Rating Flashcards
Can you give some examples of which properties are exempt from the rating list?
Places of worship
Charities
Agricultural properties
Vacant listed buidlings
What is the main legislation for Rating?
Local Government Finance Act 1988
What is the LGFA 1988?
Major piece of legislation that had a significant impact on local taxation. Included
- New taxes and reforms e.g AVD
- Abolished some of the old systems.
What is a hereditament?
A subject that is rateable e.g building, land, structure.
What are the six rules to satisfy a hereditament? 5 singles , 1 I
- Single rateable occupier
- In a billing authority
- Capable of separate occupation
- Single geographical unit
- Single use
- Single definable position
What are the four essential factors for rateable occupation?
BEAN
- Beneficial
- Exclusive
- Actual
- Not too transient
What is a rateable value and who sets it?
Set by the VOA, a rateable value is the annual rent of a property at the AVD, assuming a hypothetical tenancy
What is AVD?
Antecedent Valuation Date- the set date for non-physical factors i.e economic conditions , currently is 1st April 2021
What are the 7 assumptions of a hypothetical tenancy?
1) Vacant
2) Available to let on an annual tenancy
3) FRI terms
4) In good repairs
5) Tenant pays rates
6) Current use
7) No alterations may be made
What are the 3 methods of Rating?
1) Comparable
2) Contractor’s method
3) Profits ( Receipts and Expenditure)
What is the RICS document for Rating>
RICS Professional Standard: Rating Code of Practice 5th Edition ( Eff June 2024)
What is a Rating List?
A statutory document:
1) Local List - The current list is 2023
2) Central List i.etransport
What is transitional relief
A scheme for the transitional relief to lessen the impact of higher rateable values- table on gov website with the caps
What is an MCC?
Defined in Sch 6 of LGFA 1988
- Matters affecting the physical state of hereditament
- Matters affecting the physical state of the locality i
- Change in use
How would you calculate a tenant’s rates liability?
Rateable value X the UBR
What is a UBR and what are the current rates
Uniformed Business Rate is a multiplier set by the government:
54.6p Standard
49.9 pence Small business i.e RV less than 51,000
What are examples of business rates relief?
- Small Business
- Retail, hospitality and leisure - 75% discount
- Empty property rates relief
What is the small business relief?
RV up to £12,000 - 100% relief
Rv between £12,000 - £15,000 - tapered between 100% to 0%
What is the empty rates relief for offices, retail and industrial?
Office and Retail - 3 Months
Industrial- 6 Months
What is a S44a appeal?
Under Section 44a of the LGFA 1988, a temporary exemption is granted for a partly occupied building, at the discretion of the local authority.
What is role of the Valuation Office Agency
Maintain a fair and accurate list.
What does the RICS professional Standard Cover?
What are recent legislation- Rating
Non-Domestic Act (2023)
What did the Non- Domestic Act 2023 introduce?
- Duty to notify- current no proposed methods
What are the statutory timings of Challenge
Challenge
- Within 4 months of a check for you to submit - via get 18 months to respond
- MCC- within 16 months
What should you consider in a terms of business?
- Focus on the approach to ratepayer and not pressure them
- Specific rate TOE e.g specific rating list convered
- Appendix A
What mechanisms are there to bring an assessment back into the Rating List
Completion notice- Served by VOA
BAR- Billing Authority Report- ask to VOA to bring it in
How would you analyse rent from a lease
VO- Rating Manual and Analsyse to Break?
Apart from Monk and Newbiggin (2017) which other case relates to deletion?
Jackson (VO) v Canary Wharf Ltd [2019] UKUT 136 (LC),
Can you submit a check against 17 and 23 list at the same time?
No - need separate checks for each list
what was the deadline for submitting 17 list appeals?
31 March 2023
Name 3changes introduced within the Non-Domestic Rating Act 2023
- Duty to notify
Communication between ratepayer and VO –it requires all ratepayers to notify the Valuation Office Agency (VOA) of any change to a property they are responsible for, whether it has an existing rateable value or not, within 60 days of the change E.G. INSTALLING AN AC UNIT
BUT NO MECHANISM YET TO ENFORCE
- Completion notices
– previously could only be served on brand new buildings but can now be served on buildings which have been removed from the list due to refurbishment
The recent Non Domestic Rating Act extended the power for councils to serve Completion Notices to bring unoccupied, unlet and sometimes unfinished buildings into the Rating List, meaning that landlords with shell or Cat A space and tenants who are still fitting out could pay rates much sooner.
