Council tax – Valuation list – Hereditament – Appellant owning unoccupied house in state of disrepair – Respondent listing officer refusing appellant’s request to delete property from valuation list for council tax purposes – That decision upheld by Valuation Tribunal for England – Whether property ceasing to be hereditament – Whether relevant for that purpose that uneconomic to repair property – Whether VTE taking wrong approach to that issue – Appeal allowed
The appellant owned a 1930s demi-detached house, which had been listed in council tax band B since the commencement of the valuation list in 1993. The property had been vacant since 2007 and had fallen into a state of disrepair. For a period after it became unoccupied, it was designated as an exempt dwelling under Class A of the Council Tax (Exempt Dwellings) Order 1992; however, such an exemption could last for only 12 months. Thereafter, the appellant contended that the property should be deleted from the valuation list. The defendant listing officer rejected that contention and decided that the property should remain in the list.
The appellant’s appeal against that decision was dismissed by the Valuation Tribunal for England (VTE). The VTE noted that the statutory basis of valuation for council tax banding required an irrebuttable assumption, under regulation 6(2)(e) of the Council Tax (Situation and Valuation of Dwellings) Regulations 1992, that the property was in a reasonable state of repair and that there was no qualification to exclude repairs that were considered to be uneconomic. It took the view that a dwelling could not be removed from the valuation list unless it had ceased to be a hereditament, which had not occurred in the instant case. In that regard, it held that the property had previously been a hereditament, that no changes had been made to it since it ceased to be occupied and that a property did not cease to be a hereditament simply because it was in disrepair, and it cited R v East Sussex Valuation Tribunal, ex parte Silverstone [1996] RVR 203 as supporting its decision.
The appellant appealed. She contended that, as a matter of law, a hereditament that was not in reasonable repair would continue to exist only if the repairs needed in order to remedy defects were economically worthwhile to carry out. The respondent argued that a dwelling would cease to be a hereditament only where it had become so derelict as to be incapable of repair, as opposed to complete reconstruction or replacement.
Held: The appeal was dismissed.
There was a crucial distinction in law between the valuation of a hereditament and the prior question of whether a hereditament existed. Regulation 6(2) of the 1992 Regulations went to valuation, and the assumptions to be made when conducting that exercise, and not to the distinct legal question of whether a hereditament existed or continued to exist. The VTE had fallen into the error of confusing those two concepts. Although it had correctly held that regulation 6(2)(e) did not import any concept of what repairs a reasonable landlord would consider economic, it had failed to recognise that that provision applied only to valuation and did not answer the question that was before it, namely whether the appellant’s property had ceased to be a hereditament. That error was demonstrated by its reliance on Silverstone, which dealt with the statutory assumptions under regulation 6(2)(e) in the valuation context.
As a general matter of law, whether a property was or continued to be a hereditament would depend on whether that property was capable of being rendered suitable for occupation, in the present context as a dwelling, by undertaking a reasonable amount of repair works. The proper distinction was between a truly derelict property, which was incapable of being repaired to make it suitable for its intended purpose, and a property that could be repaired to render it again capable of being occupied for the purposes for which it was intended. That distinction did not depend on whether the repairs would be economic or uneconomic to undertake. The concept of the reasonable landlord considering something to be uneconomic was absent from the current legal regime for residential properties, unlike the regime for non-domestic rating.
Since the VTE’s decision was tainted by error of law, the proper course was to set it aside and remit the case for redetermination in accordance with a correct understanding of the law.
The appellant appeared in person; Galina Ward and Jacqueline Lean (instructed by the legal department of HM Revenue and Customs) appeared for the respondent.
Sally Dobson, barrister