A recent decision of the Valuation Tribunal (VTE) Ludgate House Limited v Ricketts (VO) and London Borough of Southwark (2018) will be of significance to owners of vacant commercial buildings who have installed live-in guardians to provide security to their properties. The Tribunal found in this case that the presence of the live-in guardians wasn’t sufficient to change the nature of the building from ‘non-domestic’ to ‘domestic’.
The case centered around Ludgate House which was was assessed as two offices with a Rateable Value of £3.39m. When the building became vacant the owner entered into an arrangement with a security company to provide live-in guardians. The owner argued that the two offices were now domestic and should not be subject to business rates. After a period of discussion, the Valuation Office Agency decided to record the property as a “composite” assessment – that is to say part domestic and part non-domestic. The owner appealed against these alterations seeking either to delete the rating list entries or, in the alternative, to reduce them to a nominal value, on the basis that Ludgate House was domestic. These appeals were consolidated and heard by the VTE.
The VTE found that, whilst the guardians were physically present, their occupation was heavily restricted and was under the control of, and on behalf of, the owner of the building, Ludgate House Limited (LHL). The VTE determined that the owner, not the guardians, was in fact in paramount occupation of the whole of Ludgate House as a single assessment.
The VTE went on to say it was “not satisfied that Ludgate House (or any part of it) was used wholly for the purposes of living accommodation”. The consequence of this was that the whole of the property should not be ‘domestic’.
The third question was that of valuation and, in this respect, the VTE determined that “on the material day Ludgate House was, in my finding, an office. It falls that it must therefore be valued as such”. The VTE also agreed that the building was all non-domestic, but that because of restrictions to effective date of list alterations, the VO’s valuation as a composite hereditament, which was RV £3,390,000 must be adopted.