Improvement relief
Under the new legislation, occupiers who undertake any new improvements after 1st April 2024 will get a 12 month exemption from Business Rates payable on the improvement. It is important to note that occupation of the existing property must continue during the works and landlords undertaking the works will not qualify for this relief.
What is the definition of the material day ?
Day on which certain relevant matters are taken into account.
what is the difference between cat a and cat b
Cat A
A Cat A fit out is the basic finishing of an interior space, this type of fit out includes the installation of a building’s mechanical and electrical services. A Cat A project will also include finished internal walls, reception areas and lift lobbies – but that’s it. With raised metal flooring, painted perimeter walls and a grid ceiling with fitted lights
Cat b- A Cat B fit out is the term used to describe a fully operational workplace that has been designed to a client’s unique specifications to make it their own. A Cat B fit out involves everything from building different rooms to choosing the art on the walls. Cat B fit outs will usually be carried out by a company before they move into a new office with the help of a design and build company.
what is the recent case relating to fit out? and what is the proposed uplift?
Shoosmiths vs mando group ltd - £15 per sq ft in manchester
is there downwards relief?
No- scrapped as part of the 2022 budget
what is an example of something that is not too transient?
Fixed advertising boards
What is the avd for the 23 list?
1st April 2021
what is the central list and what is the local list?
what are the key points about recepits method? - ie what does it do and what property types?
the ascertainment of the rental value of the hereditament by reference to receipts and expenditure, adjusted as necessary, of an undertaking carried on therein.
Pubs, leisure properties, car parks
what did the acendun case agree and what has happened since it?
off the back of it 25 per sq ft was added on for fit out in london for 2017 list
What are the stages of settling an appeal ?
- Challenge – Tribunal
- Upper Tribunal
- Court of appeal
- Supreme court – THESE decisions will filter down into the actions of tribunals as the decions hold the most weight e.g. Iceland Foods Ltd v Berry (VO) [2018] UKSC 15
what is s44a and when might it apply?
think about the car park you worked on!
what is the empty relief for offices, retail and industrial?
And how long is the re-set period?
office and retail - 3months
indsutrial - 6 months
13 weeks
When is it appropriate to use the contractors method?
For properties with no market evidence to determine the valuation
Give an example of property types which are valued on the contractors basis?
Hospitals, Universities, Schools, Sewage works
What is the concept of the contractors method?
Using the costs of building a modern version of the property to determine the capital value of the site. Once you have this you can convert this into an annual rental value.
Can you talk me through the 5 stages of the contractors method briefly?
STG 1 - Estimate replacement cost for whole site USING VO Cost guide 2023
STG 2 - Apply adjustments to cost e.g. physical obsolcence (using monstanto 1998 case which gives you range of allowance to apply for physical obsolescene)
Stg 3 - add land value to cost - value land on assumption you have a cleared site which is land for the same the same as the current mode and category e.g. if its a sewage works then it would be land for sewage works
stg4 - apply statutory decap rate - this turns costs into annual value
stg 5 - assess the valuation
What is the statutory Decap rate?
The rates are 2.6% for education, healthcare and defence properties and 4.4% for all other properties valued on the Contractors’ Basis. ( The current decapitalisation rates were set in 2016 for all future rating lists by The Non-Domestic Rating (Miscellaneous Provisions) (No. 2) Regulations 1989 (Amendment) (England) Regulations 2016 SI 2016 No. 77)
How are museums valued for business rates in2023 list and what was the case which changed the approach from contractors?
Now valued based on receipts and expenditure method - The Upper Tribunal (Lands Chamber) decision in Allen (VO) v Tyne and Wear Archives and Museums [2022] UKUT 0206 (LC)
Agreed that museums should be based on receipts and that the soci-economic benefit could not be factored into the valuation - should just be based on the receipts
In the Tribunal’s view: “We remain stuck, two steps away from a rateable value, because the value of the socio-economic benefits generated by these three museums does not tell us their value to the hypothetical tenant; nor does it tell us anything about the rent that the hypothetical tenant would be willing to pay for the hereditament in order to obtain that value”.
What are 2 examples of rateable plant?
A/C units -ADD ON 4PERSQ For retail warehouses and £7 per sq m for shops
What are charitable rates savings in ENG?
What did the Iceland Foods Limited v Berry (VO) (2018) Establish about A/C?
The true dividing line is between plant which provides a service to a building, and plant which provides a service to the activities of the trader within that building. Where the latter is the main or exclusive purpose, the plant is in the nature of a “tool of the trade” and thus non-rateable. - IN THIS CASE ac was exclusively used for the business purpose
How should you add on for A/C in retail warehouses, shops or offices?
