Holiday accommodation (self-catering)
Source: gov.uk (2025-04-28)

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

This section covers self-catering holiday accommodation. Units of self-catering accommodation may be rateable as non-domestic property in the occupation of the business that is running the enterprise. They will be composite if there is long-term accommodation within the curtilage (like a caretaker’s or owner’s flat).

To be non-domestic property, it will have to be made available on a commercial basis for not less than 140 days in accordance with paragraph 5 below. Second homes, which are let occasionally, will not therefore be non-domestic property, but will be banded for Council Tax.

Since 2010 the requirements in Wales are more detailed and are contained in The Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2010 which amends s.66 LGFA 1988 for Wales. See paragraph 5 below.

2. List description and special category code

Primary Description Code - CH1

List Description - Holiday Homes (Self-Catering)

Special Category Code 131 G should be used.

3. Responsible teams

This is a Generalist class of property, to be valued by Generalist valuers in each unit.

4. Co-ordination

The Class Co-ordination Team has overall responsibility for the co-ordination of this class. Contact details are in VP and CCT Members . The team is responsible for approach, accuracy and consistency of valuations. The team will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. Caseworkers and referencers have a responsibility to:

follow the advice given at all times

not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team

seek advice from the co-ordination team before starting any new work

4.1. Interface with Other Classes

Some self-catering holiday accommodation, especially those units in larger complexes, are physically similar to units in chalet parks and timeshare complexes (particularly the latter). There will also be an interface with caravan parks at the bottom end of the market.

Self-catering accommodation, at the very top end of the market, is likely to be on a par with similar time-share accommodation and the interface needs to be maintained between these two sectors.

There are examples of identical units within the same complex being occupied variously as timeshare and self-catering accommodation. The rateable occupier may or may not be the same person and problems have occurred in previous rating lists in such cases when different levels of assessment have been applied to similar units within the same complex.

Caravan parks and chalet parks are valued by Valuers within the Units (who are generally known as the ‘Caravan Specialists’). The National Valuation Unit is responsible for timeshare complexes. Whilst it is anticipated that the recommended valuation scheme will not cause anomalies with these other types of holiday accommodation, valuers should nevertheless be aware of the problems that could arise at this interface.

To ensure a consistent approach –

Outside London - self-catering complexes of more than 10 units, together with any cases of difficulty, should be discussed with the Unit Caravan Specialist who may wish to assume responsibility for the valuation.

In London there may be an interface with hotels and any such complexes should be discussed with the relevant Hotel Valuer in the Unit or Unit Valuation.

5. Legal Framework

5.1 Statutory Background

Rateability

Self-catering accommodation which is let commercially will be rateable under Section 66(2B) or (2BB) of the LGFA 1988, as amended. In order to be rateable under this sub-section, in England, the accommodation must be:-

(2B) A building or self-contained part of a building is not domestic property if -

(a) The relevant person intends that, in the year beginning with the end of the day in relation to which the question is being considered, the whole of the building or self-contained part will be available for letting commercially, as self-catering accommodation, for short periods totalling 140 days or more, and

(b) On that day his interest in the building or part is such as to enable him to let it for such periods

The relevant valuation provisions are contained in Schedule 6 to the LGFA 1988, as amended by Schedule 5 paragraph 38(4) to the Local Government and Housing Act 1989. It is this amendment that provides for the value to be that which would “reasonably be attributable to the non-domestic use” that allows for the adoption of notional rather than actual patterns of use, where appropriate, when valuing composite hereditaments. It should be noted that, notwithstanding the daily liability that accrues under the provisions of the Act, this amendment allows for the implementation of an arrangement which is from year to year.

Until June 2000 the recommended approach in the Rating Manual had been that availability was indicated by the letting season for which such accommodation was advertised. For example, if a property was advertised with a season from January to December it was treated as available for more than 140 days.

In the Lands Tribunal case of Godfrey v Simm (VO) it was decided that the period for which the operator intended to accept bookings determines the availability of the property. It is therefore now open to an operator to advertise a property as “available” from January to December but if the operator has made a conscious decision not to accept bookings within that period for a total of more than 139 days, the property will not be a non-domestic hereditament and must be entered in the Council Tax Valuation List instead. Before agreeing to delete an existing rating list (entry or deciding not to make a new entry, Valuers should expect to see some evidence that a conscious decision has been made to limit the bookings accepted. For example, Mr Godfrey was able to demonstrate that he had operated at, or just below, the 139-day limit for many years and had occasionally declined bookings that would have taken him over this limit. (Advertising material and proof of letting restrictions should be sought).

Property will be domestic and therefore not rateable whenever it is occupied as a sole or main residence (s.66(2D)). This will be the case regardless of the length of that occupation and notwithstanding any intention to make the accommodation available within the terms of s.66(2B).

