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The Upper Tribunal has clarified the identification of the unit of assessment for buildings occupied by property guardians. In Ludgate House, the Upper Tribunal was faced with an extremely large, multi-storey office property on the South Bank. The property had been vacated pending demolition, but was occupied by a number of property guardians who lived in the property as their home. On the material day, the property contained 4 guardians, each of whom occupied a specific lockable bedroom, but also made use of other space in the property for living purposes. The VO and Southwark LBC (with whom the Valuation Tribunal agreed) had held that the whole of Ludgate House was a single, non-domestic hereditament in the occupation of its owner, LHL. In reaching that view the VTE was heavily influenced by the sheer scale of Ludgate House, in comparison to the small amount of space actually occupied by the guardians. The Upper Tribunal, allowing the appeal, held that the VO’s and Southwark’s approach was erroneous. Whilst the guardians occupied under non-exclusive licences, it was clear that, in practice, each had a dedicated bedroom from which all others were excluded. Those bedrooms were capable of definition as discrete geographical units. It did not matter that the guardians also used other space in the building to meet their living needs, so that their occupations ‘spilled out’ of their bedrooms; the position was analogous to a serviced office, where the occupier has a dedicated core workspace but also makes use of communal areas in the wider building. Whilst the building was enormous compared to the bedrooms, the analytical focus is not on the building as a whole, but on the individual rooms as putative hereditaments. The bedrooms were thus capable of being discrete hereditaments. The Tribunal went on to find that each bedroom was in the rateable occupation of its individual guardian. The guardians were in actual occupation, and there was no contractual or other relevant relationship from which their occupation could be imputed to LHL. As to exclusivity, whilst LHL received a benefit from the guardians’ presence in terms of the security of the building, the relevant purpose for analysing occupation was the guardians’ own purpose, which was to provide themselves with somewhere to live. Each guardian’s occupation of his/her bedroom was exclusive for that purpose. Furthermore, LHL was not in occupation of the bedrooms for any purpose: rates mitigation was a consequence of occupation, not a purpose of it, and securing a building is not itself a form of beneficial occupation. Whilst the guardianship company exercised some control over the building, it was insufficient to give rise to paramount occupation on the part of the owner. On that basis, the single List entry for Ludgate House as a whole was erroneous and had to be deleted. The tribunal expressed some preliminary views on how it would have valued Ludgate House had it been a composite, but did not reach any firm conclusion as the point did not arise. It declined to express a view on the human rights implications which would have arisen had LHL been subject to retrospective rates liability, though it did recognise that the appellant’s approach could be “significant … in the field of rating”. The outcome has provided considerable clarity on the approach to identifying the hereditament in guardianship cases. The valuation of such hereditaments when they are identified, however, is a matter which will need to be considered on another day and via another appeal. David Forsdick QC and Luke Wilcox (instructed by Herbert Smith Freehills) appeared for the appellant ratepayer.
