UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2013] UKUT 180 (LC)

UTLC Case Number: RA/25/2012

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

RATING – valuation – shop – one shop hereditament divided into two – loss of discount for size – rental and comparable assessment evidence – adjustments for residential accommodation over shops – appeal dismissed

 

 

 

IN THE MATTER OF AN APPEAL AGAINST A DECISION

OF THE VALUATION TRIBUNAL FOR ENGLAND

 

 

 

BETWEEN ALISON PISHBIN Appellant

 

and

ROGER EDWARD HIBBINS Respondent

(Valuation Officer)

 

 

Re: 28 Regent Road

Great Yarmouth

Norfolk

NR30 2AF

 

 

Before: A J Trott FRICS

 

Sitting at: 43-45 Bedford Square, London WC1B 3AS

On 3 April 2013

 

 

 

Mr Mohsen Pishbin for the Appellant

Respondent in person

 

The following case is referred to in this decision:

Lotus and Delta Ltd v Culverwell (VO) and Leicester City Council [1976] RA 141.

 

 

DECISION

Introduction

1.           This is an appeal by Mrs Alison Pishbin (the appellant), the leasehold occupier of a shop and premises at 28 Regent Road, Great Yarmouth, Norfolk NR30 2AF (the appeal hereditament) against the decision of the Valuation Tribunal for England dated 24 April 2012 confirming the rateable value of the appeal hereditament at £17,000 with effect from 30 October 2010.

2.           The appeal hereditament originally formed part of a larger property known as 28/29 Regent Road which was entered into the compiled 2010 non-domestic rating list as a shop and premises with a rateable value of £27,500.  In August 2010 the landlord, Mr John Walker, made a request to split the assessment.  The entry was accordingly revised to show two separate hereditaments, 28 Regent Road and 29 Regent Road, each of which had a rateable value of £17,000.  The effective date for this change, which is not in dispute for the purposes of this appeal, was taken as 30 October 2010.

3.           On 1 June 2011 the appellant made a proposal to alter the new 2010 list entry for the appeal hereditament to a rateable value of £13,750.  The VO did not consider that the proposal was well-founded and referred the matter as an appeal to the VTE on 16 August 2011.  The appeal was heard on 17 April 2012 and dismissed on 24 April 2012. 

4.           Mr Mohsen Pishbin appeared for the appellant and called Mr John Walker, the landlord of the appeal hereditament, as an expert witness. 

5.           The respondent Valuation Officer, Mr Roger Edward Hibbins MRICS, appeared in person.

6.           The hearing took place under the simplified procedure although evidence was taken under oath. 

Facts

7.           I determine the following facts from the statement of agreed facts and from the evidence.

8.           The appeal hereditament is located on the northern side of Regent Road between the town centre to the west and Nelson Road Central to the east.  Regent Road continues further eastwards to the seafront at Marine Parade.  The appeal hereditament is situated in a secondary retail parade in a pedestrianised part of Regent Road.

9.           The appeal hereditament comprises a ground floor lock-up retail unit serviced by a rear access road.  It has a net internal area of 146.10 m² and an area in terms of Zone A (ITZA) of 73.2 m².  It has a traditional window frontage with a recessed entrance.  There is a small storage area and a WC at the rear.

The case for the appellant

10.        Mr Walker gave evidence of rental values in Regent Road and explained that his family had traded there since the 1950’s.  He now owned three shops in the road: Nos.14, 28 and 29, all of which had residential upper parts (flats).  The properties were fully let although he occupied the flat over No.29 and his daughter occupied the flat above the appeal hereditament.  He said that he knew every shop in the road and knew the rents that were obtainable for them.

11.        Mr Walker explained the background to the division of the single shop at 28/29 Regent Road in 2010 and said that the proposal had been discussed at the time with a representative of the Valuation Office Agency, Ms Chester-Flatt.  Mr Walker had assumed that by dividing the shop into two there would be an equal split of the rateable value, i.e. the rateable value of the single shop of £27,500 would be maintained by each separate shop having a rateable value of £13,750 (Nos.28 and 29 being very similar in size).  Mr Walker said that Ms Chester-Flatt had confirmed that this would be the case.  In the event once the division had taken place the rateable value for each shop was determined at £17,000 an increase of nearly 24%.