5.2 Wales from 1st April 2010 to 31st March 2016

The Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2010 amends section 66 of the Local Government Finance Act 1988 so that in Wales - from 1 April 2010 for a furnished property to be assessed for non-domestic rating purposes as opposed to council tax it must meet the following conditions:

(2BB) A building or self-contained part of a building is not domestic property if each of the following paragraphs apply in relation to it-

(a) the relevant person intends that, in the year beginning with the end of the day in relation to which the question is being considered, the whole of the building or self-contained part will be available for letting commercially, as self-catering accommodation, for short periods totalling 140 days or more;

(b) on that day the relevant person’s interest in the building or part is such as to enable the person to let it for such periods;

(c) the whole of the building or self-contained part of the building was available for letting commercially, as self-catering accommodation, for short periods totalling 140 days or more in the year prior to the year beginning with end of the day in relation to which the question referred to in paragraph (a) is being considered;

(d) the short periods it was so let amounted in total to at least 70 days.

The approach therefore is similar to the existing approach adopted in England up to the 31^st^ March 2023, but with the additional requirement to consider both the 12 months prior to assessment and the periods for which the premises are let total at least 70 days.

5.3 Purpose of approach in Wales from 1st April 2016 to 31st March 2023

The Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2016 amends section 66 of the Local Government Finance Act 1988 so that in Wales - from 1 April 2016 for a furnished property to be assessed for non-domestic rating purposes as opposed to council tax it must meet the following conditions:

(2BB) A building or self-contained part of a building is not domestic property if each of the following paragraphs apply in relation to it-

(a) the relevant person intends that, in the year beginning with the end of the day in relation to which the question is being considered, the whole of the building or self-contained part will be available for letting commercially, as self-catering accommodation, for short periods totalling 140 days or more;

(b) on that day the relevant person’s interest in the building or part is such as to enable the person to let it for such periods;

(c) the whole of the building or self-contained part of the building was available for letting commercially, as self-catering accommodation, for short periods totalling 140 days or more in the year prior to the year beginning with end of the day in relation to which the question referred to in paragraph (a) is being considered;

(d) the short periods for which it was so let -

(i) amounted in total to at least 70 days; or

(ii) taken together with the short periods for which one or more other buildings or self-contained parts of a building so let, amounted to an average of at least 70 days for each building or self-contained part of a building included within the calculation; where each building or self-contained part of the building included in the calculation-

(aa) is not included in another calculation under this sub-paragraph for the year in relation to which the question is being considered,

(bb) is situated at the same location or in a very close proximity to all of the other buildings or self-contained parts of a building included in the calculation, and

(cc) is so let as part of the same business or connected businesses.

The amendment was brought in to address the issue of complexes of accommodation where each unit of accommodation had to satisfy the 70 day occupancy requirement. This order allows the rateable occupier to average the occupancy with another unit in the complex; however these units can not be used in a further calculation. For example, buildings A, B and C, are let at the same location (and the remainder of the section 66(2BB) has been complied with). Building A is let for 95 days and buildings B & C are let for 45 days each. Building A may be included in a calculation under section 66(2BB)(d)(ii) with either building B or C. The combined days let of buildings A and B, or A and C is 140 days, resulting in an average of 70 days, meaning that in either case, both buildings are not domestic property. The remaining building (not included in the calculation) does not fulfil the conditions and is therefore domestic property. If building A is included in a calculation with building B, building A cannot then be included in a calculation with building C.

5.4 England from 1st April 2023

The Non-Domestic Rating (Definition of Domestic Property) (England) Order 2022 amends section 66 of the Local Government Finance Act 1988 so that in England - from 1 April 2023 for a furnished property to be assessed for non-domestic rating purposes as opposed to council tax it must meet the following conditions:

“(2B) A building or self-contained part of a building is not domestic property if-

(a) the relevant person intends that, in the year beginning with the end of the day in relation to which the question is being considered, the whole of the building or self-contained part will be available for letting commercially, as self-catering accommodation, for short periods totalling 140 days or more,

(b) on that day his interest in the building or part is such as to enable him to let it for such periods-

(c) the whole of the building or self-contained part of the building was available for letting commercially, as self-catering accommodation, for short periods totalling 140 days or more in the year prior to the year beginning with the end of the day in relation to which the question referred to in paragraph (a) is being considered, and

(d) the short periods for which it was so let amounted in total to at least 70 days.”

The amendment now means each property must satisfy the 70-day occupancy requirement. This also applies to every unit of accommodation in a complex of property.

