Durham County Council missing out on over £11m due to student council tax exemptions

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A FOI has revealed that student exceptions from council tax are causing Durham County Council to lose out on over £11 million of potential revenue.

The City of Durham Parish Council has “reacted in horror” to these findings.

The response to the request issued by Durham City Parish Council outlines how, as of 23rd February 2024, there are currently 6597 student-associated council tax exemption awards, leaving Durham County Council more than £11.3 million worse off than if student properties were to be taxed as normal.

This includes purpose-built student accommodation, or Halls of Residence, which fall under ‘Class M’ exemptions, and students living in wholly student-occupied properties, which fall under ‘Class N’ exemptions. According to Durham City Parish Council, the vast majority of these properties are located within Durham City, including 97% of all Houses of Multiple Occupation (HMOs) in the county. Additionally, almost £500,000 is lost due to ‘student disregards’, where full-time students are not counted when assessing how many people are living in otherwise taxable property.

Alan Doig, Chair of the City of Durham Parish Council, expressed his concerns over the current situation. In a statement, he said, “As a community, we recognise and value the important role which Durham University and its students play in sustaining local employment and services in the city centre.

we value the important role which Durham University play in sustaining local and services in the city centre

Alan Doig

“However, these figures are really quite horrifying. We are now in the position that a significant number of properties are being used as student accommodation and therefore exempt from paying any council tax towards all the local services they receive from the County Council.”

“Bodies such as the police, the local authority and Parish Council have the responsibility of helping to maintain our beautiful parish on behalf of every resident, student and non-student alike and it is a scandalous loophole in the tax regime that landlords are not required to contribute towards any funding of these vital services, which are available to all.”

Altogether, the total amount of revenue being lost for the year 2023/2024 adds up to £11,834,230.48. This represents a 4.3% increase from the previous year’s figure, which coincides with an increase of 248 in the number of student exemptions from paying council tax.

“These figures are really quite horrifying”

Alan doig, chair of the city of durham parish council

Some of the data provided in the Council’s FOI response is unclear, however. It is not stated whether University-owned accommodation is included in the figures, and the 5948 ‘Class N’ exemption awards issued in 2022/23, for individuals living in wholly student-occupied properties, is significantly lower than the 7584-8614 students estimated to be living in private accommodation in a Durham University housing report for the same year. In the report, the University states that some houses ‘which are recorded as being exempt may not be’.  

These findings come as Durham County Council faces a period of potentially significant financial difficulty. As of September 2023, the Council had acquired debts of £423 million, equivalent to £812 per person in County Durham.

Despite the measures put in place following a recent review of the Council’s Medium Term Financial Plan (MTFP), it is forecast that £56 million will have to made in savings over the next four years. This is despite an expected 4.99% rise in council tax for 2024/2025, a change which 58% of respondents surveyed by Durham County Council in January earlier this year disagreed with.

These findings come as Durham County Council faces a period of potentially significant financial difficulty

In the same survey, “Council tax, benefits and other processing” and “Local council tax support” were highlighted by 29% and 28% of respondents respectively as areas where potential savings could be made. Although these findings were taken on board in the County Council’s savings proposals as part of the MTFP, there is unlikely to be any change in the situation for student properties without changes in national legislation, which currently stipulates student properties’ exemption from council tax.

The City of Durham Parish Council has been vocal in calling for a change to the current arrangement. Last year, councillors called on student landlords to contribute towards council tax for the city, citing concerns about the noise and waste generated by student properties. In a press release attached to the latest council tax figures, the Parish Council reiterated this request, as well as urging “urgent action at a national level on this issue”.

There are currently no active proposals to change national legislation around students’ council tax status. Figures have shown that universities often provide a significant contribution to their local economies, with a recent report showing that Durham University and Newcastle University together add £900 million to the North East’s economy, as part of an overall contribution of £37.6 billion to the UK economy as a whole.

Both Durham University and Durham County Council were approached for comment, however neither offered a response.

Image: Peter Robinson via Wikimedia Commons

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