2.1 Structural alterations and restrictions on band increase
S.24(4) (a) of LGFA 92 provides that no increase shall be made to a Council Tax banding of a dwelling following physical alterations (material increase) until the whole or part of that dwelling is sold (relevant transaction) or there is a generalrevaluationof all dwellings for Council Tax purposes.
Practice Note 3 explains in more detail what a material increase and a relevant transaction are. It also provides guidance to caseworkers about making a change to a band where necessary.
Where physical alterations are notified to the VOA, the information is noted on thedatabasevia a CR10 logged report.
Should a generalrevaluation of all dwellings for Council Tax purposes occur, property is valued as it exists as at the date the list comes into force. Any physical alterations are automatically taken into account in therevaluation.
2.2 Exceptions to the material increase provisions
In certain circumstances the restrictive effects of regulation 3(1)(a)(i) do not apply. These are exceptions to the regulation. In these cases, instead of raising a CR10 Report, a review of the banding should be carried out.
Exceptions will include:
2.2.1 Disaggregation of self-contained units
Where a single property is found to contain more than one self-contained unit under The Council Tax (Chargeable Dwellings) Order 1992 (SI 1992/549) the property is to be treated as comprising as many dwellings as there are such units [See CTM Practice note 5: disaggregation of dwellings]
When a property has to be disaggregated, two (or more) new dwellings legally come into existence for council tax purposes. As a result each of these dwellings have to be valued as they physically are, at the effective date they will be entered into the list. This means that any physical alterations that have been made to the property must be included in the valuation.
So, the restrictions of regulation 3(1)(a)(i) will not apply and any physical alterations by way of extensions or alterations to the original dwelling which might have led to an increase in banding will fall to be reflected in the banding. The scenario has been looked at in the case Corkish (Listing Officer) v Berg [2019] EWHC 2521 (Admin).
2.2.2 A disaggregated self-contained unit ceasing to exist
The converse of the situation described at 2.2.1 is when works are carried out to a self-contained unit so that it is no longer self-contained. The correct interpretation of Reg. 11(10)(iv) is that both self-contained units (the annexe and the main house) will cease to exist and a new single dwelling will come into existence and the new dwelling will be valued taking into account its size, layout and character at the relevant date fully reflecting the additional value attributable to any alterations that may have been made.
2.2.3 Letting or surrender of a lease of part of a property
If part of a property such as a paddock, its garage or an outbuilding are let to a neighbour or third party, this will alter the extent of the hereditament. The result will be that that the original dwelling will cease to exist, and a new dwelling will come into existence. It will need to be valued considering its size, layout, and character at the date the alteration is made, fully reflecting the additional value attributable to any alterations that may have been made. This will potentially increase the banding, which will not be constrained by regulation 3(1)(a)(i).
2.2.4 Sale of part of a property
Where part of a property is sold, leased or gifted to another party, for example:
- garden land, or
- agricultural land forming part of an exempt farm composite, or
- the non-domestic part of a composite,
the extent of the hereditament has changed and this will result in the creation of a new hereditament. As a result the band should be reviewed including any physical alterations or improvements at the date the new hereditament comes into existence.
2.2.5 Purchase of additional land
Similar to the scenario at 2.2.2, when additional land is purchased to create a larger hereditament, this results in a new hereditament coming into existence. This takes the valuation outside the restrictions of regulation 3(1)(a)(i) and the revised banding will reflect both the additional land and any physical alterations that may have added value to the original dwelling.