12.        Mr Walker said that the rent obtainable for a shop in Regent Road was, as a general rule of thumb, twice the amount of the rates payable.  He said that prospective tenants could readily obtain details of the rates payable whereas it was more difficult for them to discover the details of rents that were payable for other units.  Mr Walker applied this rule to the appeal hereditament.  The rates payable for No.28/29 as a single shop in 2010/2011 was £11,385, or £5,692.50 per unit.  Therefore the rental value of the appeal hereditament would be in the region of £11,500 pa.  Mr Walker considered a rental value of £17,000 to be unrealistic and said that if he could have achieved such a high rental in 2008 he would have done.

13.        The appeal hereditament was let by Mr Walker on a three year FRI lease on 2 January 2007 at a rent of £12,000 pa.  The letting was of the lock up shop only and excluded the flat above.  The shop was subsequently let to the appellant on a new three year FRI lease on 2 January 2010 at a rent of £11,750 pa.

14.        Mr Walker referred to a number of other comparables.  14 and 14A Regent Road, a shop with residential upper parts owned by him, was let on FRI terms on 1 November 2006.  The rent was £12,000 pa of which Mr Walker attributed £4,000 pa to the flat.  25 Regent Road was let by a third party on FRI terms to Tenor Enterprises Ltd (the appellant’s company) on 29 June 2009 at a rent of £15,000 pa.  The property comprised a shop unit with a three bedroom flat above.  Mr Walker considered that the flat was worth £400 per month or £5,000 pa.

15.        Mr Walker also referred to several comparables for which no copy leases were available.  He exhibited two letters from Yarco Properties Ltd, the landlord of 10/11 Regent Road.  The correspondence said that this property was let on a 5 year lease from January 2008 at a stepped rent of £20,000 for year one, £22,500 for year two and £25,000 pa thereafter.  But the rents actually received by the landlord were much less than this and reached a maximum of £16,666 in the year ending 31 March 2010.  The tenant had now gone into bankruptcy.

16.        19, 19A, 20 and 20A Regent Road were owned by Mr Robert Rackham who wrote to Mr Walker on 31 January 2013 providing details of the rents obtained in 2008:

No.19: £13,000 pa

No.19A: £8,000 + VAT, including upper floors

No.20: £20,000 pa split £13,000 pa for the shop and

£7,000 pa for the two flats above.

No.20A: £12,000 pa.

17.        21, 21A and 22 Regent Road were owned by Mr Andrew Panteli who provided Mr Walker with a signed, but undated, handwritten note confirming that “the shops above are rented out… for the rent aforementioned”:

No.21: Let to Mr Martin Smith at £12,500 pa

No.21A: Let to Mr C Panteli at £10,000 pa

No.22: Let to Mr E Chrntofi at £12,000 pa.

18.        Mr Walker said that the landlord of 31 Regent Road, Mr Paul Kikis, had told him that the property had been let for £17,000 pa including the flat above.

19.        Mr Walker also exhibited a letter dated 26 October 2012 from Mr Stephen Larke of Larkes Estate Agents of Great Yarmouth who stated that “in my opinion the above mentioned properties [28 and 29 Regent Road] would have received a rental income of £13,000 per property in 2008.”

20.        Mr Walker explained that his property portfolio was his pension.  When letting his properties he did not seek to obtain “every last penny” but preferred to charge a reasonable rent in order that a tenant would stay for a long while rather than maximise his income only for tenants to leave after a short period.  Mr Walker considered that a two bedroom flat above a shop in Regent Road would let for £400 per month or £5,000 pa.  He was currently obtaining £440 per month for the flat at 14 Regent Road.  That figure had changed little since 2008 but he considered that residential rents went up slightly over that period whereas commercial rents went down “a fraction”.  He said that most shop tenants also took the residential upper parts.  Mr Walker considered that the respondent had under valued the living accommodation above the shops by 25% as at the AVD but had over valued the retail units by 25%.

