United Kingdom Upper Tribunal (Lands Chamber)

UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2015] UKUT 493 (LC)

UTLC Case Number: RA/10/2015

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

 

RATING – Valuation – 2010 List – rental evidence on appeal property rejected as not being an open market letting – relevance of other rental evidence – rent of similar adjoining property relied upon – appeal allowed in part – Rateable Value determined at £41,000

 

 

IN THE MATTER OF AN APPEAL FROM A DECISION

OF THE VALUATION TRIBUNAL FOR ENGLAND

 

BETWEEN SIMON TURNER AND SARAH TURNER Appellants

 

and

ANDREW MURDOCH

(VALUATION OFFICER) Respondent

 

 

 

 

Re: The “Rock Inn”

6 Beachside,

Rock,

Cornwall PL27 6FD

 

Before: P D McCrea FRICS

 

Sitting at: Truro Magistrates Court, The Court House, Tremorvah Wood Lane, Mitchell Hill, Truro, Cornwall TR1 1HZ

on

30 July 2015

 

Mr James Yarwood appeared for the Appellants.

The Valuation Officer appeared in person

 

The following cases are referred to in this decision:

 

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

Shrewsbury Schools Governors v Shrewsbury Borough Council & Plumpton (VO) [1960] 7 RRC 313

Shearson Lehman Brothers Ltd v Humphrys (VO) and Hackney London Borough Council [1991] RA 125

Harris v Grace (VO) [2015] UKUT 365 (LC)

 

 

DECISION

Introduction

1.                  This is an appeal by the ratepayers, Mr Simon Turner and Mrs Sarah Turner (“the appellants”) against a decision of the Valuation Tribunal for England (“VTE”) dated 13 February 2015 in which the VTE determined a rateable value of the “Rock Inn”, 6 Beachside, Rock, Cornwall PL27 6FD (“the appeal property”) at £54,000 with effect from 29 November 2010.

2.                  The appeal was held under the Lands Chamber’s simplified procedure.  The appellants were represented by Mr James Yarwood MA MRICS of Fleurets Limited. The respondent valuation officer, Mr Murdoch, represented himself.

3.                  The antecedent valuation date (“AVD”) is 1 April 2008.  The effective date and the material day are both 29 November 2010.  On 31 July 2015 I inspected the appeal property and made external inspections of the comparable evidence, with a brief internal view of 5 Beachside.

4.                  The evidence available at the hearing included an extract from the lease of the appeal property, with little detail of the circumstances of the surrender of a previous lease that the appellants held. Following the hearing I made an Order requiring the appellants to submit a full copy of the lease and associated surrender documents, which Mr Yarwood duly did, following which Mr Murdoch made further brief submissions.

 

Facts

5.                  From the evidence and my inspection I find the following facts.

6.                  The appeal property is a first floor licensed restaurant in the affluent holiday village of Rock, seven miles north-west of Wadebridge, Cornwall.  It is situated at the end of Rock Road, a vehicular cul-de-sac, on the water front and has unrestricted views across The Camel estuary to Padstow.  The passenger ferry to Padstow embarks immediately opposite the appeal property.  There is a public car park approximately 50 metres away.

7.                  The address of the appeal property is slightly confusing in that it forms part of a new development that stands on the site of the former “Rock Inn” public house, from which the appellants traded until they surrendered their lease.  In order to preserve the goodwill associated with the “Rock Inn” name, the appellants retained this as the same trading name for their unit in the new development.

8.                  The new development was completed approximately five years ago and comprises six commercial and two residential units in a three-storey stone and slate roofed building. The building is of an attractive modern design. On the ground floor there are four retail units, two being either side of a central archway and ground floor lobby.  The lobby has a passenger lift and staircase which leads up to a central first floor landing.  On either side of the landing is a licensed restaurant. The appeal property forms the right hand unit when viewed from the front.  Each restaurant unit has a front balcony which extends forward over a covered canopy area in front of the ground floor retail units.  The appeal property is also known as 6 Beachside and the restaurant to the left of the landing is 5 Beachside, but trades as “No.1 Rock Road”.  Residential accommodation is on the second floor.

