The Valuation Tribunal has refused proposals to reduce the rateable value of hereditaments for reasons directly or indirectly attributable to coronavirus, dismissing 26 appeals, in Vistra International Expansion Ltd and others v Ms Dawn Bunyan (Valuation Officer) 2017 Rating List Appeal No CHG100364424, a decision which may affect around 40,000 potential appeals.
An occupier or anyone with a legal or equitable interest in a hereditament may propose an alteration to the rateable value in the rating list if it is inaccurate owing to a material change of circumstances which occurred on or after the list was compiled under section 4(1)(b) of the Non-Domestic Rating (Alteration of Lists and Appeals (England) Regulations 2009.
The material change of circumstances must relate to the physical state of the hereditament and of the locality, the mode of occupation of the property, or the use and occupation of other premises in the locality under section 2(7) of Schedule 6 to the Local Government Finance Act 1988.
A further hurdle exists in the form of the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021, which was enacted to clarify that coronavirus and the government’s response to it are not to be taken into account in rateable values in the 2017 rating list.
Section 1(4) of the 2021 Act provides that in making a relevant determination no account is to be taken of any matter that is directly or indirectly attributable to coronavirus. This includes anything done to comply with any legislation concerning or relating to the incidence or spread of the virus or in response to any advice or guidance by a public authority. It does not apply to the physical state of the hereditament, including whether that state affects the mode or category of occupation.
The lead appeal property was an office building in Reading described in the 2017 rating list as offices and premises with an assessment of £145,000 rateable value with effect from 1 April 2017. The appellant proposed a 65% “stand back” abatement to the rateable value to reflect the material changes wrought by the pandemic, their severity and ongoing nature, including uncertainty. The VO challenged the proposal and the appellants appealed. The VT considered as a preliminary legal point whether it is permissible to take account of the matters on which the appellants relied as justifying a reduction in rateable value.
It was common ground that the physical state and condition of the property or its mode or category of occupation had not changed. Had part of the property been demolished or had it been used for a different purpose – a pub that became a fast-food restaurant, for example – because of coronavirus, it could have been revalued. The other appeals were no different. Even if Covid anxiety or public fears of going out which led to localities becoming ghost towns could be considered a material change of circumstances, it did not avoid the operation of the 2021 Act.
The enjoyment and value of the use of property had been altered by the pandemic, but these were matters which could not be taken into account following the 2021 Act.
Louise Clark is a property law consultant and mediator
