Valuation Office Agency
1.1 Introduction
Once it is established that rateability exists (See Section 2 Part 1 Rateability) it is then necessary to identify the rateable property that is to be valued in terms of what it comprises and its boundaries. The term Hereditament is used for a single unit of rateable property. It is a term that was defined in the General Rate Act 1967 and its meaning has then been interpreted by case law over the years.
Identfying the hereditament and what is to be valued is an important part of the Valuation Officers duty under [Section 41 of the LGFA 1988] to compile and then maintain a rating list. This duty is distinct from the responsibility of the billing authority to determine if there is a rateable occupier of the hereditament who may be liable to pay rates. In the Court of Appeal, Lord Justice Sedley said;
Counsel for the appellant was right to segregate the two things (hereditament and rateable occupation) and to insist that until a hereditament was identified, occupation could not arise.
The correct identification of the rateable hereditament which will become the unit of assessment is important to all parties; to the occupier whose liability, in terms of the extent of the hereditament, is established; to the billing authority in connection with charging and collection and also the Valuation Officer who is required to compile and maintain correct rating lists.
1.2. Statutory Definition
The Local Government Finance Act 1988 does not actually define hereditament but section 64 (1) of the Act states:
A hereditament is anything which, by virtue of the definition of hereditament in section 115(1) of the 1967 Act, would have been a hereditament for the purposes of that Act had this Act not been passed.
Referring to section 115(1) of the General Rate Act 1967 (the 1967 Act):
hereditament means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list;.
The statutory definition does not assist in identifying the hereditament but does indicate that a hereditament is a single unit of rateable property which will be shown as a separate entry in the rating list.
In most instances identifying the hereditament is straightforward but for more difficult scenarios guidance is provided by case law. The leading case on identifying the hereditament is [Woolway (VO) v Mazars (2015) RA 373].
1.3 Artificial Hereditaments
Some rating list entries of hereditaments are as a result of statute and do not follow the usual identification rules.
Under S.64(3) LGFA 1988 the Secretary of State has power to make regulations provided that in prescribed cases: anything which would (apart from these regulations) be more than one hereditament shall be treated as one hereditament.
For example, site sharers on telecommunication masts have been prescribed as being included in a Host mast assessment under The Non-Domestic Rating (Telecommunications Apparatus) (England) Regulations 2000 (See RM S.5a Telecommunication masts and wireless transmission sites, and corresponding Practice Note for further details).
A useful summary of further examples is set out in Ryde on Rating Division C Chapter. 2 Section N Artificial Hereditaments [246 300]
1.3.1 Property in Common Occupation [England]
The [Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018] makes provision, where two or more hereditaments occupied or owned by the same person meet certain conditions as to contiguity, for those hereditaments to be treated for the purposes of non-domestic rating as one hereditament by inserting the following paragraphs (3ZA to 3ZD) to S.64 Hereditaments of the LGFA 1988. The amendments have effect for financial years beginning on or after 1^st^ April 2010, but apply to England only:
(3ZA) In relation to England, where
(a) two or more hereditaments (whether in the same building or otherwise) are occupied by the same person,
(b) the hereditaments meet the contiguity condition (see subsection (3ZC)), and
(c) none of the hereditaments is used for a purpose which is whollydifferent from the purpose for which any of the other hereditaments is used,
the hereditaments shall be treated as one hereditament.
(3ZB ) In relation to England, where
(a) two or more hereditaments (whether in the same building or otherwise) are
(i)owned by the same person, and
(ii)unoccupied,
(b)the hereditaments
(i)ceased to be occupied on the same day, and
(ii)have each remained unoccupied since that day,
(c) immediately before that day, the hereditaments were, or formed part of, a single hereditament by virtue of subsection (3ZA), and
(d) the hereditaments meet the contiguity condition (see subsection (3ZC)),
the hereditaments shall be treated as one hereditament.
(3ZC) The hereditaments meet the contiguity condition if
(a) at least two of the hereditaments are contiguous, and
(b) where not all of the hereditaments are contiguous with each other
(i)one or more of the other hereditaments is contiguous with one or more of the hereditaments falling within paragraph (a), and
(ii)each of the remaining hereditaments (if any) is contiguous with at least one hereditament that falls within sub-paragraph (i) or this sub-paragraph.
(3ZD) For the purposes of subsection (3ZC) two hereditaments are contiguous if
(a) some or all of a wall, fence or other means of enclosure of one hereditament forms all or part of a wall, fence or other means of enclosure of the other hereditament, or
(b) the hereditaments are on consecutive storeys of a building and some or all of the floor of one hereditament lies directly above all or part of the ceiling of the other hereditament, and hereditaments occupied or owned by the same person are notprevented from being contiguous under paragraph (a) or (b) merelyecause there is a space between them that is not occupied or owned byhat person.
1.3.2 Property in Common Occupation [Wales]
Under the powers conferred by S 64(3) of the Local Government Finance Act 1988 the Welsh Government made the Non-Domestic Rating (Property in Common Occupation)(Wales) Regulations 2022 [SI 2022 No. 1025]. These mirror the effect of the Property in Common Occupation Act referred to at 1.3.1 and have the same effect in determining a statutory or artificial hereditament of the same nature in Wales, where two or more hereditaments occupied or owned by the same person meet certain conditions as to contiguity, so that Wales now aligns with England, but only from 1^st^ April 2023.
1.3.3 Crown Property
In respect of Crown property, the [Local Government and Rating Act 1997] inserted s65A into the LGFA 1998 so that any if any property would consist of two or more Crown hereditaments it is to be treated as one hereditament occupied by such one of the occupiers as appears to the billing authority to occupy the largest part of the property
(1) This Part applies to the Crown as it applies to other persons.
(2) Accordingly, liability to a non-domestic rate in respect of a hereditament is not affected by the fact that-
(a) the hereditament is occupied by the Crown or by a person acting on behalf of the Crown or is used for Crown purposes, or
(b)the Crown or a person acting on behalf of the Crown is the owner of the hereditament.
(1) If (apart from this subsection) any property would consist of two or more Crown hereditaments, the property is to be treated for the purposes of this Part as if it were a single hereditament occupied by such one of the occupiers as appears to the billing authority to occupy the largest part of the property.
This does not however relate to where property becomes vacant, as s65A only relates to occupied Crown property and not vacant property. The vacant part will form a separate hereditament
1.4 General Definitions: Relevant / Non-domestic and Composite Hereditaments
Relevant hereditaments which are liable to be rated are those defined by s.64(4) of the Local Government Finance Act 1988 and consists of property of any of the following descriptions:
- Lands
- Coal Mines and most other Mines
- Certain Advertising Rights
- Meters to measure a supply of gas or electricity
Lands are not defined but are taken to mean everything on, over or under the surface of land and will, therefore, include buildings and areas of surface water [See Electric Telegraph Co. v Salford Overseers (1855)]
The rateable hereditament may in addition to land also include cer