Calls for more support as rising number of Durham student houses causes HMO tax shortfall

There have been calls for more support as a rising number of student houses in Durham is causing a Homes in Multiple Occupation (HMO) tax shortfall.

New legislation is required to cover the “unsustainable” multi-million pound council tax gap in Durham city, as councillors warn this is a result of an increase in student properties, which are inflating prices in a competitive market.

The BBC reports that County Durham politicians have urged the government to support the city’s local authority to cover the money lost as the student population rises.

Durham faces financial tolls over student council tax exemption

Full-time students are exempt from paying council tax, so the government reimburses these authorities to compensate for a loss of income.

Campaigners are now urging the government to make up the shortfall to help aid Durham’s economic deficit in the County Council’s budget.

Liberal Democrat MP, Cllr Mark Wilkes, for Framewellgate and Newton Hall, told the BBC that, while he wouldn’t expect students to pay council tax, the current system in place is “unsustainable”. He further called into question the practicality of council tax payments, due to increased pressure on local councils.

The MP spoke of having services “to provide to the public” and pushed for national legislation change.

The government is set to announce local authority funding reforms by the end of 2026, which, it says, will make the system “fairer”.

‘We are losing £13 million’

Properties across Durham are converted to cater for a growing student quota, though Lib Dem Councillor David Freeman has argued there are more rooms to accommodate Durham students than required.

This has sparked fears amongst councillors that other key services could be impacted if the situation does not change.

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Mark said: “That’s another one to three thousand pounds that this local authority is losing in council tax. We are losing £13 million as none of these landlords pays council tax on these properties because students are exempt.”

Speaking on plans to consider two HMO planning applications in the Sherburn Road estate, Cllr David Freeman, Liberal Democrat member for Elvet, Gilesgate and Shincliffe, said the “ever-expanding number of HMOs in the Durham City area is of continued concern.” He added: “These are HMOs that are not required; there are far more bed spaces in Durham City to accommodate students than needed.”

New measures are needed to reduce the number of HMOs

Former measures to reduce the number of HMOs in Durham included the introduction of a 10 per cent threshold within a 100 metre radius.

However, landlords are exploring other nearby areas like Gilesgate, Belmont and Mount Oswald.

Councillor David Freeman, also of the Liberal Democrats, urged the now Reform UK council to re-examine the 10 per cent threshold. He suggested it should be reduced to a more “acceptable” 5 per cent, rebalancing the ratio of residents and students.

Durham University Students’ Union president Abigail Taylor said the idea of introducing a county-wide Article 4 direction “wasn’t worrying,” as there is already sufficient student accommodation available – even with existing regulations in Durham.

However, she noted that the council appeared more focused on limiting the growth of HMOs than on improving the quality of the current housing stock, which is her main concern