Latest Bad News on Council Tax and HMOs - Stanuszek v Bunyan version 2?

The HMO Action Group notes with disappointment and concern the  decision in Stanuszek  v Bunyan  No 2 [2025] EWHC 255 effectively contradicting the judgment in Stanuszek v Bunyan No.1 [2023]

At the outset it must be said for tenants and owners who don’t  study the complexities of the law  the judgment in Stanuszek No. 2  makes no sense and makes precious little sense to those who do.

In Stanuszek No. 1 Mr Justice Henshaw  quashed a valuation tribunal that had ruled  bedrooms in Mr Stanuszek’s HMO property were a collection of multiple dwellings (i.e. flats) rather than just bedrooms in a single house. Henshaw, J  sent the case back to the valuation tribunal to be considered again. They made the same judgment again and now in Stanuszek No.2  Mr Justice Saini has affirmed their decision.

Fortunately, statute law changed on 1 December 2023 so the impact of Stanuszek  v Bunyan No 2.  limited only to historic assessments (i.e. pre-1 Dec 2023). However,  in contradicting the approach taken in  Stanuszek v Bunyan No.1. case law is left in  a state of confusion confirmed by Sir Ross Cranston in  Salisbury v Bunyan and another [2022] 4 WLR 16 where he remarked: ‘There is no avoiding the fact that there is a difference in the authorities’ (para. 33).

Obviously, the fact there are effectively now two conflicting Stanuszek judgments   helps no-one and will do  little to encourage confidence amongst property owners, tenants and taxpayers to boost confidence in the wider system of valuation and council tax.

 Rather  than resolving the conflict in authorities and the problems of the taxpayer in particular  the judgment primarily serves to gloss over major failings of the VOA and VTE between 2014-2023 in the selective  disaggregation (i.e. splitting up for tax purposes)  of some but by no means  all HMO properties into collections  individual taxable flats. Parliament chose to end that practice in December 2023.

 Effectively Stanuszek No.2  Mr Justice Sabini  is perpetuating the legal fiction that the VOA and VTE inflicted on selected HMOs until compelled to change. Whilst HMO owners and tenants had become used to such failures of the Valuation Tribunal  - the generally perception being the VTE was bound to ignore any authority or argument -   it is disappointing that this ossified  stance is now being affirmed at High Court level by Sabini, J. after the first judgment recognised the problems.

At the heart of this problem pre-1 December 2023  was the policy unilaterally of adopted by the Valuation Office Agency  between 2014 - 2023 of discriminating between HMOs and  selectively targeting individual properties for   disaggregation. This was accomplished by twisting the interpretation of the definition of a dwelling section 3 of the Local Government Finance Act 1992 (“the LGFA 1992”) to treat en-suite bedrooms – and sometimes simple bedrooms – as the equivalent of taxable flats regardless of facilities within them.

Those decisions pre-1 December 2023 were and remain legally defective in firstly confusing rateable occupation with physical construction,  ignoring the material necessities that without the essentials of living, cooking and toilet and bathroom facilities within the same curtilage and the central illogicality that if the property is let to a single family or household it reverts to single assessment and finally in that there is no definition of transience. They also led to HMO properties being treated arbitrarily and unfairly.

Whilst Stanuszek v Bunyan No.1  went some way in identifying these problems, Stanuszek No.2  simply has avoided them and basically amounting to Mr Justice Saini effectively rubber stamping the Valuation Tribunal and VOA decisions made against Mr Stanuszek.

Regrettably this reluctance to challenge decisions from the valuation tribunal has characterised High Court rulings since 2012,  all based on the (convenient) assumption that Valuation Tribunal is a specialist tribunal equipped to the facts. In fact, the VTE remains an exception to the vast majority of tribunals in  being staffed  overwhelmingly by lay individuals rather than actual judges. Lay panel members are  advised for the most part by non-lawyers, except at the higher levels of the VTE structure, and the system is increasingly difficult to access in recent years.

This attitude can be contrasted with the approach taken in Harrow Borough of London v Ayiku - [2012] All ER (D) 105 which emphasised a straightforward and common sense reading of taxing statutes as a whole:

“Ordinary members of the public may look to the legislation in order to work out whether they have a liability to pay or not and may plan their lives and their financial affairs in the light of their own (or their advisers') straightforward reading of the provision…..The legislator is presumed to have intended to produce a result which is fair to the tax-payer and not liable to defeat his or her reasonable expectations derived from the terms of the legislation.

Stanuszek No. 2 also fails to appreciate the knock-on effects upon local authority finance in practical terms when  councils of collecting the tax on factional flats as by pinning liabilities on tenants many of whom cannot afford it or who may well have departed leaving no forward address or in some cases have even died.

 Sadly Stanuszek No. 2 judgment illustrates the remoteness of abstract judicial reasoning in today’s High Court from the factual, legal, administrative and commercial realities of council tax  issues in England and Wales today.