New legislation is required to cover an “unsustainable” multi-million pound council tax gap increase in Durham city. Councillors have warned that this is a result of the rising number of student houses, inflating prices in a competitive housing market.
County Durham politicians have urged the Government to support the city’s local authority to cover the money lost due to the significant rise of HMOs, or Homes in Multiple Occupation, as the student population rises.
Durham faces financial tolls over student council tax exemption
Full-time students do not pay council tax, and so the Government reimburses these authorities to compensate for a loss of income. As part of students’ living expenses while at University, they remain exempt. This has caused a significant knock-on effect on the local economy, due to the widening shortfall.
Campaigners urge the government to make the shortfall to help aid Durham’s economic deficit in the County Council’s budget.
Liberal Democrat MP, Cllr Wilkes, for Framewellgate and Newton Hall, told the BBC that the current system in place is “unsustainable”. He called into question the practicality of council tax payments, due to increased pressure on local councils. Lack of support from the national government deepens this, undermining the role and functionality of devolved powers and their financial scope.
He continued: “We have services to provide to the public, but yet again, we are in a position where we can’t change this. We need national legislation change, and we need it soon, because it’s unaffordable what’s going on.”
Increased numbers of HMOs spark disparities among residents and students
Properties across Durham are converted to cater for a growing student quota. However, the growing number of HMOs has sparked concern among councillors. They fear other key council services could be impacted if the situation does not change.
Local councillor Mark Wilkes told the BBC: “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.” Here, he spoke on plans to consider two HMO planning applications in the Sherburn Road estate.
“The ever-expanding number of HMOs in the Durham City area is of continued concern,” said Cllr David Freeman, Liberal Democrat member for Elvet, Gilesgate and Shincliffe. 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 the city of Durham included a 10 per cent threshold within a 100 metre radius. This is according to the Local Democracy reporting service. But, landlords are expanding their neighbourhood scope into areas like Gilesgate, Belmont and Mount Oswald. This has widened fears due to a perceived accommodation surplus, and its implications on the council’s already wavering budget.
Councillor David Freeman, also of the Liberal Democrats, urged the now Reform UK council (as of May 2025), to relook at the 10 per cent threshold. He suggested it should be reduced to a more “acceptable” 5 per cent, fairly rebalancing the ratio of residents and students.
Housing quality has been overlooked by the council’s plans for expansion, for Durham University’s student union president, Abigail Taylor, via the BBC. And so, a re-evaluation of local authority funding is needed. An ever-expanding student body makes a solution more nuanced, and important than seen before.
