Vail Williams provides expert advice to residential developers in relation to business rates liability on Show Homes within residential development schemes.

Following changes to the business rates system in 1990, the Valuation Office Agency (VOA) now determines whether a property is being used for domestic or business purposes, and therefore whether it is liable for business rates.

Show Homes are completed houses and flats that are usually carpeted and furnished but are used to sell other plots on a development.

They are readily open to viewings by potential purchasers and, once a site is completed, will also then be sold for residential occupation.

Despite their ultimate use as residential dwellings, Show Homes and Flats are considered by the VOA to have a business use, resulting in their entry onto the Rating List.

Business rates are therefore due on Show Homes and often this can represent a significantly higher tax burden for developers than Council Tax.

How much a developer has to pay in business rates on a Show Home is based on a percentage of the sale price, but decapitalised to reflect a market rental value. This can impact budgets – particularly for smaller developers.

In some cases, Show Homes or marketing suites, can be assessed incorrectly by the VOA, either because they are not actually being used to sell the scheme and therefore are not rateable, or the assumed sale price is incorrect resulting in a level of over assessment.

However, few developers are budgeting for this cost and even fewer are challenging the assessments applied to their Show premises – presumably on the grounds of time and cost.

How we help

Vail Williams can support residential developers in mitigating their business rates liability in a variety of ways – from checking whether a Show Home is rateable at all and checking and challenging the valuation of the property, to establishing when it no longer becomes a Show Home and exploring potential claims.

We can also explore the potential to delete a Show Home from the Rating List at an earlier date.

Our services include:
  • Establishing whether a Show Home is rateable at all (bespoke and not being used to sell the scheme and not readily available for viewing).
  • Establishing when it no longer becomes a show home and is simply a house for sale (the last of its type or where there are no other plots available).
  • Exploring the potential to claim something back in business rates
  • Undertaking an independent valuation of the Show Home
  • Addressing factual inaccuracies through Check, Challenge, Appeal

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