21st Sep, 2018

Student boom costing Coventry £6.5m in 'lost' council tax

Editorial Correspondent 10th Oct, 2017 Updated: 10th Oct, 2017

by Steve Chilton

THE boom in student housing in Coventry is costing £6.5 million a year in ‘lost’ tax revenue which pays for council services.

Figures obtained through a Freedom of Information request reveal that over the last seven years the city would have raised £37.5m more had those houses stayed as family homes.

But they don’t contribute a penny towards services like rubbish collection, care for the elderly and vulnerable, rubbish collection, road maintenance and traffic safety.

The reason is that students are exempt from paying Council Tax. And so too are their landlords, so long as they don’t live at the premises.

While most people agree that students shouldn’t be taxed, campaigners for reform have called for the law to be changed so that landlords foot the bill through business rates.

Presently neither student houses nor the massive Halls of Residence springing up across the city are classified as businesses.

The call to make landlords pay has been backed by major student cities like Liverpool, but Coventry has shown a marked reluctance to limit the spread of student houses.

Today, however, after the Coventry Observer had questioned the council’s policy, leading Labour councillor John Mutton issued a statement urging all-party support to make landlords pay.

The cabinet member for strategic finance and resources said: “The universities and students help bring a real vibrancy to the city, and we believe that it should be the businesses and landlords, who benefit from their income, who should be asked to contribute to business rates.

“We know that local people would agree – but until the government introduces legislation to enable this to happen it is very difficult for a local council to do anything to address this.

“I would also want to see any new legislation prevent landlords from increasing their rent to offset the costs of any business rates charge.”

He denies that the council has an “open house” policy of encouraging developers to build more halls of residence, claiming the government has the final decision on planning.

However, the council has not adopted an Article 4 Direction which would allow it to limit or zone the smaller student houses.

Coun Mutton added: “We are calling on councillors to agree for us to write to the Chancellor of the Exchequer, the Secretary of State for Communities and Local Government, the Chair and Vice Chairs of the Local Government Association and the three Coventry MPs to request that councils should be given powers to bring landlords of student properties within the scope of business rates in the same way that hotels, self-catering and holiday lets are within the scope of business rates.

“With the support of the council we would also wish to establish a working group to consider the operation of such a scheme in Coventry to ensure that it is designed in such a way so that it does not undermine the city’s wider housing strategy and that the cost is not passed on to students.”

The reason for the change of heart comes as local authorities prepare for the abolition of Rate Support Grant which the government currently pays to councils to compensate for the ‘lost’ Council Tax.

In its place the authorities will be allowed to keep all revenue from Business Rates – presently they hand over half to the government.

And therein lies the Catch 22, as Coventry major business boom is in student accommodation. Which isn’t classed as a business.

*The city’s two universities non-residential buildings only pay 20 per cent of the normal business rate as they are teaching institutions and have charitable status.


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