9.                  Internally, the appeal property comprises a restaurant area of approximately 60 covers, with a small bar/servery area to the rear. Full length sliding glass doors from the restaurant give access to an attractive front balcony which has decking, tubular chrome and infill glass panelled railings, and an extendable canopy roof which can be deployed when weather is inclement.  The balcony provides a further 45 covers with unrestricted views over the estuary to Padstow.  During my inspection Mr Turner described the view as “one of the best in Cornwall”. It would be difficult to dispute that.

10.              The parties have agreed the following floor areas, factors to be applied in terms of main space value, and rate for the external balcony:

First Floor

Restaurant 101.57 sqm @ main space rate

Kitchen 19.4 sqm @ 0.7 of main space rate

Customer wc’s 17.4 sqm @ 0.5 of main space rate

External balcony 40.0 sqm @ £25.00 per sqm

 

Ground Floor

Storage 30.91 sqm @ 0.5 of main space rate

11.              In around 2008 negotiations between a developer, Clarke Roxburgh Properties, and Mr and Mrs Turner commenced in respect of a proposed surrender of the appellants’ lease of the former Rock Inn and a new lease of part of a new development. In a letter dated 27 January 2009, Clarke Roxburgh Properties replied to a letter of 24 January 2009 from Mr and Mrs Turner.  The correspondence referred to a compensation payment of £8,000 per month, payable by the developer to Mr and Mrs Turner, following surrender of their lease until such time as the development was completed when Mr and Mrs Turner would occupy the appeal property. 

12.              An agreement for lease was completed on 11 August 2009.  This agreement provided that, subject to the Clarke Roxburgh Properties carrying out the development of the building, the appellants would take a lease of the appeal property.

13.              The extent of the landlord’s works is not entirely clear from the evidence.  A two page document was attached to the lease when submitted to the Tribunal, entitled “Finishes Specification for Public House”.  This indicated that the walls would be plastered and painted, timberwork would be fitted and painted, with door furniture complete, and wc’s would be tiled and fitted with sanitary ware.  In the kitchen, a gas supply pipe would be installed, and extraction units fitted.  The balcony would have a glass balustrade and decking.  Electric heating, power and TV points would be provided.  The document also stated that “the main floor covering in the lounge area will be discussed with Jeremy and Sarah Turner”; “the full electricity specification will be discussed with Jeremy and Sarah Turner once the development is under way”; and “we have agreed with Jeremy and Sarah that we would be willing to contribute £5,000 towards the cost of the new bar”.  I am satisfied that, whilst not specifically referenced in the lease, the work described in this document comprised the landlord’s work as referred to in the agreement for lease.

14.              Mr and Mrs Turner ceased trading from the former Rock Inn on 25 November 2009, at which point there was approximately seven years left on their lease, and the rent passing was £25,671 per annum.  The former Rock Inn was then demolished.

15.              The lease for the appeal property was completed on 19 October 2010, for a term of 27 years from 1 October 2009 at a rent of £45,000 per annum (payable from 1 November 2010).  The user clause was for a “high class public house” or other uses with the landlord’s consent, such consent not to be unreasonably withheld or delayed.  The lease provided for annual RPI increases, and market rent reviews in October 2016 and five yearly thereafter.  The assumed use for rent review purposes was as a public house or “for any office [presumably “other”] purpose which is within class A3 of the Town and Country (Use Classes) Order 1987”.

16.              There was a side letter, also dated 19 October 2010, which documented a personal rent concession to Mr and Mrs Turner, reducing the rent to £26,954.73 until 30 September 2016, subject to annual RPI increases.

17.              The new development was completed in late 2010.  The appeal property was first entered into the 2010 Rating List as a new assessment by way of a Valuation Officer Notice dated 5 July 2011 at £64,000 RV with a description of “public house and premises” and having an effective date of 29 November 2010.  The appeal to the VTE arose from a proposal made by Fleurets on behalf of the appellants dated 30 August 2011 against this assessment. 

Valuation Tribunal Decision

18.              In its decision of 13 February 2015, the VTE determined that the appeal property should be described in the rating list as a restaurant and premises and valued on that basis. The panel was satisfied that the actual rent passing on the property must be taken as the appropriate starting point in determining rateable value.  Although the rent for the appeal property had been agreed some time after the AVD, the panel did not find that there was any better evidence of value available. The panel accepted the valuation officer’s contention that the rent of £45,000 was a shell rent, and also accepted her unchallenged contention that an increase of 20% was generally appropriate in such cases to reflect the rental value of the hereditament valuing it as it was, fitted out. On this basis the panel determined a rateable value of £54,000. 

