A commercial property expert puts the value of the empty White Swan Hotel in York at more than £2 million - but the Evening Press has learnt that its owners pay less than £2,000-a-year in rates.

Property agent Richard Flanagan said the dilapidated city centre four-storey property could be sold for £2 million or more if a buyer was able to secure planning permission for flats, offices or specialist commercial development.

Yet the Evening Press can reveal the family owners of the notorious Piccadilly building have paid no more that £1,998-a-year in business rates, after the property was declared unfit for habitation in 1992.

By comparison, a nearby Piccadilly hotel pays £66,000 in annual business rates.

Mr Flanagan, of Lawrence, Hannah and Skelton, in Blossom Street, said the 1920s building, which has been occupied by dozens of artistic squatters, who plan to have a public open day tomorrow, is "certainly worth millions".

He said: "It is a piece of prime real estate in the heart of the retail sector of the city. There is no doubt that given its location it would be worth a small fortune. It all boils down to what a buyer could get planning consent for."

The hotel, which has been empty since its closure in 1982, is owned by the London-based Graham Family Settled Estates Ltd who control a £9 million property portfolio, including a share in the prestigious United University Club in Pall Mall, London.

A spokesperson for the Valuation Office said it was normal practice for uninhabitable buildings to be "dead listed" and made exempt from business taxes. A City of York Council spokesman said only a small storage space at the hotel qualified for business rates, hence the low charge.

Meanwhile, the squatters' group, which comprises more than two dozen peace protesters, have continued to make the building their own by switching on the mains electricity supply - but it has been revealed that they will not have to pay for it.

A spokeswoman for electricity giant npower confirmed that because the property has a "live" power supply with standing charges sent direct to the owners, the squatters will not be charged for any usage.

A spokesperson for the squatters said they had contacted npower with the initial meter reading and to say they were using the power supply. He said the squatters had "every intention" of paying the bill when they left.

The peace protesters are planning an "open day" tomorrow where York residents will be given a guided tour of the hotel. Doors open at about 10am.

Updated: 10:38 Friday, April 25, 2003