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AN ARTICLE by Peter Scrafton FIRRV, FCIArb, MRSA(Hon) Solicitor (Non-Practising)

January 2011.

A rumble in the jungle? An earthquake or an approaching tsunami? No: old hands should recognise it – the goal posts are being moved again.

Practitioners have probably felt the anticipatory tremors, but now it is out in the open. What is the state of “reasonable repair”? What started as a glaring omission from the Local Government Finance Bill of 1988 became a monster in the Rating Bill 1999. It is clear that those advising the draftsman in 1999 (if they were advising, or if he was listening) failed to understand the pre-1988 principles, and the Bill was produced in a state which most agreed was deeply unsatisfactory. For whatever reason, probably the frantic pressure of Parliamentary time, the government of the day refused to amend the Bill in any way; and thus we had the Minister’s speech in Committee in the Lords and the Practice Statement which was agreed by the professions and placed on deposit in the Library of the House of Lords.

Things seem to have proceeded in a fairly sensible fashion for a while, until the current economic difficulties started to bite, and the present Empty Property Rate provisions came into force. There is no need to rehearse the tale of stagnation and then decline. Quite when the recession started does not seem to have been debated, in the context of rating, while the government was accusing landlords of refusing to let their property – a contention which has been much derided, elsewhere.

Hard-pressed ratepayers, faced with paying rates as though they were owner-occupiers, instructed their surveyors to look for ways of mitigating the burden. In some cases, it seemed to be a pretty straightforward task, as old, long-empty and dilapidated buildings could be said to have reached the ends of their economic lives and so, according to the understanding of agents, would fall to be taken out of rating, as indicated by the Minister’s speech and the Practice Statement.

To their surprise, however, the Valuation Office Agency would not, and will not, accept most of the evidence offered to them as being sufficient. Consistency of approach on their part (always something which they have prized) seems to have forsaken them. There was a time, prior to the Act of 1988, when Valuation Officers would take a hereditament out of rating if the cost of reinstating it exceeded the rateable value, on the basis, it would seem, that the hypothetical tenancy was an annual one, with a prospect of continuance, and not an absolute certainty thereof. This approach was followed, for example, following the IRA bombs in the City: reinstatement costs were tested (sometimes before Local Valuation Courts) and people serving with the Corporation at the time, as with the Valuation Office, have confirmed that this was the case. The Corporation example is perhaps a good one, as at that time there was, within its boundaries, the alternative option of a reduction to GV£1: RV£1.

No more: detailed schedules of reinstatement costs are demanded; and unless the total exceeds three times, or five times, or sometimes ten times the rateable value, the Valuation Officer demands a withdrawal of the proposal. There is no authority for this of which I am aware, but building surveyors are having a field day!

Another ground for refusal to delete where the property has been empty for some time, has been that there is insufficient evidence of marketing. This smacks, somewhat, of the last government’s pretext for the introduction of the present empty rate provisions. That is a matter of fact in each case; but there appears to be a theoretical approach to this by the Agency, rather than a practical and pragmatic one. Who would pay to market a place which nobody actually wants?

Even deletion on the ground that the hereditament has become incapable of beneficial occupation is now frowned upon by the Agency, who say that they have no interest in determining an occupier, but only the existence of a hereditament and its value. Didn’t I read somewhere, once, that the basis of rating was a hypothetical tenancy, with the hypothetical tenant and the actual occupier bidding against one another?

This gives rise to the claim that, just because it may be incapable of beneficial occupation through being in builders’ hands, vandalised, subjected to arson attack or whatever, the hereditament continues to exist: and, applying the “magic wand” approach to “repair”, the hereditament, which is supposed to be valued rebus sic stantibus, is miraculously restored to full health and rateable at 100% in the hands of the owner (Oops! Sorry – the Agency has no interest in collection, either).

Now enter upon the scene Wingate House, in the shape of Patrick Bond, with the intention of revising the Rating Manual to update what the Minister and the Practice Statement said in 1999. Although this is not a formal consultation, he has, to his great credit, shared some of his thoughts with RSA. But does the profession agree with him?

Through this column I invite every practising rating valuer to write to the Editor with their views, so that there may be a full and proper debate. Remember that, if you say nothing, the Manual will be amended, and that, although only an Agency policy document, will be treated by the Network as the law of the land, which will be capable of alteration only after litigation – which nobody wants.


Peter Scrafton

©J.P. Scrafton, 2011

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