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Eligibility of vacant premises

Ofwat recognises that determining the principal use of vacant premises is not always straightforward.

Factors such as the length of time for which the premises have been vacant, whether or not they are capable of being used as a home (e.g. because the property is unfurnished or derelict), council tax/business rate liability and whether or not a person lists the property as their residence, may all be relevant.

Some vacant premises may be gap sites where the principal use could be assessed once a new owner/occupier selects a retailer. In 2006, Ofwat provided guidance in RD 02/06 (Charges to vacant properties), in which it considered it reasonable for companies not to charge for unfurnished vacant premises because those premises were not ready for occupation (and therefore may be regarded as not being used or being ready to be used as a home).

As vacant properties will, in the majority of cases, still be liable for either council tax or business rates (or both), Ofwat considers that such liability would be a reasonable approximation of principal use in the absence of other evidence.

Another possible source of evidence when considering eligibility, is to consider the property’s previous use alongside the incidence of business rates and/or council tax.

As set out above, if the property is liable for council tax it will normally be considered a household and should not be part of the non-household market. If the property is liable for business rates it will normally be classified as eligible for the non-household market and so should be included.

If the property is liable for business rates and council tax, it will be considered mixed use and its eligibility for the non-household market will be guided by reference to other factors which may indicate which of these uses is its principal use.

Ofwat accepts that a vacant property once brought back into use may have its eligibility changed. For example, an unused office building being converted into residential flats will become ineligible for the non-household market.

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