord is legally responsible for paying the council tax for that single dwelling. However, over recent years there has been a growing trend for the Valuation Office Agency to start to re-band those bedrooms as individual dwellings in and of themselves, meaning residents across Gosport, Portsmouth and, increasingly,
across the whole country, are being hit with unexpected and completely unaffordable council tax bills. The VOA has stated that it is not taking a new approach to HMOs or systematically revaluing HMOs. However, this is a growing issue, one that my right hon. Friend the Member for Portsmouth North (Penny Mordaunt) and I have brought to the attention of successive Ministers over the last couple of years, and one that colleagues across the House are increasingly seeing among their local landlords and developers. That is evidenced by the number of Members backing new clause 7.
There are several reasons why this issue poses a problem. First and foremost, it is placing a huge financial strain on people, often young professionals at the very start of their careers, who are suddenly landed with a council tax bill of up to £1,000, even after they have been allocated the single person discount. In some cases, it has even been backdated three years, so there could be a bill of up to £3,000. We can imagine how this is causing untold distress and misery, especially at a time when other living costs are rising. There have even been incidents of previous tenants being chased for a council tax bill they did not know they owed after they had moved out, due to reclassifying and backdating—a dreadful situation.
Shared housing is a core pillar of the housing sector. In 2018, HMOs provided up to 3 million sharers with rental accommodation across England and Wales. It is a significant contribution to the housing sector, so this issue has the potential to become a major problem. If these bedrooms start to be classified as dwellings and become band A, where the tenant is legally liable for paying the council tax, goodness knows where it will end. There are other knock-on impacts of this trend that I want, very briefly, to put on the record.
Disaggregation creates individual units, which are usually not self-contained. Once disaggregated, there is nothing to stop a landlord putting cooking facilities into these places retrospectively, thus creating miniature flats. Those do not meet housing standards or create quality living environments.
We also have the issue of housing numbers. Bedrooms within HMOs that are rebanded create a “dwelling” in law. That means that those bedrooms are added to the UK housing numbers, even though they do not meet the minimum national space standards and are not self-contained. Unwittingly, the VOA, local authorities and therefore, ultimately, the Government would be fudging the housing numbers. For each bedroom that is rebanded by the VOA as a dwelling, local authorities can claim on the new homes bonus scheme. That suggests that the Government could award those bonuses to local authorities without proper homes being created through the usual planning process.
If this continues and bedrooms keep being rebanded, the Government could be seen to be encouraging the creation of dwellings that simply do not meet national space standards. Unless they grip that growing issue, they will potentially create substandard rental properties that would contradict the renters reform Bill and the decent homes White Paper.
The Bill is fundamentally about levelling up our wonderful country. By not addressing this issue, we are doing a disservice to our constituents, many of whom are young strivers, simply trying to build their careers and make their way in life. They have been hit unexpectedly
with an extra financial strain that they have not budgeted for and certainly do not deserve, at a time they can least afford it.
I deeply regret that I had to table an amendment to put a stop to this. I have frequently raised the issue with the relevant Departments, but it has fallen on deaf ears. It has led me to fear, until this point, that some people working in this area may have forgotten that council tax is a property tax, not a head tax. It should not be down to individuals who are paying simply for a bedroom to foot the bill.
That is why I am deeply grateful to the Minister and the Secretary of State for engaging with me so brilliantly and openly on this issue, and for confirming that they will have an accelerated consultation on the issue with a view, potentially, to introducing the relevant regulations to prevent this happening and to address it. That will need to cover how we deal with the sites that have already been revalued, the bills that have been issued and the arrears that have been incurred, so that is not straightforward.
I am grateful for the Minister’s commitment to address this matter, and I have no doubt that she will. I know that she cares deeply about levelling up. She is an excellent Minister and I know that she wants to seize this once-in-a-generation opportunity to get the Bill right and deal with this issue. I thank the Minister for her commitment. I will not push my amendment to a vote and I look forward to working with her to make sure that we solve this issue once and for all.