Change of use

lincroft1710

anselld said:

Fair enough but not sure what is to gain by wool-pulling in that direction given that FHL on Business rates normally pays nothing whereas residential valuation will create CT liability.  I would have thought most of the wool-pulling was in the other direction, second home owners trying to avoid CT by claiming to be FHL.

This was before small business rates relief

lincroft1710

iane15 said:

If I am interpreting the advice in this thread, unless there were planning consents for change of use, it should not be an issue with the purchase other than we would have to inform the valuation office that the property is reverting residential use once the sale is completed. As there was an original banding for Council Tax before it was a holiday rental, I am assuming is is just a paper exercise to make the change back. 

Thanks to you all for your contributions to this discussion. Hope you all have a Happy Christmas and good New Year.

The VOA may want to inspect the property before making a decision

Brie

I remember hearing about a case where people who ran holiday rentals in a south coast town were told that the council was unwilling to change the designation back to residential as they considered it would not be in the town's interest.  Net result was that the people that owned the building weren't able to sell it and while they were allowed to stop renting it out and could use it themselves they needed to continue paying business tax.  

anselld

Brie said:

I remember hearing about a case where people who ran holiday rentals in a south coast town were told that the council was unwilling to change the designation back to residential as they considered it would not be in the town's interest.  Net result was that the people that owned the building weren't able to sell it and while they were allowed to stop renting it out and could use it themselves they needed to continue paying business tax.  

Story may be possible for something like a Guest House where planning class c1 applies.  However for a normal furnished holiday let there is no planning change of use, it is c3 same as a nomal residence.  Hence the Council are not involved with the decision to remove or reinstate the banding.  The decision is made by the VOA and they will (must) follow the facts as they are in practice.  The VOA have no interest in local politics, they will simply value and band the property as soon as the business use ends in practice.

Indeed, new legislation is tightening this up such that FHLs can only continue to be business rated if they are actually let for at least 70 days in the last year.  The pressure is to remove borderline properties from business rates to residential, not the other way round.

lincroft1710

anselld said:

Brie said:

I remember hearing about a case where people who ran holiday rentals in a south coast town were told that the council was unwilling to change the designation back to residential as they considered it would not be in the town's interest.  Net result was that the people that owned the building weren't able to sell it and while they were allowed to stop renting it out and could use it themselves they needed to continue paying business tax.  

Story may be possible for something like a Guest House where planning class c1 applies.  However for a normal furnished holiday let there is no planning change of use, it is c3 same as a nomal residence.  Hence the Council are not involved with the decision to remove or reinstate the banding.  The decision is made by the VOA and they will (must) follow the facts as they are in practice.  The VOA have no interest in local politics, they will simply value and band the property as soon as the business use ends in practice.

Indeed, new legislation is tightening this up such that FHLs can only continue to be business rated if they are actually let for at least 70 days in the last year.  The pressure is to remove borderline properties from business rates to residential, not the other way round.

As anselld has said VOA will tend to assess what they find rather that what the planning consent says should be. 

p00hsticks

anselld said:

Brie said:

I remember hearing about a case where people who ran holiday rentals in a south coast town were told that the council was unwilling to change the designation back to residential as they considered it would not be in the town's interest.  Net result was that the people that owned the building weren't able to sell it and while they were allowed to stop renting it out and could use it themselves they needed to continue paying business tax.  

Indeed, new legislation is tightening this up such that FHLs can only continue to be business rated if they are actually let for at least 70 days in the last year.

In Wales I believe there are/were proposals to tighten up the rules even further from April next year, such that a property would only qualify for business rates if available to let for at least 252 days a year and actually let for at least 182 of those. They were also talking about giving local authorities the power to charge 300% council tax on second homes.

I'm not sure how much of that has actually made it into legislation at present. 

macman

SusieT said:

I would call the council and ask if it would be a problem to have it reclassified as residential. As a total guess they will be very happy to do that as there are places who would rather have residents than holiday homes. 

It's nothing to do with the council.

user1977

macman said:

SusieT said:

I would call the council and ask if it would be a problem to have it reclassified as residential. As a total guess they will be very happy to do that as there are places who would rather have residents than holiday homes. 

It's nothing to do with the council.

Do we know that? The OP hasn’t yet told us where the property is.

TripleH

My mother had a holiday cottage on the grounds of her old home.

When permission was granted to convert the 2 storey garage into a cottage, the condition was that it could not be sold as a separate property.

If this property has no such conditions connected and was a family home before, I cannot see why it can't again, it might take time, but I would expect the solicitor to ask questions about restrictions as part of their due diligence (although they may need to be steered in this direction).

iane15

Thanks again for all the helpful contributions to this discussion. Our solicitor is now back after the Christmas break and it appears that planning consents were not required. Tax.service.gov.uk shows the property as “deleted” for Council Tax so we will need to get the Valuation Office to revert to its former banding before it became an Airbnb just over 4 years ago. As the adjacent and identical houses are already assessed, this should be straightforward. We will get a “belt and braces” indemnity policy just in case.