Matt - Case Study

Question 1

What is a Rating Challenge case?

Answer 1

This is the second stage in the Check, Challenge and Appeal process where Ratepayers can challenge their properties Rateable Value.

Question 2

What is Check, Challenge and Appeal?

Answer 2

It is the system introduced with the 2017 Rating List for how properties have their rating assessments challenged.

It was introduced by the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2017.

Question 3

It states that the property is also known as a hereditament - why is this?

Answer 3

Within Rating, the unit of assessment’s formal name is called a hereditament.

Question 4

Why was it important for you to carry out a conflict of interest check before working on the case?

Answer 4

To ensure that my valuation and judgement was impartial throughout. If it was for a friend or someone I knew, my judgement could be biased.

Question 5

Why did a Check have to be submitted before the Challenge?

Answer 5

As per the Check, Challenge and Appeal process, the Check must be completed first to confirm the factual details of the property.

We need to know and confirm the facts before discussing values.

Question 6

What is the 2017 compiled list valuation?

Answer 6

This is the valuation of the property/hereditament for the 2017 Rating List effective from the first day the list comes in to effect.

Question 7

What is the antecedent valuation date?

Answer 7

This is the date where market values and economic factors are taken in to account. For the 2017 Rating List this was the 1st April 2015

Question 8

Why is the antecedent valuation date set 2 years before?

Answer 8

This is to give the VOA time to compile the Rating List. It’s a big task!

Question 9

Why was there a survey line entry uplift of 10%?

Answer 9

This was to reflect the subject property having a second entrance.

Question 10

What is the VOA Code of Measuring Practice?

Answer 10

As the name suggests, it is the document that the VOA follow to measure properties that are assessed for non domestic rating and council tax purposes.

Question 11

How does the VOA Code of Measuring Practice differ from the RICS Code of Measuring Practice?

Answer 11

For properties measured to GEA and GIA, areas with a headroom of less than 1.5m are excluded rather than included.

Question 12

Why did you measure to Net Internal Area?

Answer 12

As per the Code of Measuring Practice, retail properties are measured to NIA.

Question 13

Why did you zone the property?

Answer 13

To value this property for Rating purposes, we adopted the zoning method of measurement.

Question 14

What is zoning?

Answer 14

It is a method of measurement used to compare retail properties on the basis that the front of the shop (or the Zone A) is the most valuable.

Question 15

With your property having two entrances, how did you decide which entrance of the shop to zone from?

Answer 15

I decided to zone from the main entrance of the shop as zoning from the secondary entrance would cause an over valuing of the In Terms of Zone A value and the subject property when compared to other retail properties that were zoned from their main entrances.

Question 16

Why did you zone from the building line?

Answer 16

To value the property for Rating purposes, we are required to identify the building line which is where the front of the shop/hereditament changes to another aspect such as a pavement. This change is called the building line.

Question 17

Why did you make note of value significant factors like air conditioning, sprinklers and CCTV?

Answer 17

Because these items are rateable and depending on whether they’re part of the main rent or tenants improvements, this affects the rental analysis.

Question 18

For your property, were these items part of the main rent or tenants improvements and how did you know?

Answer 18

They were part of the main rent and this was confirmed to me by the agent during negotiations.

Question 19

How did you propose to inspect the property given that the survey details weren’t challenged?

Answer 19

I emailed the agent to introduce myself as the caseworker for the case, and asked if I could inspect the property for due diligence and also my own experience. The agent understood and accepted.

Question 20

How did you prepare for your inspection?

Answer 20

I had regard to the purpose of my inspection which was to look at the retail shop and assess whether there was a basement store.

I also had regard to any PPE I would be required to take, my equipment such as phone for lone working, and I also assessed whether I had the appropriate competence, PII, and inspection documentation.

I also carried out statutory due diligence checks.

Question 21

Did you refer to any guidance in relation to the inspection?

Answer 21

I referred to my own employers guidance in relation to lone working such as updating my calendar with my location, including my personal safety device.

I also referred to the RICS guidance note of surveying safely.

Question 22

Tell me a bit about surveying safely.

Answer 22

It’s a professional standard document issued by RICS with effect from February 2019 that sets out good practice in relation to health and safety for RICS firms and members.

Question 23

What is the Property In Common Occupation Act?

Answer 23

This is legislation introduced in 2018 primarily reverse the U.K. Supreme Court decision of Woolway v Mazars (2015) and identifying the unit of assessment or hereditament.

Question 24

What is the contiguity condition?

Answer 24

It’s a new subsection introduced to the LGFA 1988 by PICO to help identify a hereditament, and it basically means whether hereditaments touch each other they can be classed as one hereditament and not separately assessed.

Question 25

Were the shop and basement store functionally essential?

Answer 25

No, they were not and therefore they were separately assessed. If they had been then they would have been assessed the same.

Question 26

What is the definition of Rateable Value?

Answer 26

It is to be taken to be an amount equal to rent that the hereditament is reasonably expected to let for on the assumption that:

1. The tenancy begins immediately on the day the determination is made, so antecedent valuation date and material day
2. The tenant is responsible for paying all the rents and rates to command the rent
3. The property is assumed to be in a reasonable state of repair but excluding from that assumption any repair which a reasonable landlord would consider uneconomic.

Question 27

What is Lotus & Delta?

