If you are using a builder who is VAT registered, you may be able to pay a reduced rate of 5% VAT on an HMO development instead of the usual 20%. However this depends on the type of conversion you are undertaking and what the use of the property was before it was converted. You will need to have agreement from your builder to charge you at this reduced rate and certain items are not included. This tip alone could save you thousands of pounds! (For further details please see VAT Notice 708: Buildings and construction, HMRC, 2014).