In this section
When banding a property which comprises numerous units in different occupations it will be necessary for the valuer to decide the number of bands which it is appropriate to attach. This Practice Note covers those areas of difficulty likely to be experienced and the approach to be taken. This area has become more contentious as houses in multiple occupation are now subject to registration by local authorities and landlords are required to provide minimum facilities and encouraged to improve such dwellings. Thus not infrequently changes of circumstances occur as improvements and alteration occur, and LOs are required to correct lists as a consequence.
2.1 The nature of occupation of units of accommodation contained in some properties will often mean that despite not being self contained these units would have formed separate hereditaments for the purposes of Section 115(1) of the General Rate Act 1967. As a result of the definition of dwelling contained in Section 3(2) of the Local Government Finance Act 1992 (LGFA 1992) each unit would (but for the provisions described in paragraphs 2.2 and 2.3 below) have required a separate band to be attached to it. Examples of premises containing such units of accommodation are those properties frequently referred to as being in "bed-sits" and some tenement blocks where facilities are shared.
2.2 Section 3(5) of the LGFA 1992 provides:-
"The Secretary of State may by order provide that in such cases as may be prescribed by or determined under the order –
(a) anything which would (apart from the order) be one dwelling shall be treated as two or more dwellings; and
(b) anything which would (apart from the order) be two or more dwellings shall be treated as one dwelling."
The resultant Order is the council tax(chargeable dwellings) Order 1992
2.3 The Council Tax (Chargeable Dwellings) Order 1992 (SI No 549)
Article 2. sets out essential definitions two of which are especially relevant to aggregation.
• The definition of self contained unit is ‘a building or part of a building constructed or adapted for use as separate living accommodation’
This applies to dissagregation within article 3 and to aggregation within article 4 of the Order.
• The definition of multiple property is ‘property which would, apart from this Order, be two or more dwellings within the meaning of Section 3 of the LGFA 1992’.
A ‘Section 3’ dwelling is a hereditament type dwelling, ie one defined by occupation only, and one which, of course, does not have to be self contained in the sense of having all necessary facilities. Where rooms are separately let and a landlord has relinquished paramount occupation, multiple dwellings will exist within a larger self contained unit.
Article 4. of the Chargeable Dwellings Order is worded as follows:-
(1) Where a multiple property –
(a) consists of a single self contained unit, or such a unit together with or containing premises constructed or adapted for non-domestic purposes; and
(b) is occupied as more than one such unit of separate living accommodation,
the listing officer may, if he thinks fit, subject to paragraph (2) below, treat the property as one dwelling.
(2) In exercising his discretion in paragraph (1) above, the listing officer shall have regard to all the circumstances of the case, including the extent, if any, to which the parts of the property separately occupied have been structurally altered."
2.4 The effect of this provision is to give the listing officer discretion to treat what would otherwise be a multiple property as a single dwelling in prescribed circumstances. This discretion is similar to that provided by Section 24 of the General Rate Act 1967 for the purposes of domestic rating.
3.1 Properties in multiple occupation fall into two main categories, namely;
Category (i) a property which has been constructed for the purpose of a single dwelling but is occupied in parts, with little or no adaptation, or
Category (ii) a property which has been constructed, physically converted or structurally adapted, so as to provide separate units of accommodation for several occupiers with significant degrees of self containment.
All properties that fall within category (i) should, after the exercise of discretion, generally have a single band attached to the whole original self contained unit, whilst those falling within category (ii) should have a band attached to each separate unit of self contained accommodation located within them.
1. A 1970s building constructed for its current use as 30 separate units of accommodation with individual cooking and toilet facilities but shared bathrooms is not appropriate for aggregation under Article 4. It was never a single self contained unit. (Category(ii))
2. An old Victorian house given over to bed-sits but with no physical adaptation would satisfy the conditions in Article 4(1)(a) and 4(1)(b). The building was originally constructed as a self contained unit, is multi-occupied but has had no adaptations.(Category (i))
3. Contrast 2 above to a property where proper kitchenettes have been constructed to each room, locks provided to give clear delineation of hereditaments, and where there is a stable pattern of occupation. – Quite often at least one flat in such a building does not share facilities.(Category (ii))
A judgement must be made according to the circumstances of each case, where the accommodation and degree of conversion may not be clear cut.
3.2 It must be understood that a multiple property means the existence of multiple S3 1992 Act dwellings within what is clearly a self contained unit. In considering whether to exercise discretion under Article 4 to attribute a single band to premises in multiple occupation, particular regard should be had to the following:
a) The property in its entirety must consist of a single self-contained unit and will probably have been originally constructed or for use as such. The provisions would not allow the listing officer discretion to treat a purpose-built block of flats as a single dwelling, for example, unless there had been very substantial conversion to make the whole building into a single self contained unit.
b) Wherever a self-contained unit exists within a larger property this must be separately banded as a dwelling and discretion should not be exercised in such a way as to defeat this object. For guidance as to the interpretation of "self-contained unit" see Practice Note 5 (paragraph 4). In multiple property cases, most usually, any self contained unit which would otherwise satisfy the disaggregation provisions will also be a separate hereditament define by separate occupation. If whatever accommodation is left over within the larger property can reasonably be said to consist of a self contained unit, within the Dwellings Order definition, then that part can also be considered for discretionary aggregation.
