Leeds City Council v Broadley

Tenants with fixed term or contractual periodic tenancies are liable for council tax until the tenancy is formally ended or new occupiers move in.

Summary

A tenancy continues as a contractual periodic tenancy if the agreement states it becomes periodic when the fixed term ends. A contractual periodic tenancy extends the original agreement.

The Court of Appeal held that where a tenant leaves a contractual periodic tenancy without giving proper notice to end the tenancy, they remain liable for council tax because they continue to have a material interest in the property.

Background

Council tax is normally payable by the resident or owner of the property. The hierarchy of liability, set out in s.6(2) Local Government Finance Act 1992, is used to establish liability where there is more than one resident.

The property owner is normally liable for council tax if the property is empty. An owner includes anyone with a material interest in the property. A material interest can be a freehold interest or a leasehold interest granted for a term of six months or more. A tenancy agreement is a leasehold interest.

Broadley's tenancies

Mr Broadley was a landlord who granted tenancies for a fixed term of 6 to 12 months, after which they continued on a monthly basis.

Leeds City Council argued that Broadley's tenants had two distinct tenancies: an initial fixed term followed by a separate periodic tenancy. As the periodic tenancy was not for a term of six months or more, it could not create a material interest and the tenants were not liable for council tax. Broadley was liable when his tenants left the property because he was the property owner.

Broadley argued that his tenants remained liable for council tax until they gave notice or the property was let out to new tenants. The tenancy agreements created a material interest of six months or more. After the fixed term, the tenants remained liable for council tax as owners of the property under s.6(5)(a) Local Government Finance Act 1992.

Broadley appealed to the Valuation Tribunal.

The Valuation Tribunal

The Valuation Tribunal agreed with Broadley. Tenants with a tenancy of six months or more were liable for council tax because they were 'owners' even where the tenancy was made up of a fixed and contractual period.

Leeds City Council appealed to the High Court who dismissed the appeal. The council then appealed to the Court of Appeal.

The court's decision

The Court of Appeal dismissed Leeds City Council's appeal.

The court held that a fixed term tenancy followed by a contractual periodic term can exist as a single tenancy.

In this case, the court held that the tenancies were granted for a 6 to 12 month fixed term and then continued month to month. This was compatible with the definition of 'material interest' in the Local Government Finance Act 1992. The tenant is an 'owner' until they give notice and leave the property or until a new occupier moves in.

Comments

Clients with a fixed term or contractual periodic tenancy might be liable for council tax at their former property if they leave without giving proper notice. This responsibility continues until they end the tenancy properly or a new tenant moves in.

Clients should give proper notice when leaving a tenancy to end their council tax liability.

Statutory periodic tenancies

This judgment applies only to tenancies made up of a fixed term and contractual periodic term. Clients with statutory periodic tenancies are not liable for council tax after they leave the property.

A statutory periodic tenancy arises where the tenancy agreement does not state what happens at the end of the fixed term. This is a new tenancy, separate from the original fixed term, and has a material interest of less than six months.