5.5 Wales from 1st April 2023

The Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2022 amends section 66 of the Local Government Finance Act 1988 so that in Wales - from 1 April 2023 for a furnished property to be assessed for non-domestic rating purposes as opposed to council tax it must meet the following conditions:

(2BB) A building or self-contained part of a building is not domestic property if each of the following paragraphs apply in relation to it-

(a) the relevant person intends that, in the year beginning with the end of the day in relation to which the question is being considered, the whole of the building or self-contained part will be available for letting commercially, as self-catering accommodation, for short periods totalling 252 days or more;

(b) on that day the relevant person’s interest in the building or part is such as to enable the person to let it for such periods;

(c) the whole of the building or self-contained part of the building was available for letting commercially, as self-catering accommodation, for short periods totalling 252 days or more in the year prior to the year beginning with end of the day in relation to which the question referred to in paragraph (a) is being considered;

(d) the short periods for which it was so let-

(iii) amounted in total to at least 182 days; or

(iv) taken together with the short periods for which one or more other buildings or self-contained parts of a building so let, amounted to an average 182 days for each building or self-contained part of a building included within the calculation; where each building or self-contained part of the building included in the calculation-

(aa) is not included in another calculation under this sub-paragraph for the year in relation to which the question is being considered.

(bb) is situated at the same location or in a very close proximity to all of the other buildings or self-contained parts of a building included in the calculation, and

(cc) is so let as part of the same business or connected businesses.

The order has increased the requirement of availability from 140 days to 252 days and occupancy from 70 days to 182 days.

5.6 Purpose of approach England & Wales

The object of the legislation was to close what was seen as a potential loophole whereby owners of properties that are predominately unoccupied, used as second homes, or occupied for most of the time by the owner, can effectively reduce the tax liability on their properties by becoming liable to pay non-domestic rates instead of council tax. This could happen by declaring that a property is available for let for short periods totalling at least 140 days in a year, but making little or no realistic effort to actually do so, by, for example, not actively marketing the property, asking for unrealistic rents, or restricting the dates that the property is actually available to let.

The non-domestic liability for a property may be less than its council tax liability especially as the majority of self-catering hereditaments fall under small business rates relief. The current threshold in Wales is £6,000 and in England is £12,000, with any hereditaments falling below this having 100% relief if the occupier holds no other non-domestic properties.

5.7 Practical application from 1st April 2023

Where an existing domestic property currently assessed to CT is to be considered for assessment as self-catering holiday accommodation, an inspection should be made (unless current information is considered sufficient), and full details of the property should be obtained including letting tariffs, relevant grading e.g. AA or Visit Wales , whether let through an agency and the current level of bookings.

If at the relevant date the property has been commercially let for (70 days England) (182 days Wales) and has been available for such letting for at least (140 days England) (252 days Wales) and is available for such letting for (140 days England) (252 Wales) in the next 12 months, and the required information has been supplied to verify this - then it may be brought immediately into the rating list. The date of this alteration will be the date when the provisions of s66 subsection 2B or 2BB, as appropriate, were first satisfied by the current ratepayer. If these conditions are still to be met, the occupier should be informed that, until such time as the property fulfils the provisions of s66 subsection 2B or 2BB of LGFA 1988 at the relevant date (i.e. it has been commercially let for a total of (70 days England) (Wales 182 days) and has been available for letting (140 days England) (252 days Wales) , it cannot be entered into the rating list and needs to remain in the Council Tax valuation list. Only when the required conditions have been met will the property fall to be assessed for Non-Domestic Rating purposes from the day on which it first met the provisions of s66(2B) or (2BB) with the entry for this property in the Council Tax list deleted from the same date.

5.8 Lettings for Short Periods

Section 66(2B) refers to the availability of the relevant accommodation for letting commercially for short periods totalling (140 days England, 252 days Wales) or more. There is no definition in either Act or Order of what comprises a short period.

Although ultimately a matter to be resolved by the Courts, VOs should assume that letting “for short periods” means letting for periods of a 28 days or less, to different individuals on each occasion. Otherwise, for example, a letting to persons working away from their sole or main residence on a semi-permanent basis, could become rateable where, perhaps, there was a monthly tenancy that had lasted for as long as 3 years.

The interpretation that we are adopting means that a property could still be rated when it is the subject of a periodic letting (of a month or less), provided the tenants change frequently, and provided that the property is not their sole or main residence.

5.9 Lettings to Students

There are further complications when there is occupation by students at some time during the year. Such lettings are unlikely to be for short periods and so there must be availability for short lettings for 140 days or more to tenants other than students (i.e. outside term time) for the property to be non-domestic. Under the Community Charge Legislation (s.2(5A) LGFA 1988) student accommodation was deemed to be the student’s sole or main residence both during and outside term time. But there were special provisions (s.66(2D) LGFA 1988) which enabled such property to be treated as non-domestic outside term time if it was available for short term lettings for 140 days England, 252 days Wales, or more.

Although these deeming provisions have been repealed by the Local Government Finance Act 1992, it is still arguable that the student accommodation is the student’s sole or main residence during term time. Requests to delete such accommodation from the Rating List should be acceded to, and the property should be entered in the Council Tax Valuation List instead.

5.10 Homes of Foreign Nationals

For the avoidance of doubt, UK homes of foreign nationals will be domestic property because they will not be lettings for short periods as defined in paragraph 5.1 above.