Statutory Framework

19.              Section 56 of the Local Government Finance Act 1988 (“the Act”) gives effect to Schedule 6 to the Act which sets out the statutory basis on which the rateable value of a non-domestic hereditament is determined.  The statutory assumptions for determining rateable value are set out in paragraph 2 of Schedule 6, as follows:

“2(1) The rateable value of a non-domestic hereditament none of which consists of domestic property and none of which is exempt from local non-domestic rating shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on these three assumptions –

(a)  the first assumption is that the tenancy begins on the day by reference to which the determination is to be made;

(b) the second assumption is that immediately before the tenancy begins the  hereditament is in a state of reasonable repair, but excluding from the assumption any repairs which a reasonable landlord would consider uneconomic;

(c)  the third assumption is that the tenant undertakes to pay all usual tenant’s rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the hereditament in a state to command the rent mentioned above.

….

(6) Where the rateable value is determined with a view to making an alteration to a list which has been compiled (whether or not it is still in force) the matters mentioned in sub-paragraph (7) below shall be taken to be as they are assumed to be on the material day.

….

(7) The matters are—

(a) matters affecting the physical state or physical enjoyment of the hereditament,

(b) the mode or category of occupation of the hereditament,

….

(d)   matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there, and

(e) the use or occupation of other premises situated in the locality of the hereditament.”

The parties’ contentions

Case for the appellant

20.              Mr Yarwood submitted that there were several reasons for minimal weight to be attached to the rent passing on the appeal property.  First, it post-dated the AVD by a significant time – becoming effective from 1 November 2010.  Secondly, the circumstances of the rent agreed did not relate closely to the requirements contained in the definition of rateable value, as to subject matter and conditions. He relied upon the Lands Tribunal’s decision in Lotus and Delta Limited v Culverwell (VO) and Leicester City Council [1976] RA 141 in this respect.

21.               Mr Yarwood placed more weight on assessments of similar properties in the locality.  His comparable assessments were as follows.

22.              5 Beachside, Rock

As described above, this property is, loosely, the mirror image of the appeal property, in the same building and similarly configured. The property was entered into the rating list with effect from 1 October 2010 at £15,000 RV, based upon a main space rate of £135 per sqm.  This assessment was subject to an appeal proposal on 17 October 2011 which was subsequently withdrawn.  There had been correspondence between Mr Yarwood’s firm and the VOA, which did not result in a review of that assessment by the material day, and Mr Yarwood submitted that accordingly the hypothetical tenant would rely upon the assessment of the adjoining property at £15,000 RV when deciding the level of rent to bid on the appeal property.

23.              Following the VTE’s decision on the appeal property, the VO increased the assessment of 5 Beachside with effect from 16 March 2015 to £36,000 RV, based upon £349.65 per sqm as a main space rate.  Mr Yarwood submitted that by taking this action, the VO was impugning the rating list, relying upon Shrewsbury Schools Governors v Shrewsbury Borough Council & Plumpton (VO) [1960] 7 RRC 313 and Shearson Lehman Brothers Ltd v Humphrys (VO) and Hackney London Borough Council [1991] RA 125.

24.              ‘The Dining Room’, Rock

This is a small ground floor restaurant, further into the village of Rock, away from the waterfront, assessed at £7,700 RV. Mr Yarwood said that it was a 30 cover ‘fine dining’ restaurant, aimed more at discerning diners than at visitor/holiday-makers – in contrast with the appeal property.  The property had been assessed on a zoned basis at £170 per sqm Zone A, but Mr Yarwood provided an alternative devaluation, using similar relativities to the assessment of the appeal property, which suggested a main space rate of £91.27 per sqm. Mr Yarwood considered ‘The Dining Room’ to be in an inferior position to the appeal property, adjacent to a parade of shops in a residential area.  Consequently, he thought that the hypothetical tenant would offer a lower rental bid for this property.

25.              ‘The Waterfront’, Polzeath

‘The Waterfront’ is a first floor beachside restaurant in Polzeath, a seaside village 2.5 miles from Rock, and is occupied by the same proprietor as 5 Beachside.  Mr Yarwood said that it had a similar clientele and menu to the appeal property. It was originally assessed at £19,000 RV, based upon a main space rate of £200 per sqm.[1]  Mr Yarwood said that this reflected the more desirable location of Polzeath in comparison with Rock.

