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.
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 paras 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."
2.3 Article 4 of The Council Tax (Chargeable Dwellings) Order 1992 (SI No 549).
(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."
"Multiple property" is defined as property which would, apart from this Order, be two or more dwellings within the meaning of Section 3 of the LGFA 1992.
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 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 constructed or adapted for use as such. The provisions do not allow the listing officer discretion to treat a purpose-built block of flats as a single dwelling, for example, unless there has been substantial adaptation.
b) Wherever a self contained unit exists within a larger property this should normally be separately banded 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 (para 4).
c) The frequency of tenant turnover. A regular turnover would tend to point to the exercise of discretion.
d) Whether discretion was exercised under Section 24 of the 1967 Act, if applicable.
3.2 Properties in multiple occupation fall into two main categories, namely;
(i) a property which has been constructed or adapted for the purpose of a single dwelling but is occupied in parts
or
(ii) a property which has been constructed or converted so as to provide self contained accommodation for several occupiers.
3.3 For Council Tax purposes all properties that fall within category (i) should generally have a single band attached whilst those falling within category (ii) should generally have a band attached to each unit of self contained accommodation located within them.
As a practical example, a 1970s building which was 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, whereas 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).
Aggregation under Article 4 must be clearly distinguished from a decision to merge two or more separate hereditaments, because the effective date will differ (see para 5).
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.
4.1 Once the number of dwellings to be banded has been identified a valuation is to be made in accordance with regulations 6 or 7 of The Council Tax (Situation and Valuation of Dwellings) Regulations 1992 (SI No 550 as amended).
4.2 For the purpose of clarification, whilst premises falling within category (i) of para 3.2 above would invariably be sold occupied by tenants, the assumption as to vacant possession will not serve to reduce the value of such a property as it may normally be assumed that it could have been re-let to those in occupation.
Unlike in the case of a merger of two or more existing list entries, which can have effect from the date of the compiled list, the effective date to be adopted when the Listing Officer decides to exercise his discretion for aggregation under Article 4 after compilation, is restricted. A Solicitor's Opinion obtained in 1996 advises that an alteration to a valuation list is prescribed by Regulation 14 of The Council Tax (Alteration of Lists and Appeals) Regulations 1993, as amended (with effect from 11 July 1994) by 1994 SI 1746. Regulation 14(1) applies where a dwelling has come into existence or ceased to exist since the list was compiled. By Regulation 14(8) references to a dwelling ceasing to exist or coming into existence, include references to property being treated as single dwellings under Article 4. Alterations within Regulation 14(1) take effect from the day on which the circumstances occurred which gave rise to the alteration. Where there has been no physical change (whether to the property or to the way in which it is occupied) since the date on which the valuation list was compiled, Regulation 14(1) can only apply in relation to an alteration under Article 4 if the correct effective date is the date on which the Listing Officer exercises, or decides to exercise, his/her discretion under that Article.
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, and suggest that the intention of Parliament was to avoid saddling taxpayers with an unexpected liability where there has been no relevant physical change. By contrast, 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.
The difficulty in adopting "the day on which the circumstances giving rise to the alteration occurred" to mean the date on which the Listing Officer decides to treat the separate units as a single dwelling is that this could result in the taxpayer of the single dwelling incurring a tax liability going back over a period of time, which cannot be recovered. It has therefore been decided that for aggregation, the Listing Officer should adopt the date of list alteration as the effective date for the new entry.