Rating Flashcards
What is the definition of rateable value?
Amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year.
- Property let on the AVD
- Property in reasonable repair and condition
- FRI lease
Tell me about your understanding of the role VOA/Local/Central Government play in the management of business rates.
The VOA is responsible for assessing the rateable value of all non-domestic properties in England and Wales.
What is the Local Government Finance Act 1988?
Main legislation on Local Taxation
Ceased rates as a local tax set by the Local Authority – instead level of the rate was set nationally by the Central Government
Ended rating of houses/ flats – made into a tax on non-domestic properties only
Tell me about Schedule 5 / 6 in the local Government Finance Act 1988?
Certain types of properties are exempt and that those subject to business rates are valued fairly.
Schedule 5: Exemptions
Schedule 6: Valuations
paragraph 7- MCC guidance- physical enjoyment, mode and category, locality.
What are the 4 tests of rateability?
Johns Laing v Kingswood
Beneficial- occupation must be of some value to the rateable occupier.
Exclusive- exclusive for the purposes of the occupier- right to carry out his or her occupation without anyone else on the premises.
Actual- physical presence of the occupier
not too transient- degree of building permanence to be rateable. in general 6-12 months.
How does the basis of value for rating differ to market rent?
Basis of value for rating and market rent are both methods used to assess the value of a property, but they serve different purposes and are calculated in distinct ways:
Basis of Value for Rating (Rateable Value): The rateable value is set based on a fixed valuation date.
Market Rent: reflects the real-world rent a property can achieve in the current market and is influenced by actual negotiations, market conditions, and the specifics of the lease agreement.
This distinction means that the rateable value is often more stable over time and less volatile than market rent, which can change quickly based on economic conditions.
What did the case of John Laing & Son v Kingswood Assessment Committee (1948) say about rating?
established 4 ingredients for rateable occupation.
Court of Appeal- not too transient
John Laing & Son, a construction company, had built temporary huts during World War II for use as offices and workshops.
The company argued that the huts were temporary structures and should be exempt from rates or at least assessed at a lower value.
Outcome: Temporary buildings are rateable, even if their lifespan or intended use is short-term.
-The rateable value must be assessed based on the hypothetical rental value that the property could achieve, which applies regardless of the building’s temporary or permanent nature.
How does Council Tax differ from business rates?
Council Tax- residential properties and is used to fund local government services.
- Based on the market value of the property at a historic valuation date (1991)
Business Rates- non-domestic properties such as shops, offices, and warehouses.
- Paid by occupants/ businesses
- Based on the current rental value of the property as assessed by the Valuation Office Agency (VOA).
what is business rates?
A single unit of rateable property, listed separately in the rating list.
tax on non domestic properties
What approaches do the VOA use when valuing non-domestic property?
Comparable method- Based on market rents.
Contractors Method- Based on the cost of rebuilding; used for unique or specialized properties like refineries.
Profits Method- Based on the profitability of the business; used for properties where the accounts reflect the value, such as pubs.
How does air conditioning affect value differently in different use classes?
Retail Properties: Air conditioning generally increases the rateable value due to improved customer and staff comfort and increased attractiveness.
Office Properties: Air conditioning adds value by enhancing comfort and productivity, leading to potentially higher rents.
Industrial Properties: The impact is minimal unless temperature control is essential for the operations or equipment.
Tell me about Woolway v Mazars.
Supreme Court case
Facts: The case involved an office building. Mazars LLP, an accounting firm were located on the 2nd and 6th Floor.
2nd and 6th Could be accessed through common space therefore treated separately.
Hereditaments should be contiguous if they are to be rated together as one hereditament.
Doesn’t satisfy rules of a hereditament.
PICO implemented after this. To say if contiguous- punch a wall through and other side is your occupation should be merged.
The Supreme Court ruled that the rateable value of a property should separately assessed.
What does the RICS Consultancy Code of Practice say? Has it been recently updated?
The RICS Consultancy Code of Practice outlines the standards and ethical practices expected of surveyors and consultants providing advisory services.
