Council tax – Valuation – Shared ownership lease – Council Tax (Situation and Valuation of Dwellings) Regulations 1992 – Valuation tribunal setting valuation band of respondents’ flats on assumption that notional sale of interest in flats involving grant of shared ownership lease rather than conventional long lease at nominal rent – Appellant listing officer appealing – Whether tribunal erring in assuming notional sale of interest in flats involving grant of shared ownership lease – Appeals allowed
Two separate appeals against two decisions of the valuation tribunal heard on the same day were considered together because they raised a common issue. In both cases the tribunal had been asked to consider the respondents’ flats, which were the subject of shared ownership leases and also to consider comparables, some of which were the subject of shared ownership leases and some of which were the subject of conventional long leases. The tribunal determined the appropriate valuation band for the flats, for council tax purposes, by assuming that the notional sale of an interest in the flats had involved the grant of shared ownership leases, rather than the grant of conventional long leases at a nominal rent.
The appellant listing officer appealed against both decisions under regulation 43 of the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009. The appellant contends that the tribunal had erred in law in purporting to apply regulation 6 of the Council Tax (Situation and Valuation of Dwellings) Regulations 1992 (SI 1992/550). In particular, the tribunal had erred by assuming that the notional sale of an interest in the flats had involved the grant of shared ownership leases, rather than the grant of conventional long leases at a nominal rent.
Held: The appeals were allowed.
(1) A typical shared ownership lease was a long lease, for a term of years similar in length to a conventional long lease in relation to a flat. It was not necessary to be more precise as to the length of such leases. The principal difference between a conventional long lease of a flat and a shared ownership lease of a flat lay in the sum paid at the outset by the lessee for his rights under the lease. Under a conventional long lease, the lessee paid the market value if the flat held on such terms. Under a shared ownership lease, the lessee paid a percentage only of the market value of the flat. On its true construction, regulation 6 of the 1992 Regulations provided that the physical condition of the subject flat was to be reflected in the valuation, the subject flat was assumed to be let on a conventional long lease at nominal rent and not on a shared ownership lease and the tenure of other flats in the same block might be taken into account insofar as that affected the value of the subject flat.
(2) On a fair reading of the decisions in the present cases, the tribunal had valued the flats on the basis that they would be, following the notional sale, the subject of shared ownership leases. The repeated references to shared ownership leases, both in relation to the subject flats and the suggested comparables, did not appear to have been for the purpose of discussing the specification and the finishes of the various flats nor for the purpose of assessing the effect on the subject flats on the fact that other flats in the same block had been held on a tenure different from a conventional long lease. It was adequately clear that the tribunal had thought, wrongly, that it should assess the value of the subject flats on the basis that they would be subject to shared ownership leases, rather than subject to conventional long leases at nominal rent. Accordingly, the tribunal had been wrong in law in its approach to the valuation of the subject flats and its determination would be set aside and the matter remitted for the tribunal to make fresh determinations in accordance with the proper interpretation of regulation 6.
Mark Westmoreland Smith (instructed by the Solicitor to HM Revenue and Customs) appeared for the appellant; the respondents appeared in person.
Eileen O’Grady, barrister
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