Answer 27

It is a leading case law within non-domestic rating that was about a shoe shop in Leicester, that considers the hierarchy of rental evidence to consider when valuing a property for rating purposes.

Question 28

Tell me a little bit about the case

Answer 28

It was in relation to a shoe shop in Leicester. (add more here)

Question 29

What are the six propositions detailed by the Lands Tribunal within the Lotus & Delta decision?

Answer 29

1. The subject property rent should be taken as a starting point
2. The closer the rent is agreed to the hypothetical assumption, the more weight can be attached
3. The rents of other comparable properties should be considered
4. Similar comparable property settlements should also be considered
5. An opinion of value can now be formed considering all the evidence
6. With a lack of other comparable evidence or settlements, it would be difficult to discard the subject rent

Question 30

Where does a lease renewal sit within the hierarchy of evidence?

Answer 30

It is second in the hierarchy behind a new letting.

Question 31

What is the hierarchy of rental evidence?

Answer 31

1. New letting
2. Lease renewal
3. Rent review
4. Independent expert
5. Opinion
6. Arbitration / court decisions
7. Asking rents

Question 32

Why did you attach high weight to the subject rent even though it was a lease renewal?

Answer 32

As per the hierarchy of evidence, it is second so it was good evidence to rely on. In addition it was agreed in the build up to the AVD and on terms similar to the rating hypothesis.

Question 33

When is a tone considered to be settled following recent court decisions?

Answer 33

Historically it’s towards the end of a Rating List, however in circumstances where mistakes have been made, then an argument is that the tone isn’t fully settled.

Question 34

What is a Regulation 17 Transition Certificate?

Answer 34

Regulation 17 refers to where a properties RV is incorrect as at 31st March 2017.

This is a transition document provided to the relevant billing authority to allow them to know what the RV for the property would have been for the 2010 Rating List if it was still possible to amend it.

Question 35

What is transitional relief?

Answer 35

It’s a type of relief within non domestic rating which allows phased increases or decreases in properties RVs, and also informs billing authorities of what it should have been if we could still amend the Rating List.

Question 36

Are you aware of any changes to transitional relief for the 2023 Rating List?

Answer 36

That downward phasing has been removed, the decrease is given much faster than before with the phasing.

Phased increases still exist however so if a properties RV goes up, this isn’t instantly put on the Ratepayer but is a phased increase.

Question 37

Why did you zone through the partitioned wall?

Answer 37

As per the principles of zoning, I had to zone from the building line until the structural wall.

Question 38

How did you deduct the tenant improvement items from the rent?

Answer 38

I had regard to the cost guide for the 2017 Rating List for the CCTV and calculated their annual total cost from this, which I then subsequently deducted from the rent.

Question 39

What is the planning use class for your subject property?

Answer 39

Class E with effect from April 2021

Question 40

What is the leading case in relation to having paramount control of a hereditament?

Answer 40

Cardtronics and others v Skykes (VO) [2020]

Question 41

Can you tell me a bit about the Cardtronics case?

Answer 41

This was a case that went to the Supreme Court and was about determining who was in paramount control of ATM machines, occupiers or the ATM operators.

The Supreme Court ruled that control was key in this scenario, and that ATMs were being controlled by the retailers and therefore rateable occupation of the whole.

ATMs were therefore assessed as part of the store and not separately

Question 42

Why did you value air conditioning at £7/sqm for 50sqm?

Answer 42

I had regard to the kilowattage of the air conditioning cassette to know how much of the retail space to cover. It was not plant and machinery and therefore listed as an other addition.

It is based on having a conventional air conditioning system, this back stop figure of £7/sqm is therefore used

Question 43

What is the leading case law with regards to air conditioning and rating?

Answer 43

Iceland Foods v Berry (2015)

Question 44

Can you tell me about the Iceland case?

Answer 44

This was a case that was determining whether air conditioning should be rateable.

The Supreme Court ruled that the air conditioning was part of the trade process and therefore exempt.

Question 45

Is air conditioning normally rateable?

Answer 45

Normally and if found within the Plant and Machinery Regulations 2000, however it can be excluded if found to be part of the trade process.

Question 46

Why is Plant and Machinery rateable?

Answer 46

Plant and Machinery Regulations 2000

Question 47

How did you value your plant and machinery?

Answer 47

I had regard to the 2017 Rating List Cost Guide, established the replacement cost for each plant and machinery and applied the statutory decap rate to arrive at an annual equivalent replacement cost.

Question 48

What is Planning use class E?

Answer 48

Commercial, business and service

Question 49

How would you value air conditioning?

Answer 49

1. Look at market evidence (how much it adds in rental value)
2. Using the cost approach to work out how much it would cost to implement and then statutory decap rate
3. If nothing else, use the £7/sqm backstop

Question 50

What are some different types of Transitional Certificates for the 2023 List?

Answer 50

Regulation 18 - Incorrect as of 01 April 2023

Regulation 19 - Incorrect as of 31 March 2023

Regulation 20 - Splits, mergers and reconstitutions prior to 01 April 2023

Question 51

What are some statutory due diligence checks you should do before going on an inspection or doing a valuation?

Answer 51

1. Am I competent?
2. Conflict of interest
3. Terms of engagement
4. Asbestos register
5. Business rates
6. Equality act compliance
7. Environmental matters
8. Flooding
9. Fire safety compliance
10. Title and tenure
11. Planning