The Code was updated in 2022.
Explain the outcome of Jackson (VO) v Canary Wharf.
Facts: The case involved the valuation of 3 floors in an office in Cat A condition.
There was no programme of works as there were no planned works. the VO argued there was no material day so it should be valued.
Outcome: the Upper Tribunal held the property was not capable of beneficial occupation considering its current state and therefore doesn’t constitute a hereditament and should be exempt.
Explain the Cardtronics Ltd v Sykes case
supreme court case
Facts: Cardtronics Ltd, a company operating ATMs.
The dispute arose over how the value of ATM sites should be determined for business rates purposes.
Exclusive occupation involves having sole control and use of a specific area, which was not found to be the case for the ATM locations.
Decision: Supreme Court held that the rateable value of ATM sites should be assessed based on the functional value (how valuable the ATM is as part of the broader business operation) of the ATM operation rather than the physical premises where the ATMs were located.
Tell me about Newbigin v Monk.
Facts: Newbigin (Valuation Officer) challenged the valuation of a first floor office owned by Monk, which was undergoing construction works.
Property should be reduced to RV £0 as it is incapable of rateable/beneficial occupation. Does not satisfy the credentials of being a rateable hereditament.
Decision: The Supreme Court ruled in favor of Newbigin (VO), affirming that the rateable value should be based on the property’s actual use and occupation, rather than its potential value if fully occupied.
Do charities pay business rates?
80% Statutory Relief
20% Discretionary Relief
How are rates payable calculated?
RateableValue × Multiplier
What is the Valuation Tribunal?
The Valuation Tribunal is an independent body that adjudicates valuation issues concerning business rates and council tax.
resolving disagreements between taxpayers and valuation authorities.
The Tribunal’s decisions are binding.
What is the UBR?
Uniform Business Rate is the multiplier
The UBR is set annually by the UK government and can vary from year to year.
What is the definition of a hereditament and the assumptions?
hereditament means property that can become liable to a rate.
Gilbert v Hickinbottom- court of appeal
Rules to satisfy to be a hereditament
Bakery units on separate sides of the road occupied by owner occupier.
Questioned whether the separate units are separate hereditaments or only one.
1. Single Rateable Occupier
2. In a Billing Authority
3. Capable of Separate Occupation
4. Single Geographical Unit
5. Single Use
6. Single Definable Position
What is small business rates relief and when does it apply?
For properties with a rateable value of £12,000, eligible for 100% relief.
statutory relief
what is empty property relief?
In the Spring Budget, the Chancellor announced that from 1 April 2024 business premises must be re-occupied for at least 13 weeks before applying.
Statutory- 100% relief for the first 3 months for most properties and 6 months for industrial properties.
What is the antecedent valuation date?
1/4/2021
The VOA uses historical date to assess the property’s value at a certain point in time to reflect market conditions/ rental market.
Tell me about the process of challenging the rating list and the timeline
Check- 4 months to respond- factual information displayed.
Challenge- 4 months to respond to decision notice or 16 when MCC. challenging the valuation used- evidence displayed such as case law to support claim.
VO 18 months
Appeal- 4 months to report to challenge decision
where not agreed at challenge it goes to valuation tribunal. no time frame
material day difference to effective day
The material day is the specific date on which the physical state and use of a property are assessed for valuation purposes.
The effective day is the date from which the new rateable value of a property is applied for business rates purposes.
Are there any exemptions from paying business rates?
fish farms
Agricultural Land and Buildings
Places of Worship
parks
name a few of the sections within the local government finance act 1988
4a- completion notices
5- exemptions
6- determining the RV of non domestic hereditaments
7- multipliers
What is a Section 44A certificate?
temporary partial business rates relief set in the LGFA 1988
What is a MCC?
Material Change in Circumstance is a significant change in the environment or to the subject property.
Can apply for these reasons that are impacting the subject property:
- locality
- mode and category
- physical enjoyment
MCC- what other evidence could you provide to support you case?
footfall, occupier rental reduction, turnover, comparables, photographs