5.11 Other Types of Self-Catering Accommodation

In addition to short stay commercial self-catering usage as already described, there are a number of other types of self-catering holiday accommodation which may be rateable under Section 66(2) LGFA 1988. These include:-

Hostels (such as those run by the Youth Hostels Associations).

Holiday Cottages run on a non-commercial basis (such as those used by mountaineering or cycling clubs, or by charitable organisation).

Holiday Flatlets providing accommodation which is not self-contained. (It is envisaged that the same broad valuation approach will apply to these as to self-contained holiday flats which are in one rateable occupation).

If such properties do not conform to the definition of “self-contained self-catering accommodation provided commercially”, the 140-day England, 252 day Wales, test in Section 66(2B) LGFA 1988 will not be applicable. For them to be rateable, they merely need to be wholly or mainly used in the course of a business for the provision of short-stay accommodation to individuals whose sole or main residence is elsewhere (s.66(2)(a) LGFA 1988).

6. Survey Requirements

Number of Single Bed Spaces (SBS) - In calculating bed spaces, double and twin rooms will count as two SBSs and a single room as one. A bunk bed occupying a single size room will count as one space. A bunk squeezed into a double room to form a ‘family’ room should be ignored, as should ‘put-you-ups’. With regard to flats with no separate bedrooms, where there is a ‘bed-settee’ in the living area then this should be included as a single bed space.

Self-contained holiday accommodation is likely to be drawn to the VO’s attention from a number of sources.

Tourist handbooks and guidebooks are an obvious source of useful information; newspapers and magazine advertisements another; local information will be important.

7. Survey Capture

Rating surveys for singles and complexes up to 4 units should be captured on the Rating Support Application (RSA). In all cases plans and surveys should be stored in the property folder of the Electronic Document Records Management (EDRM) system.

8. Valuation Approach

8.1 Rental Basis

Form of return (FOR) VO 6048 is specifically for self-catering accommodation. Details of rent, gross receipts and tariff are requested. Very few self-catering units are let on an open market rental basis. Consequently it is not normally possible to establish a scheme based solely on rental evidence.

8.2 Receipts & Expenditure Basis

As the largest body of evidence is likely to be in the form of gross receipts, schemes of valuation should be derived from an analysis of a cross-section of accounts information.

It is important when looking at accounts to ensure that properties are let to their full commercial potential, as there can be a variety of reasons for owning a single property for letting, which do not apply to multiple properties, e.g. a holiday home for own use, a legacy, potential retirement home etc.

Complexes (5 units and above) will almost invariably be let commercially.

When analysing accounts for complexes of self-catering units, and single properties where it can be identified that these are being commercially let, the following approach to analysis is recommended:

a. Income should be assumed as being gross, inclusive of commission, which normally varies between 20 and 25%.

b. Tenants share should normally be taken at 50%, (up to 55% where there is an exceptional standard of equipment).

The analysis of accounts of self-catering units that are wholly commercial should be expressed as percentage of gross receipts before deduction of commission. The actual percentage will be determined by the relativity between the income achieved and the costs incurred in achieving it. For instance if two properties produce the same income but one generates this purely through location and has limited expenditure the % of receipts will be higher than one in a poorer location with significant overheads. The outcome should also be back analysed in terms of a price per Single Bed Space (SBS).

8.2.1 Use of Gross Receipts

It is important to use this information correctly. For example, two similar properties could have significantly different levels of gross receipts due to one having a higher standard of non-rateable items and/or a different quality of service provided by the owners. Similarly, one owner may adopt a more vigorous marketing campaign than another and, as a result, achieve higher gross receipts.

Gross receipts generated by a property should not be used in isolation as an incorrect assessment may result. Regard must also be had to the general levels of fair maintainable trade achieved by similar properties in the area.

8.2.2 Tariffs

When provided, or where it can be identified in a brochure, tariff information for a unit can be a useful supplement to basic gross receipts information. Only peak season tariffs should be compared, as off peak tariffs are likely to vary more considerably. The description of facilities and amenities provided in respect of a particular property will help identify non-rateable elements. However, tariffs must be treated with some caution because they may not represent the actual payment nor give an indication or explanation of volumes. Therefore, a tariff rate in isolation may be misleading, as it does not give an indication of occupancy levels.

8.3 Valuation Evidence

Self-catering units up to 4 - Discussions with letting agents have demonstrated that the preferred unit of valuation and comparison for holiday lettings of self-catering accommodation is the single bed space (SBS). Accordingly, it is recommended that a SBS per Beacon type should be adopted as the primary means of comparison for single properties and complexes up to 4 units. Following receipts & expenditure analysis of a representative cross-section of properties, each Unit should compile a grid providing the price per SBS for each category of self-catering unit.

