CTM40435 - Particular bodies: housing associations: co-operatives - unlet properties
Interest paid by a housing association (CTM40405) in respect of properties that are in course of building, or which are completed but not yet let, cannot form part of the claim under ICTA88/S488 (1)(a) and (b) (CTM40420) and should be excluded when calculating the relief allowable to members. This will mostly be of relevance where the interest was not paid within the MIRAS scheme during the relevant period. The interest to be excluded can be determined by any reasonable method of apportionment, for example, by reference to the approximate amounts of the capital expenditure on the respective properties.
Where property which had been let became vacant during the period that MIRAS applied, Section 488 (2) provided that no relief was to be given to members for interest paid by the association in respect of the unlet property. To calculate this interest, a notional rent at the rate payable when the property was last let is deemed to be received by the association during the void period.
Example
| Total rents receivable by the association | £25,000 |
| Add notional rent for one unlet property (six months) | £ 1,250 |
| £26,250 | |
| Total interest paid by association | £15,000 |
| Less treated as paid by members (£25,000 / £26,250 x £15,000) | £14,290 |
| Balance to be treated as paid by association | £ 710 |
The balance treated as paid by the association rather than the members will be allowable to the association under the normal rules for Industrial and Provident Societies - see CTM40570.
