Energy Assessments (EPCs) and holiday lets

As from 1 October new build houses and houses being rented out need to have an Energy Performance Certificate.

Fortunately, it seems that holiday lets do not need to have a certificate, unless they are rented out to the same person for more than 3 months.

There doesn't seem to be an official site stating this but here are 3 assessment firms that think this is the case:

http://www.cdmmuk.co.uk/domestic_energy_performance_certificates.htm

http://dolphin-epc.co.uk/page_1203968258456.html

http://www.energyassessorlincs.co.uk/landlord_epc.htm

If anyone knows an official site that confirms this please post a link in a comment.

Celebs hit Newquay

Who could it be.......Who could it be........

http://www.thisiscornwall.co.uk/homepagenews/Celebrities-resort-map/article-347331-detail/article.html

The excitement is palpable.

Let's just hope they're better than someone starring in Hollyoaks or Casualty. Maybe Johnny Depp popped over whilst tacking a break from filming in Plymouth?

Holiday let - Business Rates or Council Tax?

Many owners are often confused as to whether they should be paying council tax or business rates. The legislative position seems to be that if the property is available to let for more than 140 days in a year then Business Rates should apply.

Luckily, business rates can often work out cheaper than council tax - especially if you qualify for small business rate relief - and you can also apply for a small marketing grant. On the downside, there can be complications with rubbish collection, as you may have to pay for these separately.

Obviously money is key so I would check out the likely Business Rates on your property before talking to the council.

However, getting an idea of what you might pay is problematic. How to calculate the Rateable Value (against which a multiplier - of about 0.45, or 45% - is used to calculate the actual bill) is a bit of a mystery!

As I understand it, the Valuation Office assess an 'open market rental value' eg how much would a businessman want to pay in rent for the property if they were considering taking it on to run as a holiday let business. The Valuation Office therefore look at the likely income the holiday rental will generate less expenses such as marketing costs, furnishing costs and utilities, plus presumably an 'income' for running the business. There is an alternative method used in some areas based on a value per bed space in the property.

Theory is fine but trying to find someone official who can actually explain how a Rateable Value is calculated is another thing entirely! For instance, check out this explanatory description on the Valuation Office website, for use by the assessors. I hope they can make sense of it!

If any one knows how a Rateable Value is actually calculated please post a reply!

The main official information sources are on the Valuation Office website:
http://www.voa.gov.uk/publications/public_fact_sheets/holiday_cottages_guide.html
http://www.voa.gov.uk/publications/public_fact_sheets/self-catering.pdf

There is also a useful post on the Lay My Hat forum - click here.

Official Google Blog: A fresh take on the browser

Official Google Blog: A fresh take on the browser

Holiday lets - a taxing business

If you are buying a holiday home you need to be aware of the tax side of things.

There are some key areas to understand eg

• Capital Gains Tax - potential to reduce your bill when you sell your home, through both Entrepreneurs Relief and by strategically designating your holiday home as your principal private residence for a period
  
• Ability to roll over any capital gain into a subsequent property or business purchase, so as to defer paying the capital gains tax
• VAT - you have to register if your business income exceeds the annual threshold, but this means you can reclaim VAT on items you buy such as agent fees, changeover fees, utility bills etc
• Ability to offset many expenses, including mortgage interest payments, against income before calculating income tax
• Major purchases can be offset against income
  
• Ability to offset any losses on the holiday home against other income to reduce income tax
  
• Potential to carve the property out from inheritance tax

I'm no tax adviser and it can all seem a bit daunting so I thought I'd pull together some useful sites which outline the tax aspects of owning a holiday home for rental.

Be careful - some sites are now out of date on Capital Gains Tax. Taper Relief (which potentially reduced the capital gains rate from 40% to 10% for holiday homes) was done away with in April 2008 and replaced with a flat Capital Gains Tax rate of 18%, levelling the field with homes owned purely as second homes or long term lets. However, holiday homes rented out to the public can take advantage of Entrepreneurs Relief giving a tax rate of just 10% on the first £1m of gains in a lifetime.

Here are a few sources:

• A very good page from DirectGOV - out of date on Taper Relief but good otherwise. Read here.
• A landlordzone article.
• Accountingweb
• Property tax portal
• Holiday Let Mortgage site - has a good update on Entrepreneurs Relief
• An article on holiday lettings and inheritance tax aspects

Hope they help! Please let me know through a comment if you find any other links that might be good to include here.

Develop in the right way and beat the market

"Mortgage approvals fell to their lowest level ever in July of just 33,000 - down 71% on the previous year" according to this Guardian article.

It's tough times and it seems no one is selling. However, I spoke today to a developer of self catering holiday apartments in Newquay who in the last 2 weeks has sold 9 of their remaining 22 units in a 38 unit development, including a £1.2m penthouse. Pretty good going in a dead duck market.

The keys? A great location, an exacting quality standard and competitive pricing. Maybe 'competitive' is stretching it a bit on a £1.2m price tag but it proves quality counts!