At QuoinStone we understand the key aspects of business rates and council tax for Purpose Built Student Accommodation (PBSA), and how these exemptions impact financial planning and operational costs for developers.
Council tax, business rates, revaluations, appeals, seasonal changes, and local authority variations, can all effect costs for PBSA developers. Our specialist expertise can help you identify any potential savings.
Let’s look in more detail about the potential for savings…
Tenancy Exemptions
In most cases, purpose-built student accommodation (PBSA) is exempt from council tax if it is occupied solely by full-time students. However, the property could become liable for council tax, (or a discount may apply), if any non-students (e.g. part-time students or working individuals) live in the accommodation, or if the accommodation is unoccupied during summer or other periods and becomes liable for council tax during those vacancies.
On-site Staff Housing (for security or maintenance personnel), may also trigger council tax liabilities, unless the staff also qualify for exemptions.
Business Rates
PBSA often includes shared facilities and communal spaces like common rooms, gyms, and study areas. These areas can be subject to business rates, (although developers may be able to apply for business rates relief on certain communal spaces or temporarily unoccupied parts of the building).
Developers need to factor in these costs, which will apply irrespective of the students’ council tax exemptions.
If the student accommodation includes commercial spaces, such as shops, cafes, or other retail units on the ground floor, these spaces will likely be subject to business rates.
It’s important to get the correct business rates valuation for these units. Higher rateable values will increase the property’s liability, so seeking advice from a rating advisor can ensure valuations are accurate and opportunities for relief are maximised.
Empty Buildings or Rooms
When parts of the property (e.g. entire blocks or rooms) remain vacant for a period, developers should be aware that they may become liable for business rates after a certain time. Properties are usually exempt from business rates for the first three months they are empty, after which full rates may apply, (although PBSA may qualify for exemptions or reductions, so it’s critical to clarify this with local authorities).
Revaluation and Appeals
Developers should be aware that the government periodically revalues properties for business rates. These revaluations can change liabilities, especially if the property is located in an area experiencing rapid development or price increases. Developers should monitor revaluation cycles and be prepared to appeal if they believe the property has been overvalued.
After the Valuation Office Agency (VOA) assesses the property, developers can appeal the rateable value if they believe it is too high. Engaging a rating expert may help reduce business rates through the appeals process.
Seasonal and Temporary Changes
If accommodation is vacant for extended periods (such as summer holidays, Easter, and Christmas), this could affect council tax and business rates liabilities. Some councils offer exemptions or reductions for student accommodation that is unoccupied during non-term times.
Local Authority Variations
Some local authorities have discretionary policies that can offer relief or exemptions on council tax and business rates for student accommodation. Developers should engage with the local council early in the planning process to understand the specific policies that might apply.
Though not directly related to business rates or council tax, developers should also consider Community Infrastructure Levy (CIL) contributions, which can apply to new student accommodation projects in certain areas.
For more in-depth advice, please download our PBSA brochure or get in touch via the button below.