City Council rates tribunal highlights danger of appeals
A recent ruling in the Upper Tribunal Lands Chamber, with City of York Council fighting it out against the Valuation Office Agency, saw both sides appealing and cross-appealing an earlier decision of the Valuation Tribunal England.
A myriad of claims and counter claims were put before the judges relating to the Rateable Value on the council’s offices in the heart of this historic city, back in 2013.
The HQ of 118,000 sq ft is part modern and part fully refurbished on a site of more than two acres. They were developed by the City Council and occupied following completion of the development in 2013.
At that time, they were assessed at Rateable Value (RV) £1,810,000 from 25 March 2013 and RV £1,790,000 from 12 April 2013 (part of the space became separately assessed following transfer to the Citizen’s Advice Bureau).
The City Council appealed and the Valuation Tribunal for England, reduced the RV to £1,350,000 from 25 March 2013 and RV £1,340,000 from 12 April 2013 respectively. Both the City Council and the Valuation Officer (by way of a cross appeal) appealed against the decision of the VTE and those appeals were heard together, with the City Council as Appellant, by the Upper Tribunal (Lands Chamber).
As always, these cases can run into pages and pages of rulings, so I have tried to condense it down to the key findings:
The Council argued that the VTE was wrong to refuse to make additional allowances in the valuation for the size of the property, the lack of car parking at the site, and the additional repairing costs that were likely to apply because part of the building was Grade II listed. They contended that the assessments should be significantly reduced to RV £1,073,000 and RV £1,060,000 respectively.
The Valuation Officer argued that the VTE had been wrong to determine different values for the old and new parts of the building and that there was no justification for any of the additional end allowances sought by the Appellant. They contended that the assessments should be increased to RV £1,700,000 and RV £1,680,000 respectively.
- 1) The first question considered by the Tribunal was whether there should be different values applied to the old and new parts of the building, or a single level across both parts:
Noting that the two parts of the building were so inextricably linked and woven together that they could never be marketed or occupied separately, the Tribunal ruled that it was more appropriate to apply a single value to both the new and refurbished parts of the building as had been argued by the Respondent VO.
- 2) The Tribunal then considered the whether it was appropriate to make an end adjustment to reflect the overall size of the property.
The City Council’s evidence supporting the allowance was derived from agreed assessments of offices in Leeds and Sheffield – not exactly like for like locations – with many larger offices in those cities. The evidence from York showed that there were two other office properties in the city that were larger than the appeal property and neither of these had been agreed with an allowance for size.
On this evidence, the Tribunal ruled there should be no allowance for size.
- 3) There are only 14 car parking spaces at the appeal property and the Appellant sought an allowance of 10% to reflect this.
The VOA contended that no such allowance had been agreed in respect of other properties in York and so not appropriate in this case. The Tribunal agreed and determined that no allowance should be made.
Another important reason was that the decision to provide only a very small number of car parking spaces at the appeal property had been a conscious one reflecting a change in planning policies and a general move away from encouraging private vehicles in city centres.
- 4) On the question of allowance for the extra repairing costs that were likely to arise because part of the building was Grade II listed.
The Tribunal found that there was no conclusive evidence to show that repair costs of the appeal property would be higher, or that rents of other listed building were reduced to reflect this. They ruled it was not appropriate to make any adjustment, noting also that the building is at the start of its refurbishment cycle.
- 5) The final matter was the question of an end allowance for the layout of the building and for differences in floor levels resulting from its hybrid nature.
The Council contended that the VTE had been correct to determine an end allowance of 10%. The VOA disagreed stating that no allowance should be made as these were factors that affected only small parts of the building.
The Tribunal noted that there was significant evidence to show that such allowances were agreed but in many cases the amount of the allowance for this factor was unclear. The Tribunal took a view and determined an allowance of 7.5% across the whole building.
In summary, the Tribunal reminded valuers of the need to “stand back and look” at the net figure after the application of all allowances to ensure the resulting valuation is comparable with others in the locality. Para 69 of the decision refers to the number of allowances sought by the Appellant:
“…..The total allowances sought, if accepted, would be a 39% discount from the ‘base’ £145 psm for the new part, and a 63% discount from the initial £110 psm for the old part. It is notable that on the agreed schedule of comparables there are almost none in York where the agreed base price has been subject to any allowances.”
And went on to say that if the Appellant “….had “stood back and looked” when he prepared his ultimate valuation, surely he would have realised how inappropriate his end result was.”
The parties agreed valuations incorporating the Tribunal’s findings and determination. The resulting figures, of RV £1,550,000 from 25 March 2013 and RV £1,530,000 from 12 April 2013 were the figures determined by the Upper Tribunal (Lands Chamber).
Although the appeal was allowed in part for both parties, this is an increase in the level of value determined by the VTE.
Perhaps this level of detail is only of real interest to business rates surveyors and valuers but the judgements are timely reminders that every valuation needs to have a detailed inspection and that end allowances need to be supported by robust evidence that is relevant to the locality. Not only that, but with the final valuations resulting in an increase on the VTE determination, this decision also reminds us of the need for careful consideration when appealing a VTE decision.
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