Self-catering complexes - 5 units and above - Sample analysis should be undertaken across the country using full R&E to inform the percentage to be applied to Gross Receipts.

Reference should be made to the relevant Practice Note for further guidance.

8.4 Monitoring Changes

Where properties move from rating to Council Tax because they are occupied by students or otherwise as sole or main residences during the winter months, it will be necessary to monitor those hereditaments during the holiday season so that they can be brought into rating when the sole or main residency ceases (providing of course there is still an intention to let as short stay accommodation for 140 days or more). Valuation Officers will need to maintain check lists for this purpose.

9. Valuation Support

Rating Support Application (RSA) for Single Self Catering Units up to 4

Complexes of 5 units and above will be valued on spreadsheets

Survaid

Class Co-ordination Team

Practice note 1: 2023 - holiday accommodation (self-catering)

1. Market appraisal

1.1 The sharp rise in house prices between 2000 and 2008 encouraged many people to purchase second homes. In view of the tax advantages many of those properties entered the self-catering market. Often the properties were not being run as viable commercial businesses, their aim being simply to assist in meeting overheads.

1.2 By 2010 the demand for second homes arising from the increase in house prices had come to an end and more owners were focused on mitigating expenses during a recessionary period. This translated in some further increase in the supply of holiday lettings. The changes introduced to the furnished holiday letting national taxation regime by the 2011 Finance Act was a further contributory factor to the supply chain because of the increase in the minimum period over which a qualifying property must be available for letting in the relevant period from 140 days to 210 days in a year with effect from April 2012. The minimum period over which a qualifying property is actually let in the relevant period increased from 70 days to 105 days in a year. Thus from a taxation perspective, both these changes mean properties must be let for longer periods than previously for second home owners to qualify for valuable tax advantages.

1.3 Since 2015 the holiday accommodation industry generally has experienced favourable market conditions. Exchange rate movements have made the (UK) a cheaper destination for travellers from Europe and the USA in particular, whilst at the same time making foreign holidays more expensive for UK residents. Industry reports indicate that turnover was increasing at 8% per annum between 2017 to 2019 prior to COVID.

1.4 The continued growth in the ‘sharing economy’ has been significant. The increased use of such peer to peer websites since 2015 and their impact on self-catering trade will be reflected in receipts information collected for the revaluation and is a factor to be reflected as at the AVD.

1.5 The sharing economy also appears to have affected the traditional letting periods for self-catering. Many establishments now advertise long weekends or short breaks during the week as opposed to the traditional weeks letting.

1.6 Following legislative changes made by Department for Education in September 2013, head teachers in England have no longer had the discretion to approve absences of up to 10 days a year for family holidays in “special circumstances”. This has changed the behaviour of families in England and Wales with initially holiday operators losing trade in the periods outside of school holidays. However the market appears to have responded and peak season tariffs have increased to follow the market and mitigate losses.

1.7 The Covid-19 pandemic had a major impact on self catering in the period leading up to the AVD (1 April 2021). Details of the various restrictions implemented by the statute in response to the pandemic, and of the vaccination rollout, can be found online. In February 2021 the UK Government published its Roadmap out for England which set out four steps to relax restrictions. Step 1, easing restrictions on outdoor gatherings, had already taken place by the AVD.

The later three stages of the Roadmap for England included:
- the opening of outdoor hospitality, and non-essential retail (Step 2, no earlier than 12 April)
- most legal restrictions on meeting others outdoors to be lifted, opening of indoor entertainment venues such as cinemas, casinos and bingo halls (Step 3, no earlier than 17 May 2021)
- the removal of remaining restrictions on social contact (Step 4, no earlier than 21 June)
Subsequent to 1 April 2021 steps 2 and 3 took place as planned, but Step 4 was delayed four weeks to 19 July.

The situation in Wales, both leading up to and after the AVD, was similar although not identical.

1.8 Specific locations where supply remains limited continue to achieve good returns. With consumers generally demanding better quality self-catering accommodation, properties at the upper end of the market, and in better locations, do relatively better than basic units with fewer or poorer facilities. The internet is continuing to drive up quality with many prospective guests able to compare and contrast holiday accommodation on street view and other sites.

1.9 The increasing use of online platforms has necessitated operators building strong customer relationships and encouraging guests to leave online reviews.

1.10 Growth is expected to be strong over the next 5 years with market reports suggesting at AVD growth of 19% per annum up to 2025/2026.

1.11 Following the pandemic there has been a greater demand for staying in self catering units as opposed to holiday villages.

1.12 There has been an increase in demand for environmentally conscious tourism with many guests seeking vehicle charging points and customer interest in the environmental credentials of the prospective site.

