Whether two industrial properties divided by a public road but connected by a substantial conveyor bridge were a single hereditament rather than two separate ones was the question for the Upper Tribunal (Lands Chamber) in FC Brown Steel Equipment Ltd v Karl Hopkins (VO) [2022] UKUT 51 (LC); [2022] PLSCS 37.
Section 64 of the Local Government Finance Act 1988 defines “hereditament” as property which is, or may be, liable to a rate as a unit of property which is, or would be, shown as a separate item in the local non-domestic rating list which the valuation officer for a billing authority is required to compile and maintain under the Act.
The principles to be applied in identifying units of property which fall to be shown as separate items were set out in Woolway (VO) v Mazars [2015] UKSC 53; [2015] EGLR 56:
- The primary test is geographical, based on visual or cartographic unity. Contiguous spaces will normally have such unity but if adjoining properties do not intercommunicate and can only be accessed via other property such as a public street or common parts of the building this will be a strong indication that they are separate hereditaments.
- Where two spaces are geographically distinct a functional test may enable them to be treated as a single hereditament but only where the use of one is necessary to the effectual enjoyment of the other.
- The functional test in 2. above depends on the objectively ascertainable character of the properties, not on the business needs of the ratepayer.
In this case, the question was: did the premises satisfy the geographical test?
The ratepayer traded in office equipment. It acquired a building on an industrial estate in South Wales in 1988. In 2012, it acquired a second building opposite the first and consolidated its UK production and warehousing on the site. The original building was factory and office premises and the new building was for storage and distribution of completed goods. The buildings were on each side of an estate road and connected by a bridge spanning the road which housed a conveyor for transporting finished goods between the two buildings.
Both buildings and the bridge were similarly clad and painted in the ratepayer’s signature colours. It was agreed that the rateable value of the premises was marginally less if valued as a single hereditament because of the end allowance to reflect the split nature of the site, although the allowance was not agreed.
The UT upheld the VT decision that the premises were a single hereditament. While the two properties could function separately, it was possible to reach any part of the site from any other part without leaving the ratepayer’s premises. The bridge was the most prominent feature of the landscape when standing in the curtilage of either property. It made a striking visual impact which clearly and very definitely connected the two sites. The shared colour scheme and branding made it obvious that they comprised a single unit of occupation.
The geographical test was satisfied. The end allowance to reflect the split nature of the site was determined at 7.5%.
Louise Clark is a property law consultant and mediator
