Personal Finance - Counting the cost of history.

Living in a national treasure can be a burden on your wallet.[QQ] The owners of the UK’s half million listed buildings are directly responsible for keeping the nation’s heritage intact. They must keep the buildings well maintained, using traditional materials and approved techniques for repairs.

If you let a building decline, the local authority can enforce repairs and – in the most extreme cases – may even take possession of a property to ensure that it survives.

Listed status also restricts what you can do to your home. The regulations affect everything from what colour the windows are painted to where you site a satellite dish. And you may have to forget your dreams of a conservatory on the back.

So why would anyone want to live in a listed building? There are compensations.

Stephen King, partner at estate agents King West in Market Harborough, Leicestershire, says: ‘There is an element of cachet in owning a listed building. Where a building is listed Grade II, for example, a buyer will know that the property retains many of its original features and is likely to have mature gardens.

‘This can be a draw for the right kind of buyer.’

Listing is also reflected in the price. King says: ‘All other things being equal, a listed building is likely to command a higher price than one that is not. It may also sell more quickly.’

Buildings are mainly listed on their individual architectural merit, with both interior and exterior features counting. They can also win listed status because of historical connections.

English Heritage has around 370,000 listings, though some of these cover multiple properties. Listings in Scotland, Wales and Northern Ireland push the total number of listed buildings past the half million mark.

There are three grades of listing used in England and Wales. Grade I buildings are the true gems: the stately homes and fine cathedrals.

Grade II* is the next stage down, classed as buildings of particular importance with most of their original features still intact. The vast majority of buildings – over 90% – are listed Grade II.

This means they are of special interest with exterior features still largely unchanged. In Scotland and Northern Ireland listings are graded A, B and C, roughly corresponding to the three English and Welsh categories.

Virtually all buildings constructed before 1700 are listed, as are most of those built between 1700 and 1840 that retain original features.

After this, listings become more selective. Only in exceptional circumstances are buildings which are younger than 30 years old listed.

Owners do get some help with the costs of maintaining a listed building. Both English Heritage and local authorities give grants towards the cost of repairs, though the funding is strictly rationed.

Usually only the finest Grade I and Grade II* buildings or those in dire need of repair qualify. North of the border, Historic Scotland can award grants towards repair costs and professional fees.

Peter Anslow runs the Listed Property Owners Club, which has 6,000 members across the UK. He says: ‘Local authority grants are administered by that authority’s conservation officer who is responsible for all the listed buildings on their patch. You are generally talking hundreds, not thousands of pounds.’

Different authorities tend to have different priorities. Anslow says: ‘Worcestershire is big on window replacement, while Kent tends to give more grants for roof repairs.’

Listed buildings also qualify for more generous treatment from the VAT authorities. The rules are complex. In essence, approved alterations to a residential property, which have listed building consent, are zero rated for VAT. Repairs, however, attract VAT at the normal rate.

Anslow says: ‘Around 70% of our members join specifically to get advice on the VAT. The list of things that can qualify for zero rating is quite surprising. Underpinning, for example, counts because it is an extension to the property downwards, not a repair. And Customs has recently agreed that rewiring work can also be zero rated.’

It is the job of the contractor carrying out the work to apply the zero rating, so it makes sense to use someone experienced in work on listed buildings. Anslow says: ‘If the contractor gets it wrong they will have to bear the extra VAT, so many err on the side of caution and do not apply zero rating to all that they could.’

Insurance is another key consideration for owners of a listed building.

They can easily find themselves underinsured in the event of serious damage to the building, such as fire or flood. While the insurer may budget X, the final bill might be far higher.

Anslow says: ‘The conservation officer is all powerful. He or she will direct how a property is rebuilt and they have no real interest in who pays. They only want to see the building returned to its original state.

‘Repairs using traditional materials and methods can be far more expensive than with modern alternatives.’

The LPOC recommends insurance through Chubb Europe, which specialises in higher value properties. The insurer inspects each property that it insures and agrees a valuation and rebuilding value, which can take these extra costs into account.

For details of VAT concessions see Customs & Excise VAT leaflet 700, section 8; LPOC 01795 844939
English Heritage’s website can be found at www.english-heritage.co.uk
For more on VAT rules go to www.hmce.gov.uk/public/info/index.htm
The Association of British Insurers is at www.abi.org.uk