Three rooms or less

[Cumbrian Peppa]

](*,) We know this a really old and tired complaint but we are really fed up to the back teeth with houses opening up as B&B's with three rooms or less and not paying business rates or business water rates or other utilities. A house not too far from us has opened up with 3 rooms and been rated 4 stars by Visit Britain; as they don't have the expense that we have [ we have 5 rooms] they can afford to undercut us quite dramatically - and they do!! For 6 months of the year October to March they offer 3 for 2 which works out at £17 pppn. We can't possible compete as our rates and other commitments still have to be paid throughout the winter months. They even have a residential mortgage! Our business mortgage is at least 2% above base rate all the time. We have no problem at all with folk trying to make a living but it should at least be a level playing field. With the credit crunch we have had Inspectors advise us not to 'do special offers' but to continue to offer quality at all times! Surely Visit Britain and the AA should at least confirm that these businesses ARE in fact businesses and paying rates before they rate them?

[imported_cassie]

I recently started a B&B in my own home as my husband had been made redundant and I retired three years ago. I have two rooms that I let and have certainly not got the facilities that you obviously have. When we have guests we are confined to the office or the dining kitchen and our son has to use our en suite as the main bathroom becomes a private facility when we have guests. We have less than 50% occupancy this year and a lot of single nighters. We do not employ anyone because we can't afford it and certainly so far we have no profit and all that our guests have provided is the ability to keep our mortgage paid up thereby ensuring that we keep the roof over our heads. Business rates etc would deepen the hardship that we are already experiencing. perhaps the reason that you are so incensed is the room rate your neighbour is offering. Is it not worth chatting with them and explaining how much they are undercutting you. Yours is obviously a business theirs perhaps is a means to keep a roof over their heads.

[Raincliffe1]

In my opinion any business where you 'live in' is primarily a means of keeping a roof over your head, the profit (if any) is secondary. If you make a loss you lose your property, similarly to if you cannot pay your residential mortgage.

I sympathise with the first post because we have exactly the same problem opposite us. Did you know you can apply for planning permission for a granny flat and it can be used as a holiday let? Did you know that you can have a 6+ room guesthouse and still have a residential telephone line or pay residential customer rates for your electricity and gas, yet pay a business mortgage - no, nor did we; and yes, you can be inspected by VisitBritain.

I think their should be a level playing field for all. It's like having your cake and eating it. Establishments want to be inspected because it brings in more customers but sometimes do not wish to pay things such as tax, business rates, licences, business mortgages, business insurance and the rates that businesses are charged for utilites. Despite paying all these aforesaid overheads you still get customers who think that after the cost of their meals is deducted from their bill everything else goes in your pocket. There will always be a sizeable proportion of Joe Public who when given the choice between 2 places will always take the one that is cheaper, overheads and doing things by the book do not come into the equation.

Katherine

[barbersdrove]

I didn't know that re the granny flat. We had a granny flat built 9 years ago for my parents who have both now passed away. we let out their place as a holiday rental but we had to apply for planning permission for a business change of use and we pay business rates on that portion of the property and business rates for the gas and electric. The insurance is also business insurance. When we sell we will have to pay capital gains tax on that portion of the house. (we are lucky in that we don't have a mortgage)

Are you sure that the place you are thinking of has not just gone ahead and done it without applying for the ususal planning permissions etc?

[joyful]

](*,) We know this a really old and tired complaint but we are really fed up to the back teeth with houses opening up as B&B's with three rooms or less and not paying business rates or business water rates or other utilities. A house not too far from us has opened up with 3 rooms and been rated 4 stars by Visit Britain; as they don't have the expense that we have [ we have 5 rooms] they can afford to undercut us quite dramatically - and they do!! For 6 months of the year October to March they offer 3 for 2 which works out at £17 pppn. We can't possible compete as our rates and other commitments still have to be paid throughout the winter months. They even have a residential mortgage! Our business mortgage is at least 2% above base rate all the time. We have no problem at all with folk trying to make a living but it should at least be a level playing field. With the credit crunch we have had Inspectors advise us not to 'do special offers' but to continue to offer quality at all times! Surely Visit Britain and the AA should at least confirm that these businesses ARE in fact businesses and paying rates before they rate them?


I see where you are coming from. I started small and didn't pay business rates and now I have larger premises and do. If they are not liable for business rates then fair doos, HOWEVER, any accommodation provider for however many rooms, they are liable for PAT testing, Fire Safety (and believe me its not just Oh, I have a fire extinguisher) and Food Safety (inspected by local Council) and if they don't abide by those they are in breach of their legal requirements and shouldn't be offering accommodation at all!!!! Anyone playing by the rules is entitled to enter the game. anyone cheating should be reported to the relevant authority.

