Dawn Bunyan (Listing Officer) v Laxmi Patel

For council tax purposes, the existence of a dwelling must be determined in two stages. First, the court must decide whether a hereditament exists and is capable of beneficial occupation. Only then does the statutory assumption that the dwelling is in a state of reasonable repair apply for valuation purposes.

A property remains a hereditament where it can be made suitable for occupation by a reasonable amount of repair, even if the repairs are uneconomic. It ceases to be one where it is truly derelict, requires reconstruction or replacement, or is objectively undergoing major reconstruction. The abolition of the former Class A exemption did not justify departing from that approach.

The Listing Officer appealed under regulation 43 of the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009 against a decision of the Valuation Tribunal for England dated 17 September 2021. The Tribunal had allowed the property owner’s appeal and deleted the council tax entry for a semi-detached house affected by rising damp, mould and fungi.

The Tribunal concluded that the property was not capable of beneficial occupation on 28 August 2019 because major works were required before it could be occupied. The central issue was whether that was the correct legal test, or whether the binding approach in Wilson v Coll required a finding that the property was truly derelict or incapable of being rendered suitable for occupation by a reasonable amount of repair.

1. Appeal allowed and remitted. The Tribunal’s decision was set aside and the matter was remitted to a freshly constituted Tribunal for re-determination.
2. Under section 3(2)(a) of the Local Government Finance Act 1992, the first question is whether a hereditament exists. The essential elements of rateable occupation include actual, exclusive and beneficial occupation for a sufficient period. The question of valuation arises only after the hereditament has been identified.
3. Following Wilson v Coll, the governing distinction is between a property capable of being rendered suitable for occupation as a dwelling by a reasonable amount of repair and a truly derelict property which requires reconstruction or replacement. The absence of economic value in carrying out repairs is irrelevant to that threshold question. The reasonable-repair assumption applies at the valuation stage and cannot be used to determine whether a hereditament exists.
4. The principles in SJ & J Monk v Newbigin and Jackson (VO) v Canary Wharf Ltd also apply in council tax cases. A property may be incapable of beneficial occupation where major reconstruction is being undertaken or will be required before occupation. Whether works amount to reconstruction rather than disrepair is an objective question, assessed by reference to the physical state of the property and the works actually being undertaken; the owner’s subjective intentions are not determinative.
5. The Tribunal wrongly relied on Tewari v Virk to adopt a less stringent test based merely on whether major works were required to make the property fit for occupation. Tewari concerned a property destroyed by fire and its conclusion was consistent with Wilson v Coll and Monk. Its broader observations that the abolition of Class A altered the Wilson approach were based on a misreading of Wilson. The abolition of Class A under the Council Tax (Exempt Dwellings) Order 1992 did not justify departing from the binding test.
6. The Tribunal had applied the wrong legal test. Given the nature and extent of the works identified in the survey, it might have reached a different conclusion had it applied Wilson v Coll.

• High Court (Administrative Court): Appeal under regulation 43 of the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009 allowed. The Tribunal’s decision dated 17 September 2021 was set aside and remitted to a freshly constituted Tribunal.
• Valuation Tribunal for England: Appeal by the property owner allowed and the council tax valuation-list entry deleted.