Composite hereditament — Farm land and buildings — Part used for domestic dwelling — Valuation for council tax purposes — Valuation banding system — Whether whole farm had to be valued in calculating value of dwelling — Listing officer placing farm houses in high band — Valuation tribunal upholding listing officer’s band allocation — High Court upholding that decision
Prior to the Local Government Finance Act 1992 all rateable properties were rated by reference to their hypothetical annual rental value. Agricultural land and buildings were not rateable. The 1992 Act introduced a change to the basis upon which dwellings were to be valued for the purposes of the council tax created by that Act, namely by reference to their capital value, and provided for the banding system.
Non domestic hereditaments continued to be assessed for rates by reference to their hypothetical rental value. The consequence of those different methods of assessment called for the introduction of the composite hereditament, and for the requirement in regulation 7 of the Council Tax (Situation and Valuation of Dwellings) Regulations 1992 enabling the capital value of the dwelling element to be ascertained in order for a dwelling to be allocated for the purpose of the council tax to the appropriate band.
The applicants were farmers who farmed land which formed part of composite hereditaments. They appealed to the valuation tribunal against the proposal by the listing officer to place their farm houses into Band E rather than Band A which, they argued, was not justified by the valuations which they sought to establish. The tribunal found in favour of the listing officer and dismissed their appeals. The applicants exercised their statutory rights of appeal to the High Court.
Held The appeals were dismissed.
1. In none of these cases was a valuation made of the whole farm (“composite hereditament”) before the proposal was made as to the banding to which the farm house should be allocated.
2. Since agricultural land and buildings remained exempt from the business rate there was no other present need to value the whole farm.
3. The draftsman of regulation 7 intended that the regulation should provide a practical and not unduly cumbersome or onerous way of isolating from a composite hereditament the dwelling element and placing a value upon it.
4. The task set for the valuer by regulation 7 was to ascertain that portion of the value of the composite hereditament which could reasonably be attributed to domestic use of the dwelling.
5. If the valuer adopted a valuation method which was capable of placing a value on the domestic element as a portion of the value of the whole then he was entitled to do so even though he did not value the whole.
6. It was then a question of fact for the tribunal to decide whether he had achieved the object set by the regulation and arrived at a fair result in compliance with it.
7. Valuers had to take into account in assessing the value of the domestic part that it was part of the whole farm, or other composite hereditament and not to be valued as though it were a separate hereditament.
David de Jehan (instructed by Hodgson & Sons, of Preston) appeared for the applicants; David Holgate (instructed by the solicitor to the Inland Revenue) appeared for the tribunal.