26.              ‘Galleon Café’, Polzeath

This is a beach café, valued using the zoning method at £14,000 RV, equating to a rate of £250 per sqm zone A.  Mr Yarwood again provided an alternative devaluation, which showed £145.27 per sqm for main space. 

27.              Mr Yarwood submitted that Polzeath was a stronger location with higher rents than Rock.  Polzeath had a ‘blue flag’ designated beach, and was popular with both families and surfers.  He said that the assessment of ‘The Waterfront’, Polzeath, at £200 per sqm was 48% higher than that of the original assessment of 5 Beachside, Rock, at £135 per sqm. Equally, the zone A rate of the ‘Galleon Café’, Polzeath, at £250 per sqm zone A, was 47% higher than that of the ‘Dining Room’, Rock, which was at £170 zone A per sqm. He also referred to the opening of a new licensed premises in Polzeath, “T J’s Surf”, which was evidence of demand in Polzeath.

28.              He disputed Mr Murdoch’s addition of 20% for fitting out, on the basis that the appeal property was fitted out by the landlord so no allowance should be made.  He also said that Mr Murdoch had not substantiated his adjustment with any evidence.

29.              Having regard to the above comparable evidence, Mr Yarwood’s valuation was based on the original assessment of 5 Beachside, and was as follows:

First Floor

Restaurant 101.57 sqm @ £135.00 per sqm £13,712

Kitchen 19.4 sqm @ £94.50 per sqm £1,833

Customer wc’s 17.4 sqm @ £67.50 per sqm £1,175

External decking 40.0 sqm @ £25.00 per sqm £1,000

 

Ground Floor

Storage 30.91 sqm @ £67.50 per sqm £2,086

£19,806

(say) £19,800 RV

Case for the respondent

30.              Mr Murdoch said that since there was little comparable evidence in the locality, he had adopted Mr Yarwood’s comparable evidence when considering the assessment of the appeal property.  In each case, however, he also considered the rents passing on those properties.

31.              In analysing and valuing 5 Beachside and the appeal property, Mr Murdoch said that both lettings were on a shell basis, whereas the rating hypothesis required an assumption that the property was valued as it was when trading.  For both properties, therefore, Mr Murdoch made an addition of 20% for fitting out.  This was based upon advice from VOA building surveyors, and was an adjustment that Mr Murdoch had regularly used in the past.  He accepted that he had not adduced any evidence in support of his adjustment, despite Mr Yarwood noting its absence.

32.              Mr Murdoch said that 5 Beachside was almost identical to the appeal property, but was marginally smaller and did not have such a large cellar. It was occupied as a restaurant, on a five year lease from 1 March 2011 at a rent of £30,000 per annum, which Mr Murdoch said equated to a main space rate of £288.59 per sqm. He added 20% to reflect the property in a fully fitted out state, which he said equated to £346.30 per sqm.

33.              In respect of the rating assessment of 5 Beachside, Mr Murdoch said that the property was originally assessed at £15,000 RV, but following the VTE’s decision on the appeal property this was reassessed – simply by adding 20% to the rent to arrive at a rateable value of £36,000 – equating to £349.65 per sqm.

34.              As regards, ‘The Dining Room’, Rock, Mr Murdoch said that the fact that this property was a restaurant was the only similarity it had with the appeal property.  It was a ground floor unit in a converted 1960’s showroom, valued in line with the adjoining retail units.  It is held freehold.  He said that there was no evidence to suggest that ground floor restaurants commanded higher levels of rent than adjoining retail units, and accordingly the property had been assessed in line with the adjoining retail units.

35.              In respect of ‘The Waterfront’, Polzeath, Mr Murdoch commented that this property was three miles from the appeal property, in a much older, 1920’s, building.  It is held on a 15 year lease from 1 March 2006 at a rent of £24,000 per annum, which Mr Murdoch devalued to £159.94 per sqm for main space.  However a premium of £100,000 was paid, and Mr Murdoch said that the tenant was the landlord’s son in law. Accordingly, he placed little weight on this rental evidence.

36.              As regards the rating assessment, Mr Murdoch said that the property had been valued at £200 per sqm, which was in line with beachside restaurants in comparable locations such as Perranporth, Bude, and Praa Sands.

