Legal definitions and stuff. Additional property

pawlala

Hiya

I am currently looking at a second property to purchase. A house has become available further up my street which I am interested in and I am currently researching the costs involved in buying it as a property not as my main residence; things like SDLT, 2nd home insurance, available mortgages, CGT (for the future) and - specifically perhaps to this thread - the additional costs of council tax. I wonder if anyone has been in a similar situation or had experience with local authorities in such circumstances - I am unsure whether CT premiums (+50% after 2 years) would apply.

A bit of background - it is not my intention to rent the property out (not until the mortgage is paid off at least), so I don't need a BTL mortgage or landlord insurance. The property in the first instance will be used as additional work space ('working from home' - office etc) and space to spread out my hobbies. I love the property I am in at the moment and don't want to upsize and sell.

I am trying to work out whether "unoccupied" and "substantially unfurnished" under LGFA 2012 would apply to me. I can't seem to find concrete definitions of these two that would be relevant to my circumstances. What I do know is that the property has white goods integrated and will be left - fridge, dishwasher, cooker/oven, washing machine, wardrobes and bed frame. Curtains present to all windows. I would be adding office furniture, tables chairs. I suspect I would be accessing and using the property for work/hobby activities on a regular basis. It would most likely not be accessed every day though.

I haven't bothered my LA with any direct questions and 'what ifs' as this is far from reality at the moment. I fancied an opinion from you lovely people first

Cheers

PL

Hoploz

Council tax discounts or premiums may count if a property is unoccupied, but yours would not be as you intend to use it.

It may not have a bed but it will have the other furniture you mention - not unfurnished.

Therefore it will be a second home and you will be liable for council tax.

However, have you considered that as you will be using it for business purposes there may be business rates instead? Not to mention planning permission for change of use.

Kynthia

My place didn't qualify even though temporarily no one was using it and there was virtually no furniture in it and certainly not enough for someone to use the place. It is also usually a temporary status. Your place will be used, even if it isn't someone's home, and will have items in there so I would expect council tax to be due.

pawlala

Hoploz wrote: »

However, have you considered that as you will be using it for business purposes there may be business rates instead? Not to mention planning permission for change of use.

Thanks. My main work activity (I am not a business owner, I'm an employee) is not working at home, but I do have days when I work from home rather than the office. Does this change the circumstance? I would be no more working from home from the second property than I would be currently in my main residence.

Plus, none of the following apply:

your property is part business and part domestic, eg if you live above your shop
you sell goods or services to people who visit your property
you employ other people to work at your property
you’ve made changes to your home for your business, eg converted a garage to a hairdresser’s

Taken from https://www.gov.uk/introduction-to-business-rates/working-at-home

Hoploz

But it isn't your home as you live somewhere else??? It's one or the other. A second home, or premises you work from.

CIS

If the property is unoccupied and it's substantially unfurnished for 2 or more years then the (up to) 50% premium will apply.

Furnished/unfurnished is not defined in legislation - surprisingly there's not been a major case or tribunal hearing to give good guidance on the matter.

Generally speaking though most authorities will treat fixed white goods as fixtures rather than 'furniture' for the question of whether the property is furnished or not. If a property has enough furniture to 'look' furnished it probably is but it depends on how willing your local authority is to make a fight out of it.

Craig

CIS

pawlala wrote: »

Thanks. My main work activity (I am not a business owner, I'm an employee) is not working at home, but I do have days when I work from home rather than the office. Does this change the circumstance? I would be no more working from home from the second property than I would be currently in my main residence.

Plus, none of the following apply:

your property is part business and part domestic, eg if you live above your shop
you sell goods or services to people who visit your property
you employ other people to work at your property
you’ve made changes to your home for your business, eg converted a garage to a hairdresser’s

Taken from https://www.gov.uk/introduction-to-business-rates/working-at-home

Using it only for business use rather than residential with de minimis business use may well trigger the Valuation Office to look at business rates. The Valuation Office would be the only ones who could clarify exactly where their threshold will apply.

Craig

CIS

I should also add to clarify.

Unoccupied means a property in which no one lives- using the property as an office would not be living in the property. Generally a person 'lives' in a property only if it is their 'sole or main residence' but again it's not a fully defined area.

Craig

pawlala

Thanks for the help. Maybe I should reassess whether it is used for any work activity. At this rate it'll just end up being for hobbies and extra storage! And investment in bricks and mortar of course

G_M

Insurance woul need careful evaluation too.

Unoccupied generally at night. Not main residence. It's likely to need a 2nd home policy I'd guess, but best to explain the precise circumstances to a broker to get advice.

Pointless to have insurance, only for a claim to be rejected if theres a fire.......

CIS

pawlala wrote: »

Thanks for the help. Maybe I should reassess whether it is used for any work activity. At this rate it'll just end up being for hobbies and extra storage! And investment in bricks and mortar of course

If you give the VOA a quick call (even if anonymous) they can advise you generally about whether they'd want to look at the business rates side or not.

Craig