Rating – Non-domestic rates – Valuation – Shop in parade fronting onto harbour – Appellant acquiring short lease of shop by way of assignment on payment of premium – Shop in elevated position with access gained by seven steps up to front balcony – Whether rateable value of shop in rating list to be reduced – Whether terms of actual letting inconsistent with statutory rating hypothesis – Whether shop wrongly valued as ground-floor property – Appeal dismissed
The appellant ratepayer held a lease of a shop in a parade fronting onto the harbour on the Wharf in St Ives, Cornwall. He sold skateboards, surfing gear, sunglasses and similar items from the property, which was elevated above the street level, with access up seven steps to a front balcony area. Other units in the parade also had varying numbers of steps up or down to the entrance. The appellant’s property was listed in the 2010 rating list as a “shop and premises” with a rateable value of £11,250 with effect from April 2010, based on the rental value of the property on the statutory hypothesis with an end allowance of 5% for the disadvantage of the stepped access. The actual rent for the unit was £13,000 pa and the appellant had paid a premium of £5,000 on taking an assignment of the lease, which was for a term of six years from 2010, contracted out of the security of tenure provisions of the Landlord and Tenant Act 1954.
In 2014, the respondent valuation officer rejected a proposal by the appellant to reduce the rateable value to £1. That decision was upheld on an appeal to the Valuation Tribunal for England (VTE), which confirmed the rateable value at £11,250.
The appellant appealed. He contended that the terms on which the property was let were not compatible with the definition of rateable value in section 56 of, and Schedule 6 to, the Local Government Finance Act 1988 so far as it was let for a fixed six-year term, was contracted out of the 1954 Act and therefore had no reasonable prospect of continuance; moreover, the lease, which he had acquired by way of assignment, had been negotiated by a third party and had a premium attached to it and contained rent review provisions and a restrictive user clause which rendered it incompatible with the rating hypothesis. The appellant also argued that the property should not have been valued as a ground-floor retail unit because of its elevated position with the need to access it by steps; he further submitted that the property should be treating as having a “hard frontage”, which reduced the value of a retail unit.
Held: The appeal was dismissed.
While the property might not be let on the statutory hypothetical terms, the actual rent was still a key piece of evidence. The features of the letting which the appellant had pointed out did not assist his case. The fact that the lease was contracted out of the 1954 Act, and that premiums had been paid, suggested, if anything, that the basic rent was lower than the equivalent rent on the hypothetical basis although there was no real reason to suppose that, like the hypothetical assumed tenancy, the appellant did not have a reasonable expectation of renewing his lease at the end of the term. While the appellant was probably not in a position to renegotiate the rent, n weight should be placed on that matter since he had not been compelled to take an assignment or pay the £5,000 premium that he had paid.
The appellant’s property could not be viewed in isolation and other evidence should be considered as long as it was comparable. In that regard, the appellant’s unit was clearly a ground-floor shop, albeit one which was accessed by steps. It was not comparable to first-floor units along the Wharf, most of which were at a much higher floor level than the appellant’s property. It was not appropriate to value the appellant’s property based on an average of ground-floor and first-floor properties along the Wharf. Rating lists were effectively a collection of valuations, which had been arrived at on a consistent basis, it was not appropriate to adopt a hybrid method in valuing the appellant’s property.
A hard frontage was a common reason for an end allowance or adopting a lower valuation than would typically be the case for hereditaments with plate glass shop fronts. However, the situation was different with the appellant’s property, which did in fact have a plate glass shop front on the balcony area, although there was a flank wall next to the steps leading up to it: Halifax Building Society v Payne (VO) (1961) 176 EG 1431 distinguished.
In valuing the appellant’s property, the rent assessment evidence in respect of that and the adjacent property should be given the most weight. Significant weight should be placed on the passing rent of £13,000 for the appellant’s property. Given that that rent was higher than the rateable value assessed by the respondent, and that both the appellant and his predecessor in title had been willing to pay a premium on a lease at such a rent and contracted out of the 1954 Act, that suggested that the rent might, if anything, be too low when considered on the statutory hypothetical basis.
Finally, while the respondent’s 5% end allowance for the steps might at first appear parsimonious, the overall rateable value could not be shown to be wrong when considered in the context of the factors considered above and assuming that the physical configuration of the property was reflected in the rent actually agreed. The rateable value of £11,250 was confirmed accordingly.
Both parties appeared in person.
Sally Dobson, barrister
