A ratepayer has successfully challenged a new list assessment for a small hotel both for the property itself and others in the same class, leading to a wholesale reconsideration by the Valuation Officer and reductions for other small hotels in outer London.
In Arma Hotels Ltd v Dawn Bunyan (Valuation Officer) [2023] UKUT 3 (LC), the Upper Tribunal (Lands Chamber) permitted the ratepayer’s challenge to the decision of the Valuation Tribunal for England in February 2022 and reduced the rateable value for the Brent Hotel in Kenton, Harrow, from £31,000 to £16,250 in the 2017 rating list.
The property was a bed and breakfast establishment converted from a detached residential property in the early 2000s. It comprised 15 bedrooms, the equivalent of 12.94 double bed units (DBUs). It initially entered the 2017 rating list at a rateable value of £59,000, but was reduced to £54,000 following completion of the appellant’s check. The appellant’s challenge led to a further reduction by the VO to £31,000 based on an assessment of £2,400 per DBU. The appellant claimed that the valuation for the hotel was unreasonable.
Under schedule 6 to the Local Government Finance Act 1988, the rateable value of the property is an amount equal to the estimated rent the hereditament might reasonably be expected to let from year to year on the antecedent valuation date of 1 April 2015.
The dispute focused on the correct methodology to be used in assessing rateable value. Larger hotels are assessed on the shortened receipts and expenditure method by reference to accounts for three years prior to the valuation date, but for smaller hotels the methodology is a comparative rental value per DBU based on locally suitable comparable evidence.
The VO submitted that a rateable value of £2,400 per DBU was supported by comparable rental evidence and there was sufficient assessment evidence to support a tone of the rating list at £2,800 per DBU. The appellant argued that there was no reliable tone within the 2017 rating list, so the only appropriate methodology was the shortened receipts and expenditure method.
The Tribunal decided that there was a lack of reliable rental evidence and the valuation list could not be said to have an established tone because of the uncharted waters created by the check challenge appeal process and the hiatus caused by Covid-19. Consequently, the shortened receipts and expenditure method was the only appropriate methodology. The Tribunal determined the rateable value at £16,250 or £1,256 per DBU.
Louise Clark is a property law consultant and mediator
