Landlords of HMOs are being faced with a revaluation of their properties by HMRC which could result in many suffering tax rises of 300 per cent. 

Areas with the highest number of HMOs have been focussed on by the Revenue, according to an investigation by the Daily Telegraph. 

Trade minister 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 tells the newspaper. 

And Ian Fletcher of the British Property Federation adds: “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”.

The newspaper says many HMO owners pay council tax and other fees on behalf of the tenants, who are then given a single monthly all-inclusive charge. 

So although tenants will ultimately pay the additional council tax, the landlord must fork out for it initially, with some landlords claiming it is a stealth tax. 

The Telegraph cites Daryl Brewer, a landlord in Portsmouth, which is in the top 20 local authorities in the country for HMOs, as saying the situation is “an absolute mess.”

The Valuation Office told him that his six-bed property let to six individual tenants has now been reclassified as six different dwellings – meaning his council tax has quadrupled from from £1,821 to £7,287.

A spokesman for the Valuation Office, which is part of HMRC, tells the Telegraph: “The amount of tax any assessment will yield is not a consideration.”