Selling Property With Council Tax Arrears

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Local authorities charge council tax on residential property owners every year, in order to raise funds for rubbish collection, fire and police services and other important work that benefits everyone in the area. If you’re an owner looking to sell and have fallen behind in your council tax payments, you have arrears and this can complicate the sale of your flat or house.

1. What are council tax arrears?
2. Can you sell a home with council tax arrears?
3. How council tax arrears can complicate buying a new property
4. Your potential options for resolving council tax arrears
5. Deciding how to sell your house or flat with council tax arrears
6. Top questions about selling a home with council tax arrears

What are council tax arrears?

If you are the freehold or leasehold owner of a house, flat or other type of residential property in England, Scotland or Wales then you will be liable for paying council tax.
Freehold homes are those where you own the land and building outright, whereas leasehold homes are those where you own the property for a specific number of years in exchange for paying the freehold a yearly ground rent, with the terms set out in a lease agreements.
Council tax is a mandatory fee charged by local authorities that homeowners are legally bound to pay. The funds are used to provide services that everyone in the community can benefit from, including adequate maintenance of public areas, proper street lighting, the collection of rubbish from homes, fire and police services, free libraries, parks, recreation centres and more, as the BBC News website details.
Council tax rates can be high in certain parts of the country, and continue to rise. For example, local authorities in England imposed an average 5 percent raise in the amount of council tax that they charge, increasing a roughly £1,960 annual charge by up to £99 more every year.
The rising cost of council tax charges comes amid ongoing inflation and other negative economic factors, unfortunately resulting in many homeowners falling behind in their payments. Once you owe outstanding council tax to your local authority, this is known as arrears.
If you own a house or flat you’re hoping to sell, but you have experienced financial difficulty and currently have council arrears, this guide offers key tips on what to expect when trying to find a buyer and your next home – including advice on the best way to still get a fair and fast offer from a buyer.

Can you sell a home with council tax arrears?

Across the UK, the combined total of outstanding council tax charges that remain unpaid is £5.5 billion, according to recently released UK Government statistics. That’s a total £510 million increase over the total arrears from 2021 to 2022, although the £5.5 billion figure covers arrears over many years, not just in 2023.
If you are one of the millions of leasehold or freehold homeowners that are struggling to pay your council tax and have fallen into arrears, you may wonder if this debt will make it impossible to sell your house or flat. The good news is that there are no legal restrictions on trying to find a buyer for your home in this situation, but there are other complications that can arise.
The next section of this guide will elaborate on those possible problems, but from a potential buyer’s perspective they won’t face any extra hurdles because of your council tax arrears.
That’s because that debt that you owe cannot be transferred to someone that eventually purchases your property, as it’s an amount that you still owe the council and that you’ll be required to pay back even after selling your home and moving to another property.

How council tax arrears can complicate buying a new property

Because you are looking to sell your freehold or leasehold property with council tax arrears, it’s likely that you’ll also be searching for the next home to buy, where you plan to live.
Although the prospective buyer or your existing flat or house will not be affected by your council tax arrears, you should be aware that the remaining debt could pose some additional complications for your attempt to purchase your next property, as the financial advice website Huuti notes.
Buying a new home whilst you have council tax arrears on your current house or flat can create a major financial strain, because not only will you be legally required to pay council tax on your next property but you will also continue to owe the debt outstanding on your present home.
One option the local authority could pursue in such a situation would be to try and apply a legally binding order on the sale of your home that specifies that the proceeds from the eventual sale must firsts be used to clear the amount of money that you still owe the council. That in turn would reduce the profit that you can expect to make from the sale of your property.
Your goal in this case would be to receive a competitive offer from a buyer that not only clears the council tax arrears you owe the local authority, but leaves you with sufficient funds to use toward the purchase of your future flat, house or other type of residential property.
One way to increase your prospects of getting a fair and speedy offer is to avoid some methods of selling, such as using an estate or trying your luck with an auction, and instead contact a quick home buying company like LDN Properties. They are experts are making competitive offers to purchase almost any type of home within a few weeks, which may help you swiftly resolve the arrears.
Later in this guide you’ll see further information on the process of selling your home to a quick property buyer, along with details on other approaches you can use to search for buyers.

