Depending on the value of the property either the landlord or the tenant can be held liable for rates in a rented property. You should be very clear on who is liable for rates and should have procedures in place to ensure that these are paid.
Rates must also be paid on properties which are vacant.
Determining legal liability for rates
A landlord is legally responsible for paying rates on any properties with a capital value of less than £150,000. If the capital value of the property is more than £150,000 the tenant is legally responsible for paying rates to Land & Property Services. You can find the capital value of any property at the LPS website. The capital value should also be listed on rates bills for the property.
The landlord is always liable for rates in Houses of Multiple Occupation. If you do not know for certain who is liable to pay rates on your property, contact Land & Property Services immediately.
The landlord is usually liable where:
- the property is a HMO
- the capital value of the property is less than £150,000
The tenant is usually liable where:
- the capital value of the property is greater than £150,000
If you're not sure who is liable for rates, speak to your solicitor or contact LPS dedicated Landlord Team by email or by calling 0300 200 7801
Tenant's liability for rates
To avoid future legal problems you should always ensure that the person legally responsible for rates is made responsible for these in the tenancy agreement.
Where the tenant is liable for rates, your tenancy agreement should state that the tenant is liable and that the tenant is responsible for making thes payments directly to LPS. If you do not state that the tenant is expected to make these payments directly to LPS, it is understood that the rent stipulated in the agreement contains an amount for rates. Tell your tenants that they should arrange to make direct payment to LPS. If they do not pay, LPS can take legal action against the tenant to recover any money owed. Where the tenant is legally liable for rates, LPS cannot take any action against you if the tenant does not pay.
Legal liability versus contractual liability
LPS can only take legal action for non payment of rates against the person who is legally liable according to the legislation. However, a tenancy agreement is a legal contract between you and your tenants. If you fail to comply with the terms of your tenancy agreement your tenant can take legal action against you.
Example: Your tenancy agreement states that the landlord is responsible for paying rates on the property. However, as the rental property is valued at £160,000 on the capital valuation list the tenant is legally responsible for paying rates. LPS takes action against your tenants because you fail to pass on rates payments. Your tenants can, in turn, sue you for the value of the rates as the tenancy agreement clearly states that you will pay these. There have been a number of cases like this in the NI courts recently.
Liability for empty homes
Since October 2011 vacant properties in Northern Ireland have become eligible for rating purposes, although you can apply for an exclusion.
Where a property is vacant, it will always be the landlord's responsibility to pay the rates for the period that the property is unoccupied. If your properties are bundled into a landlord discount account for ratings purposes, you will only receive a discount on any vacant properties if they are in an Article 21 account. You will have to pay 100% of the rates payable on any vacant properties bundled with an Article 20 account. Contact LPS if you'd like more information on these accounts.