4 PER SQ M FOR RETAIL WAREHOUSES
7 per sq m for shops
IF AC already in an office then it is likely to be reflected in the rent
Which legislation introduced the idea that you can charge for plant and machinery?
The 2000 Valuation for Rating (Plant and Machinery) (England) Regulations
is plant and machinery generally rateable?
plant and machinery (as opposed to land and buildings) is not generally rateable unless it falls within one of the defined classes of rateable items contained within the Plant and Machinery Order
What are 2 classes of plant within the 2000 plant and machinery england order?
windmills
solar panels
What was the decision of the Upper Tribunal (Lands Chamber) in Merlin Entertainments Group Limited v WAYNE Cox (VO) (2018) UKUT 0406 (LC) related to ?
MCCs
What was the appellants case in the Merlin Entertainments Group Limited v WAYNE Cox (VO) (2018
That a crash at alton towers had reduced visitor numbers and that this constituted an MCC so the rating assessment should be reduced.
What did the VO (wayne cox argue?)
The Respondent contended that these changes, in so far as they were observable at all, were not a matter relevant to the essential characteristics of either the hereditament or its locality.
What is the current definition of MCC as agreed following the decisions of, respectively, the Court of Appeal and the House of Lords, in Addis Limited v Clement (VO)
As well as alterations to the property itself, material changes can include physical changes to the locality in which it is situated, and changes which, whilst they are not physical changes to the locality, are nonetheless “physically manifest” there.
What is the general approach to rating?
The approach adopted is that everything is taken as it actually was at the AVD except those matters listed in Schedule 6 para 2(7) WHICH ARE…
- ( the physical state
- physical enjoyment-
physical state within the locality)
These are taken as they are at the date the list is compiled or at the material day, as is appropriate
Before the LFGA 1988 took affect in 1988 what was rating regulated by?
The gernal rate act 1967
How often does the voa compile the local non-domestic rating list
Used to be every 5 years up until when the 2015 list was deferred to 2017 and now it it has followed on the the 2023 list
When does the list come into force
The date it is compiled e.g. 1 april 2023
As per the non-domestic rating act what are the physical factors?
(a) matters affecting the physical state of the hereditament, and
(aa) matters affecting the physical enjoyment of the hereditament.
(d) matters affecting the physical state of the locality in which the hereditament is situated, and
mode or category
Wigan Football Company Ltd v Cox (VO) (2019) UKUT 0389 (LC) establish?
Changes caused by, and directly related to, the business performance of the occupier should be disregarded.
The respondent Valuation Officer contended that the changes identified by the ratepayer were economic ones and that they were the consequences of relegation, which was itself the alleged material change. The result of this, the Valuation Officer contended, was that the material change identified by the ratepayer (relegation) was an economic change, rather than one that was physically manifest either at the property, or in its use, or in the locality.
what did the non-domestic act 2023 change about mccs?
Removed the option to appeal for a rates reduction as a result of any negative impacts on the use or enjoyment of a property as a result of Government or local authority imposed restrictions - it is an extension of the legislation introduced during the Covid-19 lockdowns and we do not expect this will have far reaching consequences.
What are grounds for an MCC appeal?
Can appeal where a property is affected by external or internal disruption
What is the rating assumption regarding repair?
It must be assumed that immediately before the hypothetical letting began on the AVD, the hereditament was in a reasonable state of repair (save for any repairs which a reasonable landlord would consider uneconomic) whether or not that is in reality the case.
What is the theory of rating?
The idea is that rating is a tax on property at a snapshot in time retaken periodically with only a limited intermediate correction to the extent that changes occur within the two established limbs of the rebus principle (physical’ matters and matters concerning mode or category of use)
What guidance did Merlin Entertainments Group Limited v WAYNE Cox (VO) (2018 case provide for assessing MCCS?
i) Does the matter concern an intrinsic characteristic of the hereditament or of the locality, or is it an extraneous matter, for example, something to do with the personal attributes of the actual occupier or the way in which a party conducts its business?
(ii) Does the matter concern a characteristic of the hereditament? If so the issue is whether it falls within physical STATE OR PHSYCIAL ENJOYMENT CRITERIA
(iii) If the matter does not concern a characteristic of the hereditament, does it FALL UNDER THE PHYSICAL CHANGES IN THE LOCALITY
In what timeframe do the VOA aim to deal with checks & how long do they actually have?
3 months but have up to 12 months
What is the point of the recap rate?
The function of the decapitalisation rate is to convert capital value into an annual rental value.
how long do you have to appeal a challenge decision?
4 months
