Law Report: Granny flat can be assessed for council tax

Rodd v Ritchings and three other appeals; Queen's Bench Division (Mr Justice Ognall); 14 June 1995

When considering for the purpose of council tax assessment whether an annexe to a building was a self-contained unitconstructed or adapted for use as separate living accommodation, the degree of community living and the practicability of selling the annexe on the open market were irrelevant.

Mr Justice Ognall allowed appeals by Inland Revenue listing officers and quashed four decisions of valuation tribunals under the Council Tax (Chargeable Dwellings) Order 1992 (SI no 549).

Pursuant to section 3(5) of the Local Government Finance Act 1992 the Secretary of State laid the1992 Order prescribing that what otherwise would be a single property should be treated as two or more dwellings where it contained "more than one self-contained unit". Article 2 defined "self-contained unit" as a part of a building which had been constructed or adapted for use as separate living accommodation. In each case the tribunal decided that an annexe to the principal property (or granny flat) should be treated with the principal property as one dwelling and was therefore not liable to separate assessment for the purposes of council tax.

In the first case the tribunal regarded the terms of planning permission and the fact that any use as a separate unit of accommodation would be a breach of planning consent as conclusively fatal to the annexe's being treated as separate living accommodation. In the second case the tribunal concluded from the level of communal living that the whole premises comprised a single family unit of occupation. In the third and fourth cases the tribunal concluded that as it would not be practicable to sell the annexe separately it was not liable to be assessed for council tax.

David Holgate (Inland Revenue Solicitor) for the listing officers; Siobhan McGrath (Seldon Ward & Nuttall, Bideford); Gary Cowen (Max Barford & Co) for the respondents in the first and third case; the second respondent did not appear and was not represented; the fourth respondent in person.

Mr Justice Ognall said that it would be wrong to express any conclusions on the question of the relevance in principle of the terms of planning consent to the liability of premises to be assessed separately for council tax. However even if it were to be a relevant factor it would be wholly wrong to treat it as the sole one, as opposed to one of a number of facts. It was clear the tribunal in the first case failed to apply its mind to any of the evidence save for the terms of the planning consent. That was an error of law and its decision must be quashed.

In the second case the tribunal, in giving account to the level of communal living, introduced a consideration which was outwith the relevant criteria required in order properly to test the definition in article 2. It would be obvious that the purpose behind the great majority of these annexes was to furnish separate accommodation for an older generation allowing mutual privacy and a degree of community which gave peace of mind to both parties. In most cases the actual degree of communal living would be significant. But that could not assist in answering the question whether the annexe in question was constructed or adopted for use as a separate dwelling. The tribunal misdirected itself and its decision would be quashed.

Turning to the third and fourth cases, the basis for valuation for council tax was found in paragraph 6 of the Council Tax (Situation and Valuation of Dwellings) Regulations 1992 (SI no550). In the assumptions referred to in paragraph 6, there was no assumption that the property was capable of being sold on the open market. Saleability might be a useful test in confirming that the premises were self-contained but a view that they could not be sold separately could not assist in deciding whether they were to be treated as self-contained.

If the premises were physically capable of sale but nobody would wish to buy them that was a point going to valuation, not the essential physical character of the premises. The tribunal misdirected itself in each case in giving account to the factor of practicability of sale.

The cases should be remitted to the tribunals for re-hearings.

Ying Hui Tan, Barrister