37.              In respect of the ‘Galleon Café’, Polzeath, Mr Murdoch said that this was a café in the ground floor of the building and had been valued as a ground floor shop.  It was held on a historic ground rent and therefore provided no useful rental evidence.

38.              As a general comment, Mr Murdoch placed little weight on the comparables in Polzeath. He said that the location and market at Polzeath was very different from that that Rock. Polzeath attracted a younger clientele and surfers whereas a more affluent clientele was attracted to Rock, with a higher propensity to spend.  He noted that at the VTE hearing, the appellant disclosed that the takings at the appeal property for the year to 30 April 2012 were £670,948, which was a significant level of trade especially when there was an adjoining competing restaurant.  Polzeath also had more competition between various cafes and restaurants. Both ‘The Waterfront’ and the Galleon Cafe were not only in a different location but also within older and poorer quality buildings than the appeal property.  He accepted in answer to a question from Mr Yarwood that age was not determinative of rateable value.

39.              In respect of ‘The Dining Room’ at Rock, Mr Murdoch placed less weight on the evidence provided. Although the property traded as a restaurant, it was in fact a ground floor older retail unit and not comparable to the appeal property. ‘The Dining Room’ had been valued by reference to the adjoining ground floor retail units.

40.              Mr Murdoch considered that there was only one realistic comparable, 5 Beachside. It was immediately adjacent to the appeal property in the same building and enjoying the same benefits of position and views.  However, the rent for 5 Beachside, at 1 March 2011, was some time after the AVD. The rent equated to £288.59 per sqm as a shell, or £346.30 per sqm as a fitted unit. He considered that rental values had generally fallen since the AVD, and the lease term of only five years was indicative of the effects of the recession.

41.              In valuing the appeal property, Mr Murdoch took as his starting point the headline rent on the property, following Lotus and Delta. Mr Murdoch’s devaluation of the rent of £45,000 per annum equated to £316.25 per square metre. At the time Mr Murdoch wrote his expert report, he had not seen any evidence regarding the surrender of the previous lease which Mr and Mrs Turner held, and which had seven years to run at the date of demolition of the former Rock Inn. Nor had he seen any evidence in relation to the concessionary rent.

42.              He said that the food and wine offer at 5 Beachside was of higher quality, and at higher prices, than that of the appeal property. There was a difference in planning between an A4 and A3 restaurant use, but the fine line between the two was becoming blurred, following the Licensing Act 2003 and the smoking ban.  The amount of dry trade produced by public houses was increasing, and a new class of property was emerging – that of a licensed restaurant.

43.              Mr Murdoch saw parallels with the Tribunal’s recent decision in Harris v Grace (VO) [2015] UKUT 365 (LC) in terms of the lease user clause, that there was a full premises licence, an A4 planning use (bar and restaurant) and that the property in that case was fitted out in such a way as it could easily operate as a bar.

44.              Mr Murdoch submitted that in the subject case, since the appeal property was fitted out in such a way as it could be used as a bar, that it had a planning consent within class A4, and that the lease user clause was for a “high class public house”, there were many operators whose interest would not be excluded under the statutory hypothesis.  In his opinion this would be reflected by rental bids which would support his proposed level of assessment. 

45.              He said that he was troubled by the lack of evidence in this case.  He would have preferred to have had three years trading accounts to assess a divisible balance, but these were not available. 

46.              Having considered the comparable evidence, Mr Murdoch said that the best evidence was the rent on the appeal property itself, and the rent on 5 Beachside.  The rent on the appeal property must have been agreed closer to the AVD than that of 5 Beachside. Discussions must have commenced some time before October 2009 since the planning application was received by the local planning authority on 17 February 2008. His assessment of rateable value was therefore based upon the rent of £45,000 per annum, to which Mr Murdoch added 20% fit out to arrive at the following valuation:

First Floor

Restaurant 101.57 sqm @ £380.00 per sqm £38,597

Kitchen 19.4 sqm @ £266.00 per sqm £5,160

Customer wc’s 17.4 sqm @ £190.00 per sqm £3,306

External decking 40.0 sqm @ £25.00 per sqm £1,000

 

Ground Floor

Storage 30.91 sqm @ £190.00 per sqm £5,873

£53,936

(say) £53,500 RV

47.              Mr Murdoch submitted that the description in the rating list should be amended to “Restaurant, Bar and Premises” as this better reflected the use of the appeal property.

