The Local Government Finance Act 1988 introduced 5 yearly rating revaluations, the first being 1990 and this quinquennial cycle continued until 2010.
In 2013 the government cancelled the 2015 revaluation and extended the 2010 list by two years to “give certainty to ratepayers”. The 2017 revaluation had intended to be only four years in length but has in fact been extended twice, now standing at six years in duration.
In June 2021 a consultation for more frequent revaluations was published to provide the opportunity for stakeholders to offer their views. A move to 3 yearly rate revaluations was a popular suggestion to benefit the ratepayer, however the old adages of “the devil is in the detail” and “always read the small print” spring immediately to mind.
It is alarming to see several additional proposals have been put forward in pursuit and support of delivering a more frequent revaluation cycle, which are summarised as follows:
- Ratepayers will be under a duty to notify the valuation officer of any physical change or change of use to their property even if they do not intend to challenge their assessment.
- There will be an annual return for ratepayers to confirm any changes made or not. There will be a requirement for mandatory provision of rent and lease information including trade and cost information if relevant. Under the current system this information is only provided on request of the valuation office.
- The current “check” stage will be removed as this will be covered under the above proposals.
- A ratepayer will only be provided with three months to challenge the assessment from the commencement of the rating revaluation. Currently compiled list checks and challenges have no time limit whilst the ratepayer has an interest in the property.
- The landlord of a tenancy property will lose his right to challenge the assessment (on the current provisions both the landlord and tenant of a hereditament can appeal or lodge a challenge to seek a reduction).
- Implementing a non-refundable fee for providing detailed relevant rental evidence used to arrive at the rateable value in addition to a fee for submitting a challenge which would be refundable in the event of a decision reducing the rateable value.
- Allowing the valuation officer two years and nine months to settle challenges compared with 18 months currently.
- Reviewing when a material change of circumstances will apply.
Under the current system, rateable values are set at a common date, known as the “Antecedent Valuation Date” (AVD). This date is currently 2 years before the rating list comes into force. The consultation discusses shortening the gap between the AVD and commencement of a rating list, however government believes that in the medium term such a change is not deliverable in England without significant and unpalatable new restrictions to appeal rights. That along with the Valuation Office Agency’s inability to revalue all 2,000,000 UK hereditaments within 12 months along with their other duties such as dealing with challenges appears to make this shift unfeasible
The potential to leave the current 2-year gap seems to be a fundamental flaw in the proposals as we will continue to have a significant lag between the valuation date and the start of a rating list. As many will know in the property industry a lot can change in less than two years. Although shorter revaluations would move towards rateable values of reality and allow the ratepayer to challenge values on a more regular basis, there will still be a detachment between the value in the rating list and the rental evidence upon which it has been derived.
Allowing only a three-month window from the commencement of a rating list to allow a ratepayer to challenge their assessments is wholly unreasonable. As a valuer, when considering evidence to advise whether to instigate a challenge against a rateable value, we consider rental values relevant to that particular case and agreements reached with the valuation officer for other similar challenges.
If a challenge goes to the appeal stage this could take years to conclude. Therefore, does that mean that the ratepayer and valuer when learning of such agreements reached after the three month window will be precluded from challenging their assessment? Interestingly this does not form part of the consultation and no guidance has been provided to that effect.
The 2023 revaluation will be based upon rental values effective 1 April 2021 and could be the most difficult revaluation yet with the backdrop of Covid 19 and the dearth of rental evidence upon which to base valuations.
A move towards more frequent revaluations is welcome, and likely inevitable. There will always be compromises to be made when changes take effect although the balance under the proposals appear to fall firmly against the ratepayer.
We have seen this during the 2010 and 2017 rating revaluations and both times following catastrophic economic events. The question is could this and would this happen again once the three-year cycle commences?
If it does happen again the sting in the tail of the reforms will remain in any event if the Government’s proposals are implemented fully. We have already seen the technical issues with the VOA’s website in implementing the CCA process and if the technology is not in place to support the proposed new 3 Yearly Revaluation Cycle, then the ratepayers’ ability to challenge may be severely impacted or even lost.
A question mark will therefore remain over whether this proposal is just another back doorway of restricting the rights of a ratepayer to challenge their assessment.
For further information please contact Ryan Jones.