The core activity of a housing association is the provision of affordable accommodation in the form of letting of dwellings or property used for a relevant residential purpose. (Rules prevent the granting of a major interest except, for example, under shared ownership and right to buy schemes.)
The rental income received by a housing association will normally be exempt. The two common types of tenancies are assured and secured tenancies. Rent paid by way of housing benefits by the Department of Social Security will be treated as consideration for an exempt supply.
An institution used as an hotel, inn or similar establishment is excluded from zero-rating by VATA 1994, Sch 8, Group 5, Note 4. Accommodation that is provided in an hotel, inn, boarding house or similar establishment is excluded from exemption by VATA 1994, Sch 9, Group 1, Item 1(d). In Namecourt (1984) VAT Decision 1560, a company (N) owned a large property in London, where it provided “bed and breakfast” accommodation for about 260 homeless and unemployed people. Most residents stayed for six months or more, and relied on financial support from the DHSS. The tribunal held that N's supplies of accommodation were excluded from exemption. However, in Lord Mayor and Citizens of the City of Westminster (1989) VAT Decision 3367, the Council managed a hostel providing accommodation to homeless men. The tribunal held that the operation of the building was exempt; the accommodation provided by the Council was of such type that it was clearly