48.              Following the hearing, and my Order requiring further disclosure, Mr Yarwood submitted a full copy of the lease, together with the background documents outlined earlier.  Mr Murdoch was given the opportunity to respond.  Having considered the documents, Mr Murdoch abandoned his reliance on the rent of the appeal property.  Since the letting involved the surrender of the previous lease, and the appeal property was not openly marketed, Mr Murdoch did not consider that the transaction amounted to an open market letting that could be relied upon when assessing rateable value.  His revised position was that the best available rental evidence was that of the adjoining property, 5 Beachside.  He did not, however, provide any revised valuation on that basis.  Nor did he make any comment on the issue of fitting out, save outlining what the documents said.

Discussion and conclusions

49.              As a consequence of Mr Yarwood’s disclosure of the full lease and surrender documents following the hearing, it is common ground between the parties that the headline rent on the appeal property cannot be safely relied upon in assessing its rateable value.  I agree with that.  Had Mr Murdoch been supplied with these documents at an earlier stage, even before the VTE hearing, it is possible that an agreement might have been reached, or at least the issues might have narrowed.

50.              In any event, I derive little assistance from the actual rent agreed under the concessionary arrangement, of £26,954.73.  This seems to me to have been arrived at by applying the annual RPI increase to the rent passing immediately before demolition of £25,691, and accordingly relates to the original rent agreed for the former “Rock Inn” rather than having anything to do with the appeal property. Again, it is also tainted by being linked to the surrender of the previous lease.

51.              I am not satisfied that the rent of ‘The Waterfront’ is of assistance.  This is not because it was a transaction between connected parties – which might not be an absolute bar to its relevance but because a premium of £100,000 was paid, which had not been analysed by either party.   Neither ‘The Dining Room’ nor the ‘Galleon Café’ yield any useful rental evidence, being held freehold and on a long lease respectively.

52.              Accordingly the only rental evidence that can properly be considered is that of 5 Beachside, which at least has the advantage of being the best comparable in terms of physical configuration and location.  It was let at a rent of £30,000 per annum, equating to £288.59 per sqm in terms of main space, from 1 March 2011.  Mr Murdoch added 20% to reflect fitting out.  I am not convinced that this was appropriate.  There was little evidence before me as to how this figure was arrived at, and in any event it is questionable that 5 Beachside was actually let on a shell basis.  The evidence for the appeal property shows that, as Mr Yarwood contended, the landlord fitted the property out, including a contribution for the bar.  The items which the tenants supplied, seating, tables etc, are not rateable.  Mr Yarwood said that 5 Beachside was let on a similar basis, and in the absence of any evidence to the contrary I accept that. I have therefore taken £288.59 per sqm to be an accurate devaluation of the rent paid for 5 Beachside on a fitted out basis.

53.              How does 5 Beachside compare with the appeal property?  Apart from some size differences, the two properties are physically as close to the valuer’s notional evenly matched pair as one could get, especially so given the rather unique nature and location of the development.

54.              Mr Murdoch emphasised the differences between the two – that the appeal property had an A4 planning consent, and that the user clause under the lease is for a “high class public house”.  I am not persuaded by that contention.  Planning is not in itself determinative of mode and category of occupation, and the user clause in the lease (unlike in Harris v Grace (VO)) is fully qualified. Mr Yarwood submitted copies of the menus of the appeal property and 5 Beachside.  Apart from differences in price, the two properties trade in a very similar manner.  From my inspection of the appeal property and a brief internal inspection of 5 Beachside, in my view any differences between the two are of style rather than of substance. The appeal property is trading as a restaurant, not a bar.

55.              The rent of 5 Beachside took effect over two years after the AVD, which in other circumstances might be sufficient to significantly reduce its usefulness, but in this case I am reluctant to abandon the sole remaining piece of rental evidence, on a very similar property to that in question.  Mr Murdoch said that rents had deteriorated since the AVD, but there was no evidence in support of this contention, and in my view it is unlikely to be the case for the appeal property in a relatively upmarket location. However, I am also sceptical that rents will have increased in the location given the general change in economic conditions between the AVD and the material day – there was no evidence to that effect.

