· Rates are primarily a tax on the occupation of
property, therefore a rating valuation is firstly determined
by reference to a gross value which is, briefly, the annual
rental value on the basis that the property is ‘vacant
and to let’, with a hypothetical tenant to pay the
rates and a hypothetical landlord to carry out any repairs
necessary to maintain the property in a state to command
that rent. This basis applies irrespective of whether
the property is owner/occupied or rented and is known
as the ‘hypothetical tenancy’. The authority
for the foregoing is the Rating and Valuation Act 1953.
· To arrive at a rateable value a fixed statutory
deduction is made from the gross value under the authority
of the Fourth Schedule to the Rating and Valuation Act
1953. For example, ‘dwelling-houses and other buildings,
or other buildings only’, get a ‘20% or one-fifth,
deduction. ‘Other buildings’ applies to commercial
and non-factory property, as factories are allowed a higher
statutory deduction of 33 1/3% or one third’.
· The present levels of gross value (annual rent)
that are applied to all categories of rateable property
are based upon rental evidence obtained, analysed, adjusted
to fit the statutory definition, and then used for the
general all Island rates revaluation that was completed
circa 1971/72. Rental information for the period 1968
to 1970 established a ‘tone of the list’ to
which all new or altered property is subsequently related
and which will stay in place until there is a revaluation.
· A ratepayer or rating authority can appeal against
a gross value (annual rental value) but not directly against
a rateable value, although the latter determines the actual
rate poundage paid, by the application of the various
rates in the £ as a multiplier against it. A ratepayer
or rating authority, aggrieved by the incorrectness or
unfairness of a valuation may lodge an objection in writing
to the Treasury which, if not settled by agreement with
the Valuation Office, will be forwarded to the Rent and
Rating Appeal Commissioners for a formal hearing - the
authority for this is sections 24 and 26, Rating and Valuation
Act 1953.
· Anything that would adversely affect a rental
value on a property can reduce a rates gross value and
thereby the rateable value, subject to the Valuation Acts
1953 to 1991 and the valuation rules. There are a wide
number of factors that can be taken into account in arriving
at a gross value prior to the rateable value being fixed
by a predetermined statutory deduction.
· Permanent allowances are generally those established
at the time of the 1971/72 revaluation based upon rental
evidence at that time, or fixed by quasi-judicial decision
via the appeal system, or by established rating case law
based upon interpretation of rating legislation. Such
examples would be downward rental adjustments (of the
gross value) for rural location; access problems; category
and size of the property; layout of the accommodation;
age of the building; lack of basic amenities (bath, toilet,
mains water, electricity); permanent nuisance that affects
occupation; agricultural domestic occupancy allowance
(agricultural outbuildings exempt).
· Temporary downward rental adjustments can be
given provided that there is a disability that will persist
for the greater part of a rating year and that there is
a sufficiently serious degree of disability, for example,
new estate building work; associated unmade roads and
lack of street lighting; severe flooding; a property incapable
of rateable occupation due to alteration work or due to
it’s condition being beyond reasonable landlord
repair under the hypothetical tenancy - properties are
always taken to be in reasonable repair as per the statutory
definition of gross value unless there are exceptional
circumstances, a lack of maintenance would not produce
a lower gross value.
· Although rates are a tax on the occupation of
property, more usually paid by the occupier although sometimes
by the owner, the Rating and Valuation (Amendment) Act
1991 abolished rates relief for unoccupied property and
therefore all unoccupied property that is capable of rateable
occupation will receive a rates demand whether occupied
or not. The fact that a property is unoccupied would not
affect the gross value save in one exceptional circumstance;
if a property is incapable of rateable occupation after
reasonable landlord repairing expense, under the statutory
hypothetical tenancy, then the rates valuation may be
temporarily reduced to zero until the work is completed.
· Any further explanation or amplification regarding
the contents of the foregoing can be obtained by contacting
the Treasury Valuation Office (685658).
