The Upper Tribunal (Lands Chamber) has dismissed an appeal from the Valuation Tribunal for England refusing to alter the rating list for a multi-floored building to merge contiguous and interconnected hereditaments to reduce the rates bill.
Stormhill Properties Ltd v Richie Roberts (VO) [2022] UKUT 109 (LC); [2022] PLSCS 67 concerned a nine-storey office building in Manchester with 14 separate assessments totalling £202,450. The appellant’s proposal, made in November 2019, was that since the building had been vacant since 31 March 2010 it should have a single assessment with effect from 1 April 2010.
However, the window for proposals to alter the 2010 rating list closed on 31 March 2017. The appellant could only pursue its proposal if it could bring itself within the ambit of the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018 (PICO), which extended that window. The VTE decided that the proposal did not satisfy PICO, and it was agreed that the issue would be determined by the UT as a preliminary issue.
In Woolway (VO) v Mazars LLP [2015] UKSC 53; [2015] EGLR 56, the Supreme Court decided that properties in common occupation that are contiguous but not interconnected – so they can only be accessed one from another by passing through other property, such as the street or common parts – were to be rated as two or more hereditaments. This represented a departure from the prevailing practice, which treated contiguous floors in single occupation as single hereditaments. A change in the law was required.
Subsequently, PICO was enacted on 1 November 2018 to revert to the practice of treating contiguous units as single hereditaments. PICO introduced into section 64 of the Local Government Finance Act 1988 the following provisions:
- Section 3ZA provides that where two or more hereditaments (whether in the same building or otherwise) are contiguous and occupied by the same person, the hereditaments shall be treated as one hereditament.
- Section 3ZB provides that where two or more hereditaments are owned by the same person and unoccupied, they cease to be occupied on the same day and have remained unoccupied since that day but immediately before that day they were a single hereditament under section 3ZA and where at least two hereditaments are contiguous, the hereditaments shall be treated as one hereditament.
The appellant was unable to bring itself within these provisions. It provided rental schedules for the building for the period 25 March to 29 September 2010 which showed that the building was vacant at 1 April 2010 save for the ground floor, which was owned by a different company. The VTE found the proposal invalid for these reasons and the UT upheld that decision.
Even if, as the appellant argued before the UT, the ground floor was empty at 31 March 2010, in order for the separate hereditaments to be treated as one – under section 3ZB – it was necessary that they ceased to be occupied on the same day. Neither Mazars nor PICO changed the law affecting properties that are both contiguous and interconnected: they are to be treated as one hereditament.
Louise Clark is a property law consultant and mediator