Your potential options for resolving council tax arrears

Should you be in a situation where you are looking to sell your leasehold or freehold flat, house or other residential property but you also have council tax arrears, you have a few options.
The first step you should take is to call your local council and ask to speak with someone who handles council tax arrears, as the charity Citizens Advice explains. You want to avoid a situation where you try to ignore the debt, because the council could pursue all available legal options to sue you in an attempt to collect the money that you owe it. This can quickly become a very stressful situation for you, and likely cost you much more money if you have to pay for legal representation.
You have a few options for deciding how you can attempt to resolve your council tax arrears as part of the process of looking to sell your home and buy your next property. The right approach will depend on your unique circumstances, such as your budget, timeline for selling, how much you owe the council and various other factors that will be specific to your property.
Work out a payment plan: Perhaps the simplest solution is to speak with a representative from the local authority and work with them on developing a payment plan. Under this type of straightforward payback agreement, you would commit to paying the council a set amount every month, which would go toward the outstanding debate that you owe them.
Get a charging order: As described in the previous section of this guide, a charging order gives the local authority the legal right to claim a portion of the sale proceeds from your house or flat in order to clear the debt that you owe. Only pursue this option if you have calculated that it would not affect your finances to the point of not being able to purchase your next home.
Declare bankruptcy: If you are in a bad financial situation where you’re struggling to pay any of your bills, including the council tax arrears, you might need to consider bankruptcy. This is a long, complicated process but if successful it can wipe out much of the debt that you owe to the council – but it will significantly harm your credit score and ability to buy a home in the future.
Try to write off the debt: If someone has council tax arrears but has never received any type of order from a court sought by a local authority over the debt after six years, the amount owed is written off. This is an extreme step and not one that is recommended, because you have to hope that the council will ignore your debt for six continuous years, which is very unlikely.

Deciding how to sell your house or flat with council tax arrears

As soon as you are ready to sell your freehold or leasehold home with council tax arrears, you will need to decide on which method that you’ll use to try finding a buyer.
You could choose among selling to a quick home buying company, trying your luck with a property auction, selling using an estate agent’s services or selling without any assistance. There are benefits linked to some approaches, for example not having to pay any commission if you decide to sell to a quick buyer. And other choices have notable drawbacks, including the fact that it might take more than an entire year to sell when doing so without any help.
The easiest way to identify the option that best pairs with your specific circumstances is to start by noting down your top priorities with selling, such as your goal selling price, how long you are prepare to wait and the amount of fees, if any, that you can accept paying to sell your home. Next, you should compare these details against the information about all four methods below, and this will help with narrowing doing the choices and identifying the most suitable.

Selling to a quick home buying company

Quick home buying companies are so-called because they are able to complete all the steps of purchasing a freehold or leasehold property within just a few short weeks – and this includes the time taken to not only exchange contracts on the home but also pay the seller their proceeds.
These companies, which include LDN Properties, can move so swiftly because they already have the funds in place to buy homes. They do not need to wait for many weeks or months to first win approval for a mortgage that would pay for the purchase of a property.
As a result, quick buyers are often by far the most rapid way to sell any type of home for a fair price, and they won’t lose interest due to the property’s age, condition, location, shape or size.
For example, LDN Properties has been buying all types of freehold and leasehold homes since 2003 and its long list of offers made properties with council tax arrears, as well as houses with a flooded basement, (https://ldn-properties.co.uk/guides/selling-house-with-flooded-basement/) properties located near a motorway, flats without a lift, holiday lets, student properties, Wimpey No-Fine houses, properties that are situated nearby to mobile phone masts, flats with a leak, houses in high risk flooding zones, homes with squatters, flats that have an infestation, properties with a restrictive covenant and many other varied scenarios.
Another great advantage of selling your house or flat to a quick property buyer is that the legitimate companies will never make you pay any commission, which will assist in reducing your overall selling expenses. That compares favourably to selling via an auctioneer or estate agent, because those methods will charge fees that will be taken out of the sale proceeds.
When you’re looking for a quick home buyer, check The Property Ombudsman (TPO) website first to see if specific companies are registered with TPO – it’s an independent entity that writes regulations to guard homeowners from falling victim to fraud in the quick buying industry. All genuine TPO members, such as LDN Properties, must follow those rules, which should give you peace of mind when selling your home. You can search for individual companies on TPO’s website, and if they’re truly registered then you will be shown their membership details.