[Erik_Hamburger]

Hmm.
I don't believe in so-called 'unfair competition'. I have bought a 7-bedroom house specifically with the intention of opening a B&B of 3 bedrooms/max of 6 guests, so I don't have to pay Business rates and the 'rules' are easier to deal with.
This gives me a position of long-term strategic competitive advantage and it seems to be working!
And yes I have had an inspection by the EHO, I have done a Fire Risk Assessment and will get inspected once the local F&R Service responds to my communication, I have a small hotel TV licence, my appliances will be tested, I have to comply with marketing and sales laws, and have informed the local Council of my intentions before I bought the premises.
Why don't you do the same ;)

[freddy1]

How somebody funds and finances their property is nobody's business but their own. You can get up to 50% business rate relief which more often than not then works out less than residential rates anyway; business gas and electricity rates are less than residential (although the downside there is that you have to sign up for a period of time). If your business isn't working don't blame somebody else. You don't know the circumstances of the owners of the other B&B(but then as you allege to know the type of mortgage they have then perhaps you do). As long as they are operating under current legislation and are not poisoning, burning or discriminating against their guests than that is all is required. Delving deeper into somebody's finances to run a B&B is invasive and just not right.

[Andrew Clay]

It's even worse if you run one self-catering property and are VAT registered because it's part of a farming business. You have to add 20% VAT to your prices. Yes, you can recover some of the VAT on expenses like the loo rolls, but you can never compete with someone who's not VAT registered.

[freddy1]

Absolutely Andrew...we all have to be savvy enough to save where we can - I'm not VAT registered as I don't reach the threshold. But then would the lady who started this thread demand that all account are inspected by VB or the AA to make sure we're declaring earnings correctly to the Inland Revenue? Please, these organisations are there to purely grade us on what we offer and are not financial watchdogs.

If you don't take on a business insurance for your business then you're leaving yourself wide open to losing everything plus a prison sentence maybe! Keeping costs down does not mean cutting out the legal necessities. It doesn't matter how much regulation is put in place as there will always be those that will not abide by one bit of it. We are not those people but they are the ones that bring any sector into disrepute and give false impressions. The public do know the difference between cheapskating and good quality and are willing to pay for it. A lot of the time it's down to how much money one is willing to pay for good marketing...bad marketing is as useless as no marketing, ie, an old static website will not draw the business and for a good website one has to pay for it. Grading is something I don't agree with and do begrudge the money but I have it so I can go on the local and county council websites that do draw a lot of enquiries. Oh, but then again perhaps it's not a "level playing field" to pay for a professionally designed website and one should only have a home made one.

[want_to_open_soon]

ive lived in my house 16 year,its a large 3 storey on a very prominant corner.My parents lived with me and this helped me pay my mortgage,both my duaghters have been married and moved into there own homes.my parents have decided they are ready to move into a bungalow.this means me and my 2 boys are going to be in this huge house,also my son is 18.so he will probable want to move on soon.i cant bear the thought of not living here,and wondered if i could turn 3 rooms into guest rooms.if not i wont be able to afford to stay here any advice welcome.

[Raincliffe1]

Freddy 1:

The level playing field I refer to is doing things by the law and declaring that a premises a business in terms of utilities etc, what type of website you have for example is down to where you choose to spend your budget.

Regards, what I purport to know I was willingly shown/told by the people at these premises, I didn't delve as you put it - i.e. 'we are on a fixed rate mortgage which we took out when we bought the building/house' or another example 'I get free telephone calls at weekends calls and my broadband costs £6.00 a month'. In terms of utilites, I merely asked who there provider was as ours was going up in leaps and bounds. Armed with the information and the cost per unit/standing charge, I telephoned the particular energy provider who then told me that those sort of prices were only available to residential customers.

Agreed that when you have smaller sized accommodation taking into account the business rate relief it may work out cheaper than council tax for the whole building, rather than council tax for your owners' flat (if you live on the premsies) plus business rates. At our last hotel the business rates payable were over £11,000 per annum, definitely not cheaper than council tax and if the small business rate relief was stopped I think the many small accommodaiton providers would find they are paying more than the equivalent council tax if their property was residential only.

And, sorry to say but yes, although the majority of the public do know the difference between cheapskating and good quality (when it is an aspect that directly impacts on their stay e.g.food/comfort/cleanliness) but not all of them are willing to pay for it and even more are not bothered if you are doing things by the book or not.

Agree with you Andrew Clay that it is damn hard to compete with businesses that are not VAT registered. The only way I see is to really push your takings so that profits can be used to reduce your liabilities and then you gain in that way which offsets increased tax bills.

Katherine

[Kim234]

Round where I am property is very expensive so all B&B and Guest houses have wacking great mortgages so it makes prices high. Had a couple knock on the door that thought £65 was expensive and would "keep on looking!" this is considered exceptionally cheap! Think is though what is considered a reasonable price in one place and another depends on a lot of external factors ie someone that has paid off their mortgage will be in a better position than someone who who has to find five grand a month. Its all relative you compete as best you can as you must have something they don't. But I think something we all need to realise is they don't care what makes up the costs.

[Sue: White Horse Walking Holidays]

I've just had a guest tell me we don't charge enough, but you have to keep very much in line with other local places. I'd like to charge more and think it's worth more, but would probably lose business to others and am busy working on getting repeat business.