21.        Mr Pishbin submitted that the appellant had been placed at a disadvantage because the respondent had the knowledge, resources and experience to present his case cogently whereas the appellant found the whole process to be time-consuming, nerve-racking and difficult.  The basic issue was one of fairness and both the appellant and her landlord (Mr Walker) considered that they had been treated unfairly.  The appellant had suffered two significant increases in rateable value in one year. Firstly, the rateable value of the combined retail unit at 28/29 Regent Road had increased from £22,250 (2005 list) to £27,500 (2010 list) an increase of 23.6%.  Secondly, when the shop was divided into two, instead of having a rateable value of £13,750 (half of £27,500) each unit had a rateable value of £17,000, an increase of another 23.6%.  The respondent said that the second increase was due to the loss of a 20% discount for size once the units were split, but neither the appellant nor Mr Walker had been aware that such a discount existed.  The representative of the Valuation Office Agency, Ms Chester-Flatt, assured Mr Walker that by separating the two units there would be no increase in the combined rateable value; all that would happen would be an equal division of the existing (2010 list) rateable value.  Mr Walker proceeded to divide the unit in good faith in the light of what Ms Chester-Flatt had said and her assurance on the matter should now be honoured by the respondent.  Mr Walker’s evidence demonstrated the level of rents obtainable in Regent Road and this showed that the respondent’s figure of £235 per m² was “grossly unfair”.  The respondent’s valuation of every flat at £3,000 pa, or less than £60 per week, was unrealistically low.

22.        The respondent had relied upon comparable assessments in Regent Road but Mr Pishbin submitted that there were many reasons why a ratepayer would not pursue an appeal.  Such an appeal took a considerable time by comparison with the length of modern leases and involved a significant cost.  Mr Pishbin submitted that evidence of withdrawn appeals or appeals that were not pursued should not be taken as supportive of Mr Hibbins’ figure of £235 per m². 

The case for the respondent

23.        Mr Hibbins took account not only of the rent passing on the appeal hereditament but also of the totality of rental evidence in Regent Road.  He also had regard to settled assessments on other retail hereditaments in the vicinity.  This valuation approach reflected the guidance given by the Lands Tribunal in Lotus and Delta Ltd v Culverwell (VO) and Leicester City Council [1976] RA 141.

24.        The starting point for Mr Hibbins’ analysis was the rent passing on the appeal hereditament.  He considered two lettings.  The first lease was granted on FRI terms for three years at £12,000 pa from 2 January 2007.  Using the agreed areas this rent was analysed at £163.91 per m² ITZA.  The second lease was granted on fully inclusive terms (with the landlord paying for all repairs and insurance) for three years at £11,750 pa from 2 January 2010.  This represented a rent (adjusted onto FRI terms) of £138.83 per m².  Mr Hibbins said that these rental values were much lower per m² than other rents in the vicinity.  The two lettings were not close to the AVD; the first was 15 months before it and the second was almost two years after it.  Given the current economic climate he felt that “post AVD rents are of limited assistance in determining open market rental value at the AVD.”  He also had concerns about Mr Walker’s letting policy for this and his other shops.  Mr Walker was prepared to accept a lower than maximum rent for reasons connected with his personal pension planning.  This was at odds with the statutory definition of rateable value which had to be applied.  Mr Hibbins concluded that the rents passing on the appeal hereditament were not reliable and consequently he moved on to examine other rental evidence.

25.        Mr Hibbins said that the best comparable in terms of location was the adjoining property at 29 Regent Road which was let in January 2011 for £175.06 per m².  But this rent was fixed three years after the AVD and the rent per m² was greater than that achieved at number 28 one year earlier, a result that Mr Hibbins did not expect to see given the economic climate at that time.  He concluded that the rent payable at number 29 was “equally unreliable as the rents passing on the subject premises.”

26.        Mr Hibbins said that the rent return showed that 10/11 Regent Road had been let in February 2008 for £20,000 pa.  Allowing for a 17.5% discount for size this letting showed a rental value of £222.55 per m².  He acknowledged the proximity of the letting to the AVD but said that “the uncertainties of how to reflect size make this rent of more limited value”.  Until shortly before the hearing Mr Hibbins had been unaware that there was a stepped rent at number 10/11.  Taking the information provided by the appellant into account he calculated that the annual equivalent of the stepped rent was £261.40 per m².  He noted the pattern of bad debts on this letting but without further details he did not attach weight to this information.

