Council tax warning as landlord sees bills quadruple to £7,000 in 'stealth raid'

Many large rental homes, which are let room by room to tenants, are being revalued due to being considered multiple smaller dwellings for council tax purposes.

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A stealth tax raid could result in hundreds of thousands of landlords seeing their council tax bills quadruple.

The raid has seen rental properties been reclassified to generate more tax.

Many large rental homes, which are let room by room to tenants, are being revalued due to being considered multiple smaller dwellings for council tax purposes.

Areas with the highest number of rental homes have been focussed on in the new plans, experts suggest councils were looking to reclassify homes in order to increase their income.

Minister of Trade Penny Mordaunt has criticised the revaluations and called on the government to do more to tackle the trend.

"This is a growing problem and it is arbitrary. It is stopping homes being built because developers' business models become unviable,” she said.

Government figures show 500,000 of so-called "houses in multiple occasion" in England could be affected by the plans.

Ian Fletcher, of the British Property Federation, an industry body told the Telegraph: "Local authority budgets have been squeezed for more than a decade, so they need ways of getting more money. There is only one way this will go and that is up".

This form of tenancy arrangement often sees landlords paying bills and council tax on behalf of the tenants, before passing on a single monthly charge to renters.

With possible council tax rises, landlords may have to take on the extra costs themselves or increase the rental fee for tenants.

43-year-old Daryl Brewer, a landlord in Portsmouth, resides in a city that is is in the top 20 local authorities in the country for large rental properties.

The Valutation Office told him that his six-bedroom property that he rents to six tenants has been classified as six different dwellings.

This has resulted in the property council tax quadrupling from £1,821 to £7,287.

“This looks like the poll tax. It’s an absolute mess,” Mr Brewer told the Telegraph.

A spokesman for the Valuation Office, which is part of HM Revenue & Customs, said that its approach to large rental homes had not changed. “The amount of tax any assessment will yield is not a consideration,” he said.