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As student accommodation providers consider the blend and use of rooms, cluster flats and flats as a result of Coronavirus related vacancies it is important that tax issues are considered. In particular, if a provider makes the decision to let to non-students on either a long-term or short-term basis an unexpected VAT charge could arise.

This charge can be swingeing as it is based on the number of months remaining in a 10 year period from completion of the property, along with the percentage of the property where use will change.

To take advantage of the zero-rate available on construction or purchase the provider will have certified that the property was to be used as student accommodation. Residential letting to non-students, both short and long-term, are not qualifying uses.

The quantum and cost of this charge will vary depending on the structure in place and what the intended future use is. It is therefore recommended that prior to taking the decision to change the use profile of a student accommodation building the owner or operator considers whether any VAT cost could outweigh the income received to offset the loss of student rental income.

Saffery Champness can provide advice on the VAT and other tax implications in respect of existing or proposed new developments. Should you have any questions please contact Roger Wareham, a partner in our Bournemouth office, at

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