Not infrequently, however, improvements have been made to certain flats, some even being fully self contained, leaving the remainder of the let rooms scattered over the building without any real prospect of being considered a self contained unit in themselves - a precondition for aggregation . In these circumstances application of discretion would be inappropriate.
c) The frequency of tenant turnover. A regular turnover would weigh on the side of exercise of discretion. There could be a question of who, in fact is in paramount occupation – is it a multiple property at all?
d) The degree of structural adaptation. This is the only measurable element of the legislation. The greater the degree of adaptation towards self containment, the less likely it would be for discretion to be exercised and vice versa. Adaptation will vary merely from the provision of a separate lockable door to full self containment with kitchen, WC and washing facilities. In judging the degree of structural adaptation, care should be taken in considering whether a ‘kitchen’ exists as a result of significant structural changes or just use of a sink with typical white goods and moveable furniture one may find in a kitchen, which are actually chattels, eg fridge, cooker, microwave, kettle, tables, chairs etc. Imagine the building empty and cleared of furniture and moveables – would the facility clearly constitute a kitchen or kitchenette?
Similar to disaggregation, aggregation is a particular circumstance where the normal rules of banding of dwellings may be broken in limited circumstances. Aggregation under Article 4 must be clearly distinguished from a decision to merge two or more previous separately occupied dwellings or two previous self contained units dwellings, where physical works have been carried out to create a single unit, because the effective date will differ. In the case where works are carried out or where occupations change the effective date will be the date the new circumstances arose. In decision to aggregate, no changes of occupation or conversion works are involved.
For example, a family may occupy a pair of semi-detached or adjoining terraced houses, which are separately banded. The taxpayer removes all bathroom and kitchen fittings in one house including service pipework, creates internal doorways between the two houses, and re-routes electrical and gas services so that they are connected to a common meter. Thus, a new single self-contained unit of accommodation is created, and the two existing bands are merged into a single band from the date when the alterations were completed.
When an aggregated dwelling comes into existence by the exercise of LO discretion, it is the exercise of that discretion which creates the ‘deemed’ dwelling, and the date appropriate is the date of exercise of that discretion. (see a full explanation in para 5)
The effective date to be adopted when the Listing Officer decides to exercise his discretion for aggregation, under Article 4 or decides that circumstances no longer warrant application of discretion should be taken as date of schedule of alteration for the following reasons.
Under the Appeals regulations (reg14 of the 1993 CT Appeals regulations for Wales and reg 11 of the 2009 regulations for England) the effective date for a post compilation date dwelling is the date it came into existence or ceased to exist.
References to a dwelling ceasing to exist or coming into existence, specifically include references to property being treated as multiple dwellings (Article 3 disaggregation) and multiple dwellings being treated as single dwellings (Article 4 aggregation), under 1993 reg 14(8)(d), and 2009 reg 11(10)(b)(iv).
Alterations take effect from the day on which the circumstances occurred which give rise to the alteration. Because of the circumstances envisaged under article 4 there is unlikely to be any physical alterations to trigger the coming into existence of the dwelling, since dwellings will already exist in a multiple property, by definition. Thus, the effective date under article 4 exercise of discretion can only be the date on which the Listing Officer exercises or decides to exercise under that Article, most usually date of schedule of alteration.
This view is reinforced by the effect of the 1994 amendments, which limit the date of an increase or division under Article 3 to the date of the list alteration. Further 1/4/2007 amendments to Reg 14(5)(a) limits the effective date to date of schedule for all circumstances where disaggregation applies, notwithstanding the dates of the coming into existence of any previous physical changes (e.g. the previous coming into existence of an annexe in a single property). This is also reflected in the 2009 regulations at 11(6)(b). This suggests that the intention of Parliament is to avoid saddling taxpayers with an unexpected backdated liability.
No special provision is made for 'mergers' under Article 4, which suggests that the draftsman had taken the view that any such 'merger' would not be backdated. Similarly, where circumstances arise to cause the LO decides to review the exercise of discretion, re-instating multiple dwellings, the date of schedule alteration is appropriate.
The words from the regulations "the day on which the circumstances giving rise to the alteration occurred" should be taken to include the action of the LO to review his/her discretion, because whether of not new dwellings come into existence depends on the exercise (or withdrawal of) that discretion.
In conclusion, therefore, in order to avoid backdating where cases of aggregation are instituted or reversed, the Listing Officer should adopt the date of list alteration as the effective date for the new entry.
Appendix 1sets out essential case law with a bearing on circumstances likely to be found in a house in multiple occupation.