27.        12 and 12A Regent Road were both restaurants.  The former was let on internal repairing terms on 28 February 2009.  Adjusting onto FRI terms and making an allowance of 2.5% for shape gave a rental value of £263.22 per m².  Number 12A was let on an FRI lease on 1 March 2007 at a rent that included the flat above.  Mr Hibbins deducted £3,000 in respect of the flat (a standard figure that he used when adjusting his comparables to allow for residential upper parts).  This gave an adjusted rent of £265.53 per m².  Mr Hibbins acknowledged that a restaurant was arguably a different mode and category of occupation to a shop but he said that restaurants did not attract a premium in this location and that they were valued on the same basis as shops.  Nevertheless he considered both lettings to be of limited assistance because of their mode and category of occupation, the fact that the letting of No.12 post-dated the AVD and because the letting of No.12A was a year before the AVD, was a lease renewal which therefore might not reflect tenant’s improvements and was at a rent that included residential accommodation.

28.        Mr Hibbins considered the letting of 19A Regent Road in May 2009 to be useful evidence.  He said that the analysed value of £226 per m² “at the very least provides a minimum value” given that the market fell between the AVD and the date of the letting.  This rental analysis reflected an allowance of 9% that had been made for a non-standard frontage.  Mr Hibbins said that from his inspection of the property that allowance was not appropriate and should be removed.  This would give a revised value of £208 per m².  Mr Hibbins thought that the rental information provided by the appellant about this property probably referred to an earlier letting in 2002 and should be ignored.

29.        20 Regent Road was a lease renewal on FRI terms two years before the AVD at a rent that included two flats.  Because of these factors Mr Hibbins considered that the analysed rental value of £221.82 per m² was of very limited assistance. 

30.        Mr Hibbins considered the new letting of 21 Regent Road on 11 February 2008 for £12,500 pa to be a key rental comparable.  He said that the completed form of return showed a rent of £12,500 pa rather than £12,000 pa as stated by Mr Walker.  The information from the landlord, Mr Panteli, provided by the appellant confirmed that the rent was £12,500 pa.  The statutory form of return did not state the terms of the letting but Mr Hibbins assumed it to be on an FRI basis.  No.21 was located close to the appeal hereditament and the letting was close to the AVD.  No adjustment was required for residential accommodation.  The rent was analysed to £237.73 per m². 

31.        Mr Hibbins also considered the further rental evidence that was adduced by the appellant.  The letting at 19 Regent Road was between connected persons and was historic (2005).  The landlord of 20 Regent Road, Mr Rackham, said that the two flats were worth £7,000 pa but it was not clear whether this was an agreed figure or simply the landlord’s opinion.  The letting at 20A Regent Road was historic (March 2005).  Mr Walker had referred to a property at 21A Regent Road but there did not appear to be such an address.  22 Regent Road was let in April 2011, three years after the AVD, and should be ignored.  Mr Hibbins said that his analysis of 25 Regent Road was based upon the information given in the statutory form of return which showed a new letting in 2003 for £15,000 pa with a nil increase in 2008.  His analysis of this rent showed a figure of £211 per m² but he considered this to be of only limited assistance.  Finally, Mr Walker had referred to a letting of 31 Regent Road at £17,000 pa but, apart from the names of the parties, he had provided no further details.  Mr Hibbins gave this comparable no weight.

32.        Mr Hibbins concluded that 21 Regent Road was the best comparable and provided strong evidence of the true level of shop values in the vicinity at the AVD.  The rents on 10/11 and 19A Regent Road were also useful.  The totality of the evidence indicated that the actual rent passing on the appeal hereditament was not its true open market value at the AVD.

33.        Mr Hibbins then considered comparable assessments.  He referred to nine such assessments in Regent Road.  Of these, three were located on the northern side of Regent Road in the same parade as the appeal hereditament.  Appeals on Nos.16 and 30 had been withdrawn and the appeal on No.32 was struck out by the VTE since no case was presented by the appellant.  All three properties were assessed at a unit rate of £235 per m² ITZA.  Three of the comparables, Nos.108, 112 and 113, were on the southern side of Regent Road located at its western end, towards the town centre.  Mr Hibbins said that properties on the southern side of the road were generally less valuable that those on the (sunnier) northern side.  Nos.108 and 112 had therefore been assessed at a figure of £220 per m².  No.113, a corner unit, had been assessed at £250 per m².  The ratepayers at Nos.112 and 113 appealed their assessments and were represented by national agents who settled the appeals at the compiled figures.  The appeal at No.108 was not pursued.  The remaining three comparable assessments, at 52, 53/54 and 55/56 Regent Road, were located further to the east towards the seafront and beyond Nelson Road Central.  Values here were taken at £200 per m² which was less than the value of properties on the western part of Regent Road.  The ratepayers of Nos.53/54 and 55/56 were represented by Messrs Aldreds but did not pursue their appeals against the compiled list assessments based on £200 per m².  The appeal on No.52 was pursued at a hearing before the VTE but was dismissed.

