This can be already be found on the website under financial assistance – housing improvements but it’s also relevant to empty properties
Funding And Financial Issues
A common barrier to renovating a property for rental or sale is lack of funding.
Below you will find some information on potential funding streams and other financial issues. If you are interested in any of the funding schemes, please contact the Housing team for further information.
Houses To Homes
Houses to Homes loans are available to bring empty homes (min 6 months empty) back into use for sale or rent. The scheme will involve the provision of interest free loans, secured against the empty dwelling and repayable within 5 years. Finance may be used for:
- loans to return a property to use to sell - these loans would have a maximum 2 year repayment period
- loans to return a property to use for full time rent - these loans would have a maximum 5 year repayment period
Funding will be available up front before works start, providing owners with working capital. Loans can be offered to individuals (expected 3 months pay slips), charities (3 years accounts), companies/ businesses (3 years accounts).
There will be a maximum loan amount of £25,000 per unit of accommodation, up to a maximum of £250,000 per applicant. Loans will be secured as first or second charge against the Land Registry Title.
Social Housing Grant
Ceredigion County Council administers Social Housing Grant for selected projects every year. These projects would have to involve the provision of social housing, for example the conversion of a large empty property into a number of rental units. A long lease to the property would be transferred to a registered Social Landlord who would be responsible for the letting of the property to persons on the social housing waiting list.
Leasing Scheme Wales
The Leasing Scheme Wales is a Welsh Government backed pilot scheme which aims to improve access to long-term affordable and good quality housing in the private rented sector. In return for giving up your property, the scheme offers landlords; CCC leases of between 5 and 20 years subject to conditions, a full property management package including repairs and maintenance, guaranteed rental income for the length of the lease, even when the property is not occupied by a tenant, up to £5000, as a grant, to bring properties up to an agreed standard and/or to increase the EPC rating to level C. Additional grant funding of up to £25,000 potentially available for empty properties. The availability of this scheme is largely based on the location and condition of the property. Each application would be considered on an individual basis.
Please view our Leasing Scheme Wales page for further details.
There is an initial 6 month exemption on council tax payments whilst properties may be undergoing sale or renovation after changing hands etc. After the 6 month period is over, the full rate of council tax for the property will be charged.
When the property has been vacant for 12 months, the empty property premium will become due and the Council tax charge will be an extra 25% so it’s important you think about how you can bring the property back into use as early as possible. For more information see the Council Tax pages.
VAT discounts on renovating empty homes
In most cases VAT is payable on the costs of renovating or adapting an empty home for re-use. But there are several circumstances in which VAT on building works is charged at a reduced rate or even zero-rated. If you are intending to renovate an empty home it is important that you understand them, because it is quite common for builders not to know about different VAT rates. This could lead to you being overcharged, and it can be difficult to reclaim overpaid VAT. The full guidance on VAT on building and construction is available from HMRC in HMRC notice 708 if you are employing builders, and HMRC notice 431C if you are carrying out work on a DIY basis.
Reduced rate VAT
If you are using VAT registered builders, and the property has been empty for more than two years before works start, and will be used solely for residential use after the works, the works may be eligible for a reduced rate of VAT (currently 5%). Further details are available on HMRC notice 708. There is no equivalent reduced VAT rate for DIY work.
Zero rate VAT (using builders)
If the property has been empty for more than ten years before works start, and will be used solely for residential use after the works. VAT may be zero-rated. Further details are available on HMRC notice 708.
Zero rate VAT (DIY work)
If you are carrying out the building work yourself, and the property has been empty for more than ten years and will be used solely for residential use after the works, you may be able to recover any VAT you spent on materials. You will need to pay your suppliers the full cost inclusive of full VAT and then reclaim the VAT element from HMRC. Further details are available in HMRC notice 431C.
Proving how long the home has been empty
In all three cases you will need to prove how long the property has been empty. One way of doing this is to ask the council for a letter certifying the length of time the property has been empty from their records. If the council is unable to provide this, you may be able to get proof of how long it has been empty from the electoral roll (this is available at your local council office or main local library, or information on disconnections from utility companies. If you are unable to demonstrate the property has been empty for more than two years, there may be other circumstances in which you can pay reduced VAT. These include installing energy saving materials, approved alterations to a listed building used by a charity, and converting a non-residential building into a home for use by a housing association. Further details on these reductions can be found in HMRC notice 708.
There is also a capital allowance scheme that allows the costs of converting empty spaces above shops into flats to be offset against the profit of the business. None of these tax allowances are widely known, and it is not uncommon for builders to inadvertently charge too high a VAT rate on building works to empty homes. If you are employing builders it is good practice to ensure that you and the builders both understand and agree the correct VAT to be charged before work starts. Your accountant should be able to advise further.
In addition reduced rates of VAT apply to a number of types of building works, such as installing energy saving measures, adapting a building for a disabled person or works to convert a non-residential building into a home. These discounts may apply to works to bring an empty home into use. Further information on these discounts is available from HMRC.