Dwellings - an explanation of terms: what ‘multiple occupancy dwelling’ means
In order to qualify for the reduced rate, a residential conversion must result in a multiple occupancy dwelling, such as where a self-contained dwelling is converted into a number of non-self contained ones.
The reduced rate is also applicable where a multiple occupancy dwelling that has been empty for at least two years, is renovated or altered (prior to 1 January 2008, the dwelling had to have been empty for three years).
What ‘multiple occupancy dwelling’ means
A ‘multiple occupancy dwelling’ is defined in Value Added Tax Act 1994, Schedule 7A, Group 6, paragraph 4 of the notes.
What ‘designed for occupation by persons not forming a single household’ means
A dwelling designed for ‘persons not forming a single household’ is a building (or part of a building) where the living space is to varying degrees shared by persons not forming a single household. A typical example would be a block of bedsits, where the occupant households share the amenities - for example, the bathroom or the kitchen.
Excluded from the meaning of ‘dwellings designed for persons not forming a single household’ are buildings that are used to any extent for a relevant residential purpose. The clause, which was introduced with effect from 1 June 2000, clarifies that the terms refer to different and distinct types of property.
A dwelling is ‘designed’ as a ‘multiple occupancy dwelling’ if it is built for that purpose (and not subsequently altered to something different - for example, offices), or has been altered to that purpose from some other use - for example, a barn.