56.              How does the available assessment evidence assist in the valuation?  I do not find that of ‘The Dining Room’ and the ‘Galleon Café’ to be of use.  Both were valued on a zoned basis, and having externally inspected them I find neither to be comparable to the appeal property.  I am not assisted by Mr Yarwood’s alternative devaluations on these two assessments.  Mr Murdoch confirmed that the valuation office had looked at whether restaurant rents differed markedly from retail rents when in similar locations and concluded that they did not.  The assessments of these two properties were therefore valued accordingly, and I consider it to be stretching the point too far to devalue them using a method of another valuation scheme in attempt to render them comparable.

57.              I also find the assessment evidence of 5 Beachside to be of limited use.  Mr Yarwood implied that the assessment was increased from its original level as a direct result of this appeal being made to the Tribunal.  Mr Murdoch disputed this, relying on the obligation upon him to maintain an accurate list.  I accept that, but consider the method arrived at by the VO, of simply adding 20% to the actual rent of 5 Beachside, to be a fairly rushed, broad brush approach, which seems to have ignored the concept the need to have consistency of valuation between various hereditaments, within which actual rents will only play a part.

58.              Mr Yarwood’s case hinges on the original assessment of 5 Beachside at £15,000 RV being correct.  I do not accept that it was, given that the property was let at £30,000 in March 2011. Additionally, the main space rate for that assessment, at £135 per sqm, does not sit comfortably with the other available evidence.  

59.              The parties had opposing views as to whether Rock or Polzeath was the better location.  It was common ground that Rock could be described as “sailing” territory, and Polzeath “surfing”.  From my inspection, which admittedly was in the middle of the summer holidays, I found Polzeath to be the much busier location.  However I cannot ignore the upmarket cachet of Rock, and the attraction of a short boat trip to Padstow.

60.              Mr Yarwood made comparisons between the two, which on the face of it were persuasive and consistent.  On closer examination, however, they unravel.  His comparison of Waterfront being 48% higher than 5 Beachside does not bear scrutiny once it is found that the original assessment of 5 Beachside was too low.  Equally, his contrast of the ‘Galleon Café’ with ‘The Dining Room’ is not a proper comparison.  It is unsurprising that the ‘Galleon’ is 47% higher, bearing in mind its beachside location in comparison with the quasi-residential, inland location of ‘The Dining Room’.

61.              Mr Murdoch said that the original assessment for “The Waterfront”, at £200 per sqm, was in line with the assessments of other beachside restaurants in comparable locations around Cornwall.  Why then, should the appeal property be valued any differently?

62.              Whilst it is tempting to treat the appeal property in the same way as appears to have been adopted by the VO at other locations, in my view the better evidence is supplied by the rent at 5 Beachside.  This has the advantage, rarely found in rating, of an open market letting on an adjacent property, of identical age, location and aspect.  Having found almost no difference between the way in which the two properties trade, the only remaining issue is that of the date of letting of 5 Beachside being some time after AVD.  No evidence was available to support the VO’s contention that rents fell between AVD and letting of 5 Beachside in March 2011, which in my view is at odds with Mr Murdoch’s contention of Rock being a popular location, different to others in Cornwall.  I have also noted that there is only four months between the material day and the date of letting of 5 Beachside.

63.              Accordingly, I find that the appeal property should be valued at the same main space rate as that of the letting of 5 Beachside - £288.59 per sqm.  My valuation is therefore as follows:

First Floor

Restaurant 101.57 sqm @ £288.59 per sqm £29,312

Kitchen 19.4 sqm @ £202.01 per sqm £3,919

Customer wc’s 17.4 sqm @ £144.30 per sqm £2,511

External decking 40.0 sqm @ £40.00 per sqm £1,000

 

Ground Floor

Storage 30.91 sqm @ £144.30 per sqm £4,460

£41,202

(say) £41,000 RV

64.              I should add for completeness that I was unpersuaded by Mr Murdoch’s contention that the likely hypothetical tenant would make an overbid – there was no evidence in support of this.

Disposal

65.              The appeal therefore succeeds in part, and I direct that the appeal property shall be entered into the non-domestic rating list at a rateable value of £41,000 with effect from 29 November 2010, having a description of “restaurant and premises”.

66.              The appeal was heard under the Tribunal’s simplified procedure, under which costs are only awarded in exceptional circumstances.  Neither party submitted that there were any such circumstances, and I therefore make no order for costs.

 

 

Dated: 25 September 2015

 

 

 

 

P D McCrea FRICS