Where a newly built house is used as a show house or view house, to illustrate other houses for sale, it is chargeable to business rates.
A new rating list for commercial property will come into force on 1 April 2005 and property is to be shown on that list at its value on 1 January 2003.
Any new commercial property (like a show house) that comes into rating after 1 April 2005 should be valued at the value it would have had on 1 January 2003 had it been built then.
The value of property in the rating list is not its sale price, but the rent that could be expected from it if it was let commercially. The rating list currently in force attributes show houses with the value they would have had at 1 January 1998. 1998 was a depressed point in the market when compared to 1 January 2003. This means that the rateable value of a show house and therefore the rates due from show houses will be far higher after 1 April 2005 than currently experienced. Businesses that use show houses/view homes may need to review their practice before April 2005, because of the greatly increased costs.
Please e-mail the Construction Confederation Tax Department (Camilla.Ford@theCC.org.uk) for a return e-mail of the web page to access the Valuation Office Practice Note 2005 giving guidance to their valuers on the methods to be used for valuing a show house.