2. Changes from last practice note

2.1 There are no changes from the broad principles followed for the 2017 rating list. The approach therefore remains the same

2.2 Since the last practice note there have been amendments to Section 66(2B) and (2BB) of the LGFA 1988 which concerns when self-catering should be treated as non- domestic. The Non-Domestic Rating (Definition of Domestic Property) (England) Order 2022 and The Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2022 have amended the criteria on the availability and occupancy tests. Please refer to section 480: Holiday Accommodation (Self Catering) subsection 5 Legal Framework.

3. Ratepayer discussions

3.1 For the 2023 Revaluation the VOA has had discussions with representatives of the self-catering industries in England.

4. Valuation scheme

4.1 Self-catering single units and complexes up to 4 units

4.2 Location and quality - It is self-evident that both location and quality (to reflect all advantages/disadvantages associated with the property) play an important part in arriving at the value of a self-catering unit. Accordingly it is important that valuations reflect both location and quality in every instance. Notwithstanding the wide variety of property types within the self-catering market it is considered that four main levels (with appropriate adjustments for quality and location) will normally be adequate.

4.3 Number of single bed spaces - Local evidence will determine how quantity affects value, but experience shows that the standard size of a unit in most locations will be between four and six single bed spaces (SBS).

4.4 Valuation scales - Values of SBS should be derived from the evidence obtained from analysis of accounts and receipts of commercially run self-catering hereditaments. A detailed explanation as to the correct approach when carrying out a Receipts and Expenditure valuation is contained in section 4 part 2 of Rating Manual (https://www.gov.uk/guidance/rating-manual-section-4-valuation-methods/part-2-the-receipts-and-expenditure-method).

4.5 Rental values should be arrived at and then devalued in terms of SBS. As the SBS scales will be derived from full accounts and comparing properties of a similar type, it is anticipated that anomalies will be minimised.

4.6 The values of SBSs for 2021 should be incorporated within the following scales:

5. Self-catering holiday homes (Up to 4 units)

5.1 Location

5.2 Category 1

Will be recognised as a prime location, being a highly sought after area or ‘hot spot’ for self-catering. It may have tourist attractions and areas of outstanding natural beauty, seaside or historic market towns and cities. Properties in a prime location will command very high tariffs and have very high occupancy levels, even at off-peak times.

5.3 Category 2

This is the type of location in which the majority of self-catering properties will be situated and may be described as good. It will offer a wide range of popular and well established amenities and may be near tourist attractions and areas of natural beauty. Vacancy rates will be low at ‘peak’ times.

5.4 Category 3

These locations will usually be further away from tourist attractions and amenities. Tariffs will be lower than prime and good locations and generally properties will be slightly harder to let.

5.5 Category 4

By their nature this type of location will usually have a low number of self-catering properties. The location may have close proximity to non-residential buildings or have other inherent factors which impact on its appeal. In these locations properties will be difficult to let, have low tariffs and achieve low numbers of lets.

5.6 Care must be taken by valuers not just to ‘rank’ their self-catering properties within their area into four categories but to decide whether a particular location is actually 1, 2, 3 or 4. For example, some Units may not have any Category 1 locations and the majority of their properties may be in Category 2.

6. Quality

In order to define the quality a judgement must be made based on the physical attributes of the property in accord with the definitions below:

6.1 Category A

High quality modern or modernised properties significantly above average attractiveness/value for the type/location. The property may be detached, offer parking, additional bathrooms, additional reception rooms, very well maintained gardens and facilities significantly above standard accommodation. A comparatively high level of investment in maintaining and presenting the property will be required to achieve maximum tariffs.

6.2 Category B

Most properties will fit into this category, which may be described as ‘standard’. These properties will have the typical range of facilities for a self-catering property, without the distinguishing features of Category A. They will usually have central heating and double glazing and a reasonable quality kitchen and bathroom.

6.3 Category C

These are basic properties below ‘standard’ quality. There will be a low level of investment in maintaining and presenting the property. Room sizes will typically be smaller, with shared facilities. There will be a lack of all standard facilities such as heating, double glazing and an absence of any modernisation. Very few properties will meet the criteria of this category.

7. Non-standard single units

7.1 These will be looked at on an individual basis as they will fall outside of the expected values on the national schemes.

8. Self-catering complexes (5 units and above)

8.1 The larger complexes, those with more than 4 units, should be compared in terms of a percentage of gross receipts. As a general rule complexes will be more efficient to operate than single units, although this will be greatly affected by the voids encountered. The costs of providing additional facilities must also be reflected when making any comparison.

8.2 The method of valuation for multiple self-catering units will follow the general principle set out by the singles. The major difference is that location will not be used as a factor as this will already be apparent in the fair maintainable trade; the defining factor will be quality. The same quality indicators will exist for both units up to 4 and complexes. The choice of category is driven by the quality of the accommodation and the appropriate percentage should be adopted after the three categories have been considered.

9. Quality

9.1 Category A

High quality modern or modernised units significantly above average attractiveness/value for the type/location. The units will usually be detached, have high quality facilities significantly above standard accommodation - key indicators include - swimming pools, tennis courts, games room, sauna, hot tubs and animal petting. A comparatively high level of investment in maintaining and presenting the property will be required to achieve maximum tariffs.