34.        Mr Hibbins concluded that a tone of the list had become established in Regent Road which on its northern side between Alexandra Road and Nelson Road Central was £235 per m² ITZA.  This was supported by the relevant rental evidence.  Applying this figure to the appeal hereditament’s area of 73.2 m² ITZA gave a rateable value of £17,202 which Mr Hibbins rounded down to £17,000.  No discount for size was applicable following the division of Nos.28 and 29 into separate shop units.  The correct rateable value was therefore £17,000 with effect from 30 October 2010.

Conclusions

35.        Mr Hibbins gave three reasons why the lettings of 28 and 29 Regent Road were unreliable. Firstly, they were not close to the AVD; secondly, the letting at No.29 was not consistent with the 2010 letting of the appeal hereditament; and, thirdly, because of Mr Walker’s letting policy which did not seek to maximise rental value.

36.        Mr Hibbins is not wholly consistent about the reliability of comparables that were not close to the AVD.  He says in his expert report that:

“In my opinion, particularly having regard to the current economic climate, post AVD rents are of limited assistance in determining the open market rental value at the AVD.”

Despite this statement Mr Hibbins relies upon the letting of No.19A as “useful evidence” even though it took place 13 months after the AVD.  But one of the reasons that he considered the letting of No.12 to be of limited assistance is that the transaction was 12 months after the AVD.

37.        Neither party produced any evidence to show how rental values changed over time before and after the AVD.  Mr Hibbins asserted that the market was strong at the AVD but fell after September 2008.  Mr Walker said that Great Yarmouth did not experience a boom in 2008 and that commercial rents obtainable had only gone down a fraction since then.  There is some support for Mr Walker’s view in the two lettings of the appeal hereditament in January 2007 at £163.91 per m2 and in January 2010 (£160.52 per m2 - see paragraph 39 below).  But that comparison says nothing about how values may have changed between those two dates and, in particular, by the AVD.

38.        In my opinion rental evidence derived from transactions that took place more than 12 months either side of the AVD should be given little weight in the absence of any objective evidence about local market trends.  For this reason I place little weight on the two lettings of the appeal property or the letting of No.29.  But, unlike Mr Hibbins, I also place little weight on the letting of No.19A.

39.        Mr Hibbins’ second reason why the lettings at the appeal hereditament and No.29 were unreliable was, at least in part, based on a misunderstanding.  He analysed the second (2010) letting of the appeal hereditament at £138.83 per m².  In doing so he made adjustments on the basis that the landlord was responsible for all outgoings.  In fact the lease was on FRI terms and the correct rental analysis shows a figure of £160.52 per m².  The difference between that rent and the figure for No.29 one year later of £175 per m² is therefore not as marked as Mr Hibbins supposed it to be. 

40.        Mr Hibbins’s final reason for dismissing as unreliable the two lettings of the appeal hereditament and that of No.29 was that Mr Walker’s letting policy, which did not emerge until the hearing, did not reflect the statutory assumptions by which the rateable value must be assessed.  Instead Mr Walker let his properties at sustainable rents which he considered to be affordable for a tenant in the long term.  He did not use agents.  Furthermore he adopted a rough rule of thumb whereby the rental value was assessed as twice the rates payable.  I share Mr Hibbins’ doubts about whether Mr Walker’s approach properly reflects the statutory assumptions.  Throughout the hearing both Mr Walker and Mr Pishbin emphasised that they were concerned with the rent obtainable for the appeal hereditament and comparable properties rather than the rent payable.  For instance, they said that although 10/11 Regent Road had a stepped rent with an annual equivalent rental payable over 5 years of £23,500 the rent obtained over those 5 years only averaged just over £11,000 pa.  In my opinion Mr Walker’s letting policy is likely to under value the appeal hereditament, and No.29, when considered against the requirement to assess rateable value by reference to Schedule 6 to the Local Government Finance Act 1988, as amended.

