Will A Loft Conversion Increase Council Tax?

According to Find a Tradesman Service the average UK loft conversion cost around £ 40,000 in 2021. With converting your loft from a storage space to a living area, home office or an extra bedroom you can surely expect the value of your property to increase by at least 10 to 20 per cent. However, you need to make sure that you follow the guideline outlined by the Planning Permission | Loft conversion.

Will A Loft Conversion Increase Council Tax?

Council Tax will not increase immediately as a result of loft conversion; especially as long as the property is not put up for sale. It is only then that the loft conversion will be taken into consideration by the Valuation Office Agency while assigning the market value and a council tax valuation band.

If the revaluation of the property indicates a significant increase in the value of the property such that it is now eligible for a higher council tax band, council tax will increase as a result of loft conversion. Although the condition of the property’s sale has to be met for this purpose.

If the loft conversion has an insignificant impact on the property’s increase in value which does not elevate it to a higher valuation band, in such cases, despite an appreciation in the value of the premises, council tax may remain unchanged.

Through this article, we will explore the following areas regarding loft conversions and their impact on council tax:

Do I Need Planning Permission For Loft Conversion?
What Are Building Regulations?
What Kind Of Changes To Property Affect My Council Tax Bill?
Do You Have To Pay Council Tax When Renovating A Property?
Can I Apply For A Council Tax Discount For Home Renovations?
How Much Do Home Renovations Cost In The UK?

Do I Need Planning Permission For Loft Conversion?

Internal work on your property such as loft conversion, garage conversion, new staircases, bathrooms, kitchens or rewiring does not require planning permission as such work is considered under permitted development.

However, if you live in a leasehold flat, you may not be able to proceed with loft conversion without taking all legislative rights from the freeholder. They may also ask to oversee the structural designs and plan prior to anything restructured.

The next step would be to take the approval of Building Regulations to assure that minimum standards for design and structure are being met during the restructuring process.

What Are Building Regulations?

These are some basic standards for the design and structural changes that are to occur and are essential to be met during construction, conversion or refurbishment of properties. Building Regulations have been set to assure that the health and safety of the residents will not be compromised in any way as a result of the said modifications to the property.

These include the following:

Structural changes such as house extensions or conversions should not affect a load-bearing wall, beam or chimney breast or which will make access to property difficult.
There should be no electrical safety concerns due to the addition of fuse boxes or plugs, or a change of electrics that causes new electrical wiring.
Installation of heating appliances such as a boiler, radiator or fuel-burning appliance should be managed with extreme caution.
There should be no concern for fire hazards due to construction work and the escape route (of the added/converted section to the premises) must comply with fire safety standards.
Installation of a new bathroom or kitchen should not affect the overall plumbing of the house.
New windows, doors or fixed air-conditioning systems should meet the safety and design standards set by Building Regulations.

What Kind Of Changes To Property Affect My Council Tax Bill?

There are certain circumstances due to which properties may be revalued and their bands reassigned by the local council. Below is a list of factors that may cause a change in band:

a part of your property is demolished and is not rebuilt
the property is altered to subdivide it into self-contained units, (this could be a single unit with an annexe – each unit will be considered under a separate band)
a single property is reconstructed into self-contained flats
flats are converted to a single property
residents start or stop working from home
changes were made to property the property by the previous owner
significant changes such as a new road are being made to the local area
the council tax band was changed for a property with similar features in the same area

While some of the changes listed above are directly related to renovations and repairs being made to premises and they also might be in control of the resident, some might be involuntary and external changes that do have an impact on council tax bills.

Do You Have To Pay Council Tax When Renovating A Property?

If the property is uninhabitable due to the renovations that are being made to it and the nature of work includes structural changes or major home repairs, residents will be exempt from paying council tax for the tenure of the process.

However, if you are unable to qualify for an exemption from council tax, certain home repairs may count you as eligible for a council tax reduction; while renovations that do not affect everyday living and the property remains occupied while work proceeds will not qualify for either an exemption or a discount.

You may be able to avail of a discount on your council tax bill if any of the following repair works are being done at your home:

repair of roof structures or foundations
rebuilding of external walls or chimney stacks,
replacement of floors
removal of internal walls (not partitions)

Can I Apply For A Council Tax Discount For Home Renovations?

To be able to qualify for a council tax discount while your home is being renovated, you must inform your local council office prior to the commencement of the repair work at your premises (or as soon as possible once the work starts. If the claimant informs their local council after the renovations are complete, they will be required to provide substantial evidence to be considered for a council tax discount.

The next steps will be as follows:

Step 1: The council contacts the residents and sends a representative to survey the premises.

Step 2: If the property qualifies for a discount, the reduced amount of council tax will remain applicable for an entire year (this may be up to a 100 per cent discount).

Step 3: Once the property becomes inhabited, residents liable for council tax payments must inform their local council within 21 days.

Step 4 (a): If the property remains unfurnished and uninhabited for less than 2 years, a full council tax bill becomes applicable.

Step 4 (b): If the property remains unfurnished and uninhabited for more than 2 years, residents will be liable to pay a premium called “empty house premium”. This is an additional charge over and above the full amount of their council tax bill.

How Much Do Home Renovations Cost In The UK?

According to House Renovation Cost in 2021 it may cost you around £80,000 to renovate (with major changes) a three-bedroom house in the UK. However, depending on the nature of individual repairs and modifications required, the cost of minor changes may vary. Below is a quick guide:

New heating system: £5,500
New gas supply: £1,500
Rewiring: £5,750
Replastering of walls: £2,500 to £15,000
New kitchen: £10,000 to £25,000
New bathroom: £4,750

The best way to proceed is to prepare a list of changes that you would like to make and then arrange a survey of your premises to learn about the expected expenses. Here is a link to guide you How Much Are House Survey Costs in 2021?

Conclusion:

Loft conversions are complex projects where one needs to manage a budget on the one hand and assure to meet Building Regulations on the other. However, the added space as a result of conversion or use of better space that may have been lying vacant earlier proves to be worth the effort.

Leased flats will require their owners to seek approval from their landlords/freeholders prior to any structural reconfiguration of this nature. In some cases, the freeholders may also require to see the plans and designs that are to be put into place.

Loft conversions increase the scale of occupancy in a property and add to its market value by at least 10 to 20 per cent. This increase in value serves in the favour of owners who sell their property as it earns them a better deal.

If this increase in market value is significant enough, it may increase the valuation band assigned to the property; moving it up a rank when the Valuation Office Agency assesses the property for sale. This change in council tax band will increase the amount of council tax to be paid when the new owners purchase the property.

FAQs: Will A Loft Conversion Increase Council Tax?

Will a loft conversion increase the value of my house?

Yes, a loft conversion will increase the value of your house by anywhere between 10 to 20 per cent of its current market value.

Will an extension affect my council tax?

Your council tax might get affected as a result of the extension to your property; especially if the extension increases the market value of the premises such that it is elevated to a higher valuation and by the Valuation Office Agency. However, such revaluation of property value and council tax will only take place once you sell the property.

How much value will a loft conversion add?

According to research carried out by the Nationwide Building Society, a loft conversion can increase the value of your property by at least 20 per cent.

Why has my council tax band changed?

Council tax is based upon the market value of your property. If there is an increase in the value of your property due to alterations or an extension, you will be assigned a higher valuation band. If there is a structural change or partial demolishment of the property, it may move down a level.

How much does a loft conversion cost in the UK?

Loft conversions start from £ 40,000 for basic structural changes made to the property. This amount can vary depending on the requirements and extent of modifications.