9.2 Category B

The default category should be described as ‘standard’. These properties will have the typical range of facilities for a self-catering property, without the distinguishing features of Category A. They will usually have central heating and double glazing and a reasonable quality kitchen and bathroom.

9.3 Category C

These are basic properties below ‘standard’ quality. There will be a low level of investment in maintaining and presenting the property. Room sizes will typically be smaller, sometimes with shared facilities. There will be a lack of all standard facilities such as heating, double glazing and an absence of any modernisation. Very few properties will meet the criteria of this category.

9.4 Typical percentage to be applied to each category derived from accounts analysis:

9.5 This practice note should enable all self-catering units to be valued, however in exceptional circumstances a full RandE approach is not precluded. Any such cases should be referred to the class coordination team (CCT) for guidance.

10. Other considerations

10.1 For some of the larger self-catering complexes there may be some crossover with other classes such as Caravans and Chalet Parks - please see the guidance concerning co-ordination in the main Self-Catering Section in the Rating Manual - (Para 4.1).

11. Source data

11.1 Details of the supporting RandE analysis are available from the CCT should this be necessary prior to any Valuation Tribunal or Upper Tribunal hearings.

Practice note: 2017 - holiday accommodation (self-catering)

1. Market appraisal

By way of background, the sharp rise in house prices between 2000 and 2008 encouraged many people to purchase second homes. In view of the tax advantages many of those properties entered the self-catering market. Often the properties were not being run as viable commercial businesses, the aim being simply to assist in meeting overheads.

By 2010 the demand for second homes arising from the increase in house prices had come to an end and more owners were focussed on mitigating expenses during a recessionary period. This translated in some further increase in the supply of holiday lettings. The changes introduced to the Furnished Holiday Letting national taxation regime by the 2011 Finance Act was a further contributory factor to the supply chain because of the increase in the minimum period over which a qualifying property must be available for letting in the relevant period from 140 days to 210 days in a year with effect from April 2012. The minimum period over which a qualifying property is actually let in the relevant period increased from 70 days to 105 days in a year. Thus from a taxation perspective, both these changes mean properties must be let for longer periods than previously for second home owners to qualify for valuable tax advantages.

During the past two years the strengthening pound has dampened demand for UK holidays as overseas holidays have become relatively less expensive.

The consequential increase in supply and fall in demand has resulted in downward pressure on achieved rates particularly for poorer locations during the off-peak season. It is not uncommon for holiday letting agents to offer discounts of up to 25% against the tariff price to produce an income flow. Therefore, some caution must be exercised when considering tariff rates as a comparator.

Self-catering accommodation was most popular for those visiting the seaside or the countryside, where it accounted for 33% and 35% respectively of trips by region. Those visiting large cities were least likely to stay in holiday rentals.

In some instances this has meant that income since the last AVD has not kept pace with increased overheads. The profitability of such units has therefore diminished.

Specific locations where supply remains limited continue to achieve good returns. With consumers generally demanding better quality self-catering accommodation, properties at the upper end of the market, and in better locations, do relatively better than basic units with fewer or poorer facilities

2. Changes from last Practice Note

There have been discussions with the industry which have involved changes to consolidate the basis for both singles and multiples into two national schemes of valuation. Self-catering units up to 4 will continue to be analysed on a price per single bed space, complexes (5 units and over) to be valued using a percentage of gross receipts.

3. Ratepayer Discussions

For the 2017 Revaluation the VOA has worked closely with the English Self-Catering industry to develop schemes of valuation that can be more easily understood by the ratepayer.

4. Valuation Scheme

4.1 Self-Catering Single units & Complexes up to 4 units

4.1.1 Location and Quality - It is self-evident that both location and quality (to reflect all advantages/disadvantages associated with the property) play an important part in arriving at the value of a self-catering unit. Accordingly it is important that valuations reflect both location and quality in every instance. Notwithstanding the wide variety of property types within the self-catering market it is considered that four main levels (with appropriate adjustments for quality and location) will normally be adequate.

4.1.2 Number of Single Bed Spaces - Local evidence will determine how quantity affects value, but experience shows that the standard size of a unit in most locations will be between four and six single bed spaces.

4.1.3 Valuation Scales - Values of SBS should be derived from the evidence obtained from analysis of accounts and receipts of commercially run self-catering hereditaments. A detailed explanation as to the correct approach when carrying out a Receipts and Expenditure valuation is contained in Section 4 Part 2 of Rating Manual (https://www.gov.uk/guidance/rating-manual-section-4-valuation-methods/part-2-the-receipts-and-expenditure-method)

Rental values should be arrived at and then devalued in terms of SBS. As the SBS scales will be derived from full accounts and comparing properties of a similar type, it is anticipated that anomalies will be minimised.

