Council Tax and Bills in an HMO: Who Is Liable, and What You Can Recharge to Tenants

In a house let room by room, the costs a single-let tenant would normally carry usually become yours. Council tax is the one that catches landlords out, because the law puts it on the owner and stops you passing it on as a separate charge. Gas, electricity and water can be passed on, but only in ways the tenancy agreement sets out, and never at a profit. This guide covers who is liable for what, the honest ways to recharge, and the records that settle a dispute.

Correct as at 24 October 2026. England only; Wales and Scotland have their own rules.

(General information, not legal advice.)

Council tax: the owner is liable

In a single let, the tenant normally pays the council tax. In an HMO it moves to you. Where a house is an HMO, or is let to tenants who each rent only part of it, the owner, not the tenants, is liable for the council tax (Local Government Finance Act 1992 s.8(3), with Class C of the Council Tax (Liability for Owners) Regulations 1992). The government's Council Tax Information Letter 3/2023 puts it in one line: liability "rests with the landlords of HMOs covered by the regulations".

One bill for the house, not one per room. Since 1 December 2023, an HMO in England "must be treated as a single dwelling" for council tax (SI 2023/1175). The gov.uk HMO guidance says the Valuation Office "values most HMOs as single properties for Council Tax" and has done since that date in England. That change is about how many dwellings the house counts as. It does not set or change the band; your band is whatever the Valuation Office gives the house.

You cannot recharge it as a separate payment. The only council tax payment the Tenant Fees Act lets you require is "A payment to a billing authority" (Tenant Fees Act 2019 Sch.1 para 8(1)), meaning the council. The government's statutory guidance says landlords "cannot require a tenant to pay a separate, additional charge to them for council tax", and that "A tenant cannot be required to pay for these costs if they are already paid for in the rent."

So council tax goes into the rent, and the tenant's written statement of terms must say so. Where a bill payment such as council tax is payable to you under the tenancy, the statement must say that it is, and whether it is part of the rent or in addition to it.

What this means for pricing a room

Price council tax into every room's rent from the start. As a rough guide, the average Band D bill in England for 2026-27 is £2,392 (MHCLG, 25 March 2026). Spread over four rooms, that is about £50 a room a month (£2,392 ÷ 4 ÷ 12). Your own band and council will give a different figure, so use your bill, not the average.

Two practical points. Set the figure so it still covers the bill in a month when a room is empty, because the bill is for the house. And when the council's new rates arrive each spring, the extra cost is yours until the rent itself goes up, which for an assured periodic tenancy means a rent increase made the lawful way, not a top-up charge.

Gas, electricity and water: three honest positions

The Tenant Fees Act permits a payment "for or in connection with the provision of a utility" only "if the tenancy agreement requires the payment to be made". A utility here means electricity, gas or other fuel, and water or sewerage. So whatever you charge for bills must be written into each room's agreement before you charge it.

A room agreement can take one of three honest positions.

Where a bill payment is charged in addition to the rent, the tenant's written statement must give each amount, or explain when and how the tenant will be told the amount and when it is due. For a share or a cap, that usually means saying you will send the bill and the split each time the supplier bills you, and how many days the tenant then has to pay.

The at-cost rule for gas and electricity

If you buy gas or electricity and charge tenants for it, Ofgem's rules cap what you can recover. Ofgem's maximum resale price direction (2014) says "the maximum price at which each unit of gas or electricity may be resold shall be the same as that paid", and the standing charge is shared "pro rata with the amounts payable for units". Where a tenant has been overcharged, the direction provides for interest on the excess at "twice the average base rate of Barclays Bank".

Ofgem's earlier resale guidance (2003) adds three points worth knowing. The reseller "must use his reasonable endeavours to estimate what proportion of the total bill each tenant should pay". The method "must be explained to the purchaser on request". And the reseller "is not entitled to recover the costs of running his or her own electricity or gas system".

In practice that rules out an admin fee on the bills, a flat "bills charge" set above what you pay, and a margin on each unit. It does not stop you charging the real cost, shared fairly and explained.

In LetSorted

When you create the tenancy agreement for a room in LetSorted, you choose one of these three positions for gas, electricity and water, and the agreement states it. There is no field for a fee or surcharge on bills, and the agreement states that council tax is part of the rent. See how LetSorted handles HMOs.

Broadband and the TV licence

Broadband. In most HMOs one line serves the house, so the contract is usually in your name and included in the rent. If you charge for it separately, the Tenant Fees Act permits a payment for a communication service where the tenancy agreement requires it. Where that payment is made to you, anything above "the reasonable costs incurred by the landlord" is a prohibited payment. The Act also lets you require a tenant to take out their own contract with a utility or broadband provider, which is more common in a whole-house let than a room let.

TV licence. The Tenant Fees Act permits a TV licence payment made to the BBC where the tenancy agreement requires it. A TV licence share paid to you on top of the rent is not one of the permitted payments. Whether one licence covers the whole house or each tenant needs their own depends on how the rooms are let and what each tenant watches. Check TV Licensing's guidance for shared houses rather than assuming your licence covers the tenants.

The records that settle a bills dispute

A bills dispute is usually settled by whoever has the dated record. Keep these for every room tenancy:

• Meter readings at move-in and move-out. Photograph each meter with the date showing, on the day a tenant moves in and the day they move out. Send the readings to the supplier the same day.
• Every bill, filed by period. Keep each supplier bill against the dates it covers, so the share for any month can be rebuilt from the bill itself.
• The split, shown to the tenant. Each time you charge a share, send the tenant the bill, the share from their agreement, and the sum. It also gives, before anyone asks, the explanation of the method that Ofgem's guidance says you must give on request.
• Proof of payment. Record when each tenant paid their share, separately from the rent, so a missing bill payment is never mistaken for rent arrears or the other way round.
• The council tax bill for the house. Keep each year's bill and band. If a tenant or the council asks who is liable, it is the first document you will need.

Some landlords hand the whole job to a bills-inclusive service, which puts the house's utilities on one account and charges a set monthly amount per tenant. If you use one, check that what it charges your tenants fits the position in their agreement.

Before your next room is let

Council tax and the bills are running costs, but the dates around an HMO are where the larger risks sit: the licence, gas, electrics and fire safety, for the building and for each room. If you are still weighing whether an HMO pays once these costs move to you, our worked example of a 4-bed house against a 4-room HMO runs the numbers.

To keep the building's dates in one place, add your HMO to the free tracker and get an email before a gas, EICR or EPC date falls due.

Frequently Asked Questions

Who pays council tax in an HMO?

Where a house is an HMO, or is let to tenants who each rent only part of it, the owner is liable for the council tax, not the tenants. Since 1 December 2023 in England an HMO is treated as one dwelling, so there is one bill for the house, not one per room. You cannot charge tenants a separate council tax payment, so the cost goes into the rent. Correct as at 24 October 2026. England only.

Can I charge HMO tenants more for gas and electricity than I pay?

No. Under Ofgem's maximum resale price direction, a unit of gas or electricity you resell may cost the tenant no more than you paid for it, and the standing charge is shared in proportion to the units. You may charge for utilities only where the tenancy agreement requires the payment. Correct as at 24 October 2026.

Can I charge tenants for the TV licence?

The Tenant Fees Act permits a TV licence payment made to the BBC where the tenancy agreement requires it. A TV licence share paid to you on top of the rent is not one of the permitted payments. Whether one licence covers the house or each room needs its own depends on how the rooms are let, so check TV Licensing's guidance for shared houses. Correct as at 24 October 2026.