41.        For the above reasons I do not consider that the rental evidence of the appeal hereditament or No.29 is reliable.

42.        I agree with Mr Hibbins that the comparables at 10/11 and 21 Regent Road are the closest to the AVD.  Both these comparables were new lettings without residential accommodation.  No.10/11 is a larger property (108.95 m^2. ITZA) requiring an allowance for size (17.5%) while No.21 was let on unknown terms.  In his expert report Mr Hibbins said of No.10/11 that “the uncertainties of how to reflect size make this rent of more limited value”.  At 17.5% the letting of No.10/11 devalues to £220.50 per m².  If the initial rent of No.10/11 of £20,000 pa had been adjusted for size at 20%, the same figure that was applied to 28/29 Regent Road when it was a single shop, the adjusted rent would be £229.50 per m².  If account had been taken of the stepped rents the annual equivalent figure would have been higher.

43.        Mr Hibbins identifies 21 Regent Road as a key rental comparable.  But he has assumed that it was let on FRI terms.  In my opinion that assumption is not justified.  Apart from No.21 Mr Hibbins refers to eight other rental comparables of which two are not let on FRI terms.  It may be probable that No.21 was let on an FRI lease but that is as far as one can reasonably go.  The evidence is silent on the point.  When considering Mr Walker’s evidence Mr Hibbins says of the letting of No.21A that “no further details are provided of the terms of the lease or the date of commencement.  Without this information this rent has no evidential weight and in my opinion should be disregarded.” He makes similar observations about 22 and 31 Regent Road.  In my opinion if a valuer does not know the terms of the letting he cannot produce a reliable analysis of it; see, for instance, Mr Hibbins’ mistaken analysis of the second letting of the appeal hereditament.  I recognise the merits of the comparable at No.21 in terms of the date of the letting and its proximity to the subject hereditament.  In my opinion the figure of £237.73 per m² is the maximum rent that the comparable represents.  If the landlord was responsible for all outgoings this rent would show a rental value of £205 per m².  So the range of possible values for this comparable at the AVD, depending upon the terms of the lease, was £205.00 to £237.50 per m².

44.        Mr Hibbins adjusts two of his comparables, 12A and 20 Regent Road, for the residential accommodation which is included in the rent.  He adopts a standard figure of £3,000 per flat which he explained at the hearing had been obtained from research carried out by the Valuation Office Agency at the time the 2010 list was compiled.  But that figure, which seems to have been used to value any flat regardless of size or condition, was apparently not derived from a specific analysis of flat rentals in Great Yarmouth; indeed Mr Hibbins said that the £3,000 per flat was “almost a Norfolk figure”.  I prefer Mr Walker’s local knowledge of flat rentals gained over a considerable period.  I accept Mr Walker’s view that £3,000 per annum (£250 per month) is an inadequate allowance for a flat as at the AVD.  I prefer Mr Walker’s figure of £400 per month or £4,800 pa.

45.        But Mr Hibbins said, and Mr Walker agreed, that letting a flat as part of a larger demise on FRI terms including shop premises would not command the same rent as a flat that was available to let separately.  The figure of £4,800 pa represents the rent for a separate letting and the landlord would have to deduct management costs from this amount to give a net rent.  It is the net rent that should be deducted from the overall rent in order to give the rental value of the shop.  In my opinion an appropriate allowance for the landlord’s management is £800 pa (16.7%) leaving a net residential rent of £4,000 pa.

46.        Mr Hibbins’ comparable at 12A Regent Road was adjusted to allow for flats being part of the demise.  Using the net rental figure of £4,000 per annum per flat gives an amended value for this comparable of £250.50 per m².  Mr Hibbins also similarly adjusted the rent at 20 Regent Road but, for the reasons he gives, I place very little weight on this comparable or those at Nos. 12 and 12A.

47.        The appellant’s comparables were largely anecdotal and hearsay.  Although supporting correspondence was produced this failed to give sufficient details of the various lettings to be reliable.  But the appellant did adduce leases in respect of 14 and 25 Regent Road.  No.14 was let by Mr Walker on 1 November 2006 at £12,000 pa including a flat.  The letting was therefore 17 months before the AVD and is also subject to the criticisms of Mr Walker’s letting policy that have been described above. 