Trying your luck with a property auction

You won’t be required to put in much work when selling your home with council arrears via an auction, as the auctioneer will prepare and advertise a listing – which describes your property and features photographs of the interior and exterior – as well as hosting the auction and overseeing the final legal paperwork and other stages involved with a successful sale.
In exchange for doing all of this work, property auctioneers will usually charge the seller a fee based on the property’s final sale price. This commission is subtracted immediately from the final sale proceeds, which will increase your net costs when selling your home.
Auctions can also take a very long time to complete the entire process, starting with the potential for many weeks or months of waiting between when you decide to sell and when the auction is held. Even if your property manages to sell at the auction, the top bidder will typically have 28 days to sign all of their required documents and fulfil their other mandatory steps. If you’re looking for a faster sale then you should consider other approaches to selling.
Note that some auctioneers may be willing to negotiate certain aspects of the sale with you, such as reducing the commission that they charge you, making the buyer pay some share of your costs or reducing the time the winning high bidder has to complete their necessary actions. It’s always worth asking individual companies about these and other possible changes.

Selling using an estate agent’s services

Another approach for selling your house or flat with council arrears is getting in touch with an estate agent. They’ll prepare a listing for your home, advertise it in local newspapers, in their office and online, organise viewings where people interested in possibly buying your property will get a chance to tour it, and then hear any offers you may get from serious buyers.
Remember also that even if you get a genuine offer from a buyer, they might still rescind the offer and walk away from the sale. They are allowed to do this and not face any penalties right up until the time that contracts are exchanged. If this happens, it will force you to start over with trying to find a buyer, potentially delaying the sale of your home by several more months.
For doing their time-consuming work, the typical estate agent will require that you pay a fee often based on your home’s eventual sale price. This will cause your total selling costs to rise, because the fee will be taken out of the proceeds from the sale. If you’re looking to cut expenses when selling, you should look at other options in this section.
Estate agents can also sometimes take a very long time – such as more than an entire year – to sell a property, which will not be a good approach to take if one of your main goals with selling is securing a sale as fast as feasible. For those homeowners looking to sell speedily, review the benefits that come with faster methods such as selling to a quick property buying company.

Finding a buyer without any help

Alternatively, you could consider trying to sell your home without any assistance, which puts the burden on you to handle all of the required tasks. This includes creating and advertising a listing, organising and leading viewings and fielding any serious offers from buyers.
It’s a huge undertaking and it won’t be something that you can just put off to your free time, and the work involved can quickly become very stressful. This is why selling solo is only really suggested for those homeowners that have succeeded in the past with selling properties, or that have a suitably qualified friend or family member that may be willing to help them for free.
There are few benefits involved with this method of selling, and it’s often one of the slowest choices because you could be waiting for a genuine offer from a buyer for over a year.
One of the limited advantages of this approach is that you will not be required to pay a third party, like an estate agent or auctioneer, any commission, which helps cut your costs. But the saving you make with this choice could easily be eliminated by the other expenses that you will face when selling alone, such as the cost of advertising your property’s listing.
Instead of trying this stressful way of selling, consider contacting LDN Properties or another quick home buying company. They make competitive and speedy offers to buy all categories of homes, and can often complete the process of purchasing a property in a few weeks. Plus, the legitimate companies will never make homeowners pay them any commission. It’s a much simpler and stress-free way to not only avoid fees but also get a much faster sale.

Top queries and answers about selling property with council tax arrears

Property owners thinking of selling quickly often have some questions they want to ask, ranging from the condition needed before selling through to selling with service charge arrears. Here are some of the top questions we’re asked about selling property with council tax arrears: