Moving on out

The Court of Appeal has upheld a ruling on whether landlords are responsible for paying council tax on a property when a tenant has moved out before the tenancy agreement has formally ended. Justin Bates sets out the background to the case.

Summary

In Leeds CC v Broadley [2016] EWCA Civ 1213, December 06, 2016 (McCombe, Underhill LJJ, Sir Stanley Burnton) the Court of Appeal has held that a tenancy which demises land for a fixed period and continuing thereafter on a monthly basis takes effect as a single term and not as two separate tenancies, so that, for the purposes of council tax liability, the tenant (and not the landlord) is liable for council tax once the fixed period ends.

Background

Liability for the payment of council tax is imposed on a hierarchy of six categories, starting with a resident owner-occupier: the highest in the list is liable (s.6, Local Government Finance Act 1992). The next four categories all relate to residents: a resident with a leasehold interest in the whole or part of the property (which is not itself inferior to another such interest, i.e. not including someone who sub-lets part from a resident tenant of the whole or a larger part of the property) is second in the hierarchy. The intervening categories are: statutory, secure or introductory tenants who are resident; resident licensees; and, other residents. In default of any resident, the final category is the non-resident “owner”, defined as any person with a material interest in the dwelling in relation to which there is no inferior person with a material interest in the whole of part of the property (s.6(5)); in effect, the person with the “lowest” material interest (in terms of landlord-tenant law, i.e. the lowest sub-tenant) is liable, provided he has a material interest. “Material interest” is itself defined as a freehold interest or a leasehold interest which was granted for a term of at least six months (s.6(6)).

Mr Broadley was the freeholder of five properties, each of which was let on an assured shorthold tenancy. In each case, the tenancy was expressed to be for a fixed term of 6 or 12 months “and thereafter continuing on a monthly basis” until terminated by either party giving written notice. While the tenants were in occupation, they paid council tax to Leeds CC. All of the tenants then left without terminating their tenancy agreements. At that stage, the authority decided that Mr Broadley had become liable to pay the council tax.

Mr Broadley disputed this analysis, contending that the tenants remained liable until the tenancies were terminated. The tenancies were a “material interest” as they were all granted for a term of at least six months. Leeds accepted that the fixed term was a “material interest”, but contended that, once it had ended, a new contractual monthly periodic tenancy arose, which was not a “material interest”.

Rulings

The dispute was referred to the Valuation Tribunal, which found for Mr Broadley. Leeds CC unsuccessfully appealed to the High Court ([2016] EWHC 1839; [2016] H.L.R. 38). These were not – as Leeds contended – two separate tenancies (one for a fixed term followed by a new periodic tenancy) but a single tenancy with a fixed period continued on a month to month basis.

A further appeal to the Court of Appeal was also dismissed. The agreements provided for a single tenancy with a fixed period and continuing thereafter on a monthly basis; such a tenancy took effect as a single term and not as two separate tenancies.

Justin Bates is a barrister at Arden Chambers. He made written submissions for the intervener, the Residential Landlords Association. Justin can be reached on 020 7242 4244 or This email address is being protected from spambots. You need JavaScript enabled to view it..