48.        25 Regent Road was let to the appellant’s company on 29 June 2009 for a term of four years from 1 April 2009 on FRI terms (12 months post AVD) at £15,000 pa including the flat above the shop.  Mr Pishbin said that £5,000 per annum was attributable to the flat but the lease is silent on the point.  Deducting my figure of £4,000 pa for the flat leaves a rent for the shop of £11,000 pa.  Using the area of 53.95 m² ITZA provided in Mr Hibbins’ rebuttal report this rent represents £204 per m².

49.        From my analysis I conclude that the range of the most relevant comparable rents is £205 to £237.50 per m².

50.        Mr Hibbins went on to consider comparable assessments of other shops in the vicinity.  Three of those assessments, Nos.16, 30 and 32, referred to premises that were in the same parade of shops as the appeal hereditament, namely on the northern side of Regent Road between Alexandra Road and Nelson Road Central.  All three assessments were the subject of appeals, two of which were supported by professional advisers.  Two of the appeals were withdrawn following negotiations and the third (No.32) was struck out by the VTE for lack of prosecution by the appellant.  In each case the rateable value was based upon an ITZA rate of £235 per m².

51.        The remaining assessments were of hereditaments located on the southern side of Regent Road to the west of Nelson Road Central, where a tone of £220 per m² had been accepted, or on Regent Road to the east of Nelson Road Central, where a tone of £200 per m² had been accepted.  All of the assessments were the subject of appeals that had either been settled, withdrawn or struck out by the VTE. 

52.        The appellant argued that there were many reasons why an appellant had not pursued an appeal, including factors of cost and time.  But the appellant did not produce evidence that such factors applied to any of the comparable assessments relied upon by the respondent.  Of the three appeals against assessments on shops in the same parade as the appeal hereditament the reasons why the appeal at No.32 was not pursued are speculative.  But it is reasonable to conclude that, being professionally advised, the ratepayers at Nos.16 and 30 withdrew their appeals in the light of their advisors’ consideration of the evidence.

53.        In my opinion the comparable assessments relied upon by Mr Hibbins support his adopted tone of £235 per m^2.ITZA.  This figure falls within the range of values (albeit at the top end) that is supported by the rental evidence considered as a whole.

54.        The appellant’s sense of grievance arises primarily from the fact that upon division of the single shop at 28/29 Regent Road into two separate shops, the VO removed a 20% discount for size that had previously been allowed, albeit unknown to the appellant.  Such discounts are usually made to reflect the fact that a lessee will pay less per unit area where he is taking a lease of a large unit.  In the evidence before the Tribunal there were three other examples of discounts for size being made in Regent Road: No.10/11 (17.5%, 307.6m²); No.32 (20%, 262.83m²) and No.16 (27.5%, 351m²).  The discount allowed for No.28/29 (20%, 277.0 m²) is consistent with this approach.  The division of the single shop into two smaller shops justified the removal of this discount, there being no evidence of any similar discounts applying to shops with a net internal area as small as that of the appeal hereditament (146.1m²).

55.        I consider Mr Walker to be an honest and straightforward witness (who gave evidence under oath) and I have no reason to doubt his evidence, or Mr Pishbin’s submission, that a representative of the Valuation Office Agency did not explain, for whatever reason, the valuation consequences of dividing the two shops.  Had they appreciated what the consequences would be they may not have proceeded to split the original hereditament.  But this is not a factor that sounds in the valuation dispute that falls to be considered and, having examined the evidence of rents and comparable assessments in detail, I do not consider that the VTE was wrong to determine that the appeal hereditament should have a rateable value of £17,000 following the division of 28/29 Regent Road into two shops.

56.        I therefore dismiss the appeal and confirm the rateable value of the appeal hereditament at £17,000 in the 2010 local non-domestic rating list with effect from 30 October 2010.

57.        The appeal was heard under the simplified procedure and, as I informed the parties at the hearing, costs are not awarded unless under exceptional circumstances.  Neither party suggested that there were any such circumstances in this appeal and I therefore make no award as to costs.

 

Dated 1 May 2013

 

 

A J Trott FRICS