Multi-Occupied Properties Consultation – Mazars – PLA Response

 

BY EMAIL: ndr@communities.gsi.gov.uk

Local Taxation Division
Fry Block
South East Corner
2nd Floor
2 Marsham Street
London SW1P 4DF

22 February 2018

Dear Sirs

Multi-Occupied Properties Consultation Response

I am writing to you on behalf of the Property Litigation Association. The PLA is the industry association for solicitors whose substantial practice is property litigation. The PLA has around 1,300 members. This letter is a response to the Multi-Occupied Properties Consultation that was published in December 2017. The PLA has also liaised with specialist rating surveyors in respect of this response.

I am writing to you on behalf of the Property Litigation Association. The PLA is the industry association for solicitors whose substantial practice is property litigation. The PLA has around 1,300 members. This letter is a response to the Multi-Occupied Properties Consultation that was published in December 2017. The PLA has also liaised with specialist rating surveyors in resect of this response.

Question 1:  Does the draft Bill at Annex A put in practice the policy intention as set out above to reinstate the practice of the Valuation Office Agency prior to the Mazars decision?

1.1   Not entirely. See further below.

Question 2: if your answer to question 1 is no, why and how should the draft Bill be amended to reinstate the practice of the Valuation Office Agency?

Contiguity

2.1   It is to be welcomed that the MHCLG is seeking to restore the practice of the VOA prior to the Mazars decision.

2.2   As property litigation specialists, we are concerned that the drafting of clause 1(3ZC) will not achieve the aim of the Consultation Document set out at paragraph 29 of the Consultation Document.

2.3   On the examples provided in the Consultation Document, the situation is straightforward and the draft legislation will ensure the hereditaments are contiguous. However, multi-occupied buildings are rarely simple structures. We do not feel that the draft legislation adequately addresses the situation that arises where there is for example a void space as between two floors, or indeed a void space as between two units on the same floor.

2.4   Taking the example of a letting of floors 2 and 3 in a building, we think that there is scope for argument that units will not be contiguous if the ceiling of floor 2 is not part of the floor of floor 3. This could be the case from 2 perspectives. Firstly, from a structural perspective, the ceiling and floor may not the same thing. Secondly, from a legal perspective, the tenant may not be demised the actual structure of the building itself – it only being demised the inside of the ‘eggshell’.

2.5   The same logic would equally apply to vertical division.

2.6   We do not consider that the intention would be for floors 2 and 3 to be non-contiguous due to a limitation within the draft legislation. From a practical and common sense perspective the floors are contiguous and should benefit from the quantum discount.

2.7   The PLA would strongly recommend that the MHCLG reconsider the draft legislation with a view to ensuring that the legislation is sufficiently wide to enable occupation of adjacent floors to be contiguous. We would recommend that MHCLG should revise the wording by working with rating surveyors, building surveyors and the PLA to ensure that the objective in the Consultation Document is achieved.

Application to Occupied Properties

2.8   We are further concerned that the scope of the draft legislation extends only to occupied properties.

2.9   For example, a company occupies floors 5-10 in a building. This is treated by the VOA under the draft legislation as one assessment. However, if the company vacated these floors, then each floor would need to be assessed separately. Prior to Mazars, VOA practice would have been to leave the assessment as a single assessment.

2.10   Similarly, using the same basic scenario facts, if the occupier remained in occupation of floors 9 and 10 and vacated the remainder of the building, then there would be separate assessments for each of floors 5, 6, 7 and 8 and one assessment for floors 9 and 10. Prior to Mazars, the VOA would have simply split the original assessment into two – namely an assessment for floors 5-8 and one for floors 9-10.

2.11   We would recommend that the draft legislation be revised to accommodate the pre-Mazars practice in respect of the above.

Application to Occupied Properties

2.12   We are further concerned that the scope of the draft legislation extends only to occupied properties.

2.13   For example, a company occupies floors 5-10 in a building. This is treated by the VOA under the draft legislation as one assessment. However, if the company vacated these floors, then each floor would need to be assessed separately. Prior to Mazars, VOA practice would have been to leave the assessment as a single assessment.

2.14   Similarly, using the same basic scenario facts, if the occupier remained in occupation of floors 9 and 10 and vacated the remainder of the building, then there would be separate assessments for each of floors 5, 6, 7 and 8 and one assessment for floors 9 and 10. Prior to Mazars, the VOA would have simply split the original assessment into two – namely an assessment for floors 5-8 and one for floors 9-10.

2.15   We would recommend that the draft legislation be revised to accommodate the pre-Mazars practice in respect of the above.


Question 3: Do you agree that backdated changes to the 2010 rating list to reinstate the previous practice of the Valuation Office Agency should only be made as a result of a proposal from the ratepayer (or a previous ratepayer)?

3.1   There would be a need to see any draft appeal amendment regulations quickly to ensure that all appropriate assessment amendments for the duration of the 2010 List can be covered.


Question 4: Do you agree that the former 2010 list appeals process should apply to proposals for backdated alterations to the 2010 rating list?

4.1   Yes.

Question 5: If your answers to questions 3 or 4 are no, why and what arrangements should apply for implementation of this policy to the 2010 rating list?

5.1   Note comments above.


Question 6: Do you agree that a ratepayer should be able to make a prioritised “check” of their rateable value on the 2017 rating list to apply the legislation to their assessment? This would be in addition to the Valuation Office Agency’s normal duty to maintain the rating list.

6.1  Yes 


Question 7: If your answer to question 6 is no, why and what arrangements should apply to reinstate the practice prior to the Mazars decision?

7.1   N/A.

We trust that the above comments are helpful. If you have any comment, query or concern, please contact Bryan Johnston to discuss further (bryan.johnston@dentons.com; 020 7320 4059).

Yours sincerely

Bryan Johnston
PLA Law Reform Committee

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