The values of SBSs for 2017 should be incorporated within the following scales:

4.1.4 Self-Catering Holiday Home Categories (Up to 4 units)

Location

Category 1 Will be recognised as a prime location, being a highly sought after area or ‘hot spot’ for self-catering. It may have tourist attractions and areas of outstanding natural beauty, seaside or historic market towns and cities. Properties in a prime location will command very high tariffs and have very high occupancy levels, even at off-peak times.

Category 2 This is the type of location in which the majority of self-catering properties will be situated and may be described as good. It will offer a wide range of popular and well established amenities and may be near tourist attractions and areas of natural beauty. Vacancy rates will be low at ‘peak’ times.

Category 3 These locations will usually be further away from tourist attractions and amenities. Tariffs will be lower than prime and good locations and generally properties will be slightly harder to let.

Category 4 By their nature this type of location will usually have a low number of self-catering properties. The location may have close proximity to non-residential buildings or have other inherent factors which impact on its appeal. In these locations properties will be difficult to let, have low tariffs and achieve low numbers of lets.

Care must be taken by valuers not just to ‘rank’ their self-catering properties into four categories but to decide whether a particular location is actually 1, 2, 3 or 4. For example, some Units may not have any Category 1 locations and the majority of their properties may be in Category 2.

Quality

In order to define the quality a judgement must be made based on the physical attributes of the property in accord with the definitions below:

Category A High quality modern or modernised properties significantly above average attractiveness/value for the type/location. The property may be detached, offer parking, additional bathrooms, additional reception rooms, very well maintained gardens and facilities significantly above standard accommodation. A comparatively high level of investment in maintaining and presenting the property will be required to achieve maximum tariffs.

Category B Most properties will fit into this category, which may be described as ‘standard’. These properties will have the typical range of facilities for a self-catering property, without the distinguishing features of Category A. They will usually have central heating and double glazing and a reasonable quality kitchen and bathroom.

Category C These are basic properties below ‘standard’ quality. There will be a low level of investment in maintaining and presenting the property. Room sizes will typically be smaller, with shared facilities. There will be a lack of all standard facilities such as heating, double glazing and an absence of any modernisation. Very few properties will meet the criteria of this category.

4.1.5 Non-standard single units

These will be looked at on an individual basis as fall outside expected values on the national schemes.

4.2 Self Catering (3 to 4 unit complexes)

Self Catering complexes consisting of 3 to 4 units should be valued in the same approach. However an end adjustment of 30% for 4 units and 20% for 3 units should be applied. This is to enable a smooth transition between the valuation schemes.

4.3 Self-Catering Complexes (5 units and above)

The larger complexes, those with more than 4 units, should be compared in terms of a percentage of gross receipts. As a general rule complexes will be more efficient to operate than single units, although this will be greatly affected by the voids encountered. Additionally the costs of providing additional facilities must be reflected when making any comparison.

The method of valuation for multiple self-catering units will follow the principle set out by the singles. The major difference is that location will not be used as a factor as this will already be apparent in the Fair Maintainable Trade, the defining factor will be quality. The same quality indicators will exist for both Units up to 4 and Complexes. The choice of category is driven by the quality of the accommodation and the appropriate percentage should be adopted after the three categories have been considered.

Quality

When deciding on the appropriate percentage to adopt, the following approach should be taken. In order to define the quality a judgement must be made based on the physical attributes of the property in accord with the definitions below:

Category A High quality modern or modernised units significantly above average attractiveness/value for the type/location. The units will usually be detached, have high quality facilities significantly above standard accommodation - key indicators include - swimming pools, tennis courts, games room, sauna, hot tubs and animal petting. A comparatively high level of investment in maintaining and presenting the property will be required to achieve maximum tariffs.

Category B The default category should described as ‘standard’. These properties will have the typical range of facilities for a self-catering property, without the distinguishing features of Category A. They will usually have central heating and double glazing and a reasonable quality kitchen and bathroom.

Category C These are basic properties below ‘standard’ quality. There will be a low level of investment in maintaining and presenting the property. Room sizes will typically be smaller, sometimes with shared facilities. There will be a lack of all standard facilities such as heating, double glazing and an absence of any modernisation. Very few properties will meet the criteria of this category.

Typical percentage to be applied to each category derived from accounts analysis -

This Practice Note should enable all self-catering units to be valued, however in exceptional circumstances a full R&E approach is not precluded. Any such cases should be referred to the CCT for guidance.

4.4 Other Considerations

For some of the larger self-catering complexes there may be some crossover with other classes such as Caravans and Chalet Parks - please see the guidance concerning co-ordination in the main Self-Catering Section in the Rating Manual - (Para 4.1).

4.5 Source Data

Details of the supporting R&E analysis are available from the CCT should this be necessary prior to any Valuation Tribunal or Upper Tribunal hearings.