Case No. UKUT-311-(LC)-UTLC-Case-Number:-LC-2022-105

Stable value £68427.The resultant devaluation represents the value of a licenced stable with adjacent grazing and access to a gallops for which the trainer pays separately. The rent was effective from the end of October 2018 and neither expert sought to make any adjustment to reflect the possibility of changes in rental values since the AVD.28.I will now examine the leasehold comparables starting with the closest in locational terms.The Beeches, Sutton Veny, Warminster, Wiltshire BA12 7BY29.The Beeches is situated adjacent to the property and the two sites share a common access road. It is a very much larger facility than the property and included a total of 71 stables in 5 American barns as well as residential accommodation, 2 horse walkers, a lunge ring, field shelters, a manège, linear and circular gallops which are shared with the appeal property, a washdown facility and paddocks. It was let in 2018 together with the property which is the subject of this appeal. For the purposes of devaluing the rent, the various elements included in the Lower Barn demise are taken into account.30.It was let on a 5 year lease from 30 October 2018 at an initial rent of £50,000 per annum for the first year and £65,000 per annum for the second and third years. There is a rent review at the end of the third year to the greater of the passing rent or the open market rent. For his analysis Mr Marriott had adopted the average rent £62,000 per annum since the rent for years 4 and 5 could not be lower than the passing rent for years 2 and 3. He considered the lease to be effectively internally repairing and he noted that the landlord also maintained the surface and drainage of the gallops. Mr Marriott made an allowance of £5,000 per annum for this responsibility and a 5% adjustment for external repairs. This resulted in a net rent of £53,900 per annum. He also made an allowance of 5% for restrictions to the use of the gallops during the shooting season although he later admitted that this was not the hinderance he first thought it to be. After allowing for the value of various facilities on site such as horse walkers, gallops and paddocks, his final adjustment was for quantum at 17.5% and he said this figure was based on an agreed scale with the VOA. His analysis equated to a value for each stable of £462.00 exclusive of any quantum allowance.31.Mr Albert disputed many of Mr Marriott’s conclusions about the terms of the lease and had again applied a time weighted approach to the calculation of the stepped rent resulting in a figure of £59,539 per annum. Mr Albert noted that the lease stated that maintenance of the gallops was the responsibility of the tenant and contained a stipulation that involved ‘rotovating, strimming and applying weedkiller on a regular basis and generally to maintain the gallops in accordance with good equine husbandry’. He therefore considered it unnecessary to make an allowance for the costs of this maintenance in his analysis. He also noted that a circular gallops was also included in the demise but it was in poor condition. Nevertheless, he considered that it had been repaired thereby proving that it was economic to do so. Accordingly, he thought that it should be included in his analysis.32.He also disputed Mr Marriott’s conclusions about the amount of residential accommodation in the demise. He had sought confirmation from Mr Harris who had stated that a two bedroomed house and a three bedroomed hostel were included.33.Mr Albert went on to point out that the demise included a small area of grazing but additional areas were held on a separate licence. He also considered that the outdoor arena or manège should be valued at £1.25 per m2 to take account of quantum and the larger stables over 20 m2 in area should be uplifted at 110% of the basic stable value. He made no adjustment for quantum to reflect the overall size of the property, stating that it was already reflected in the rent and that to reflect it in his analysis would result in double counting. Mr Harris confirmed that he had constructed the covered washdown at his own expense. His preferred analysis culminated in £388 per stable. Neither expert attempted an adjustment for rental movements from the AVD to the date the rent was agreed.34.It was again disappointing to find that the experts had been unable to agree much of the factual detail or how the rent ought to be devalued. Starting with the rent, I see no reason to take the analysis beyond the date of the rent review and a simple average of the first three years rents results in a figure of £60,000 per annum. Since the landlord’s repairing liability extends to the whole property, I deduct 5% for it before making any other adjustments and the result is a net rent of £57,143. 35.The gallops were contentious. There is no disagreement that the 8 furlong linear, all weather gallops and the neglected 8 furlong circular gallops are both included in the demise. As far as the former is concerned, Mr Marriott adduced nothing in support of his adopted cost of £5,000 per annum. The landlord’s repairing obligation extends to repair of the gallops drainage and surface treatment and the extent to which this aspect might be covered by the 5% repairing adjustment was not explored by either expert. Mr Marriott’s assessment of £5,000 per annum appears excessive to me and Mr Albert had allowed nothing at all. I adopt a figure of £2,500 per annum.36.The experts agree on the rental value of the trainer’s house at £8,700 per annum and I accept Mr Albert’s value on the remaining residential parts as their extent was confirmed by Mr Harris. There is no dispute as to the unit value of £100 per room per calendar month. Turning to the grazing which to a large extent is held on a separate licence, I prefer Mr Albert’s approach of including only the 1.74 acres that is actually in the demise. This should be valued at £200 per acre in line with established practice.37.I have already alluded to the horse walkers in my comments about the Lower Barn analysis and therefore take the 10 and 8 compartment examples in the demise at £500 and £400 respectively. I noted the condition of the circular gallops on my visit and it was clearly not in use. Mr Albert was mistaken in his assertion that it had been repaired and evidence supplied by Mr Marriott showed it to be in need of significant works. I have no evidence regarding the cost of putting it in to repair, but the yard is clearly able to function without it and I therefore exclude it from my analysis.38.The washdown was a tenant’s improvement carried out by Mr Harris and I prefer Mr Albert’s approach to the valuation of the arena.39.Finally, the question of an allowance for quantum needs to be addressed. Mr Marriott had made an allowance of 17.5%, a figure Mr Albert considered appropriate for a 70 stable yard. Mr Albert is wrong in his conclusion that since the rent reflects quantum it need not form part of the analysis. His analysis reflects quantum whereas Mr Marriott’s isolates the quantum effect allowing comparison with smaller yards. Applying Mr Marriott’s methodology to the adjusted components I arrive at a value per stable without quantum of £595.00. As with the Lower Barn at The Beeches this value represents the value with the paddocks reflected as at October 2018. Major’s Farm, Whitsbury, Fordingbridge, Hampshire SP6 3QB40.Majors Farm is located about 3.5 miles north west of the town of Fordingbridge and 6.5 miles south of Salisbury. This yard has a more traditional layout than either of the two properties at The Beeches, with 35 individual, brick-built stables arranged around a courtyard. It benefits from a horse walker and turnout grazing. The site contains a significant amount of residential accommodation including a 5 bedroom trainer’s house, a bungalow and two hostels containing 4 and 12 beds respectively. Mr Marriott thought that the latter had been converted from storage as a tenant’s improvement.41.The property was let on a 3 year term from 1 February 2013 at a rent of £41,610 per annum. It was unsurprising to find that the experts were again unable to agree the factual aspects of this comparable although they had reached an accord that the tenant was only responsible for internal repairs.42.The approaches of the experts to the valuation of the residential element were disparate. Mr Marriott had apportioned a total of £25,800 per annum, some 62% of the total rent passing. Mr Albert allocated £41,196 per annum which amounted to virtually the whole rent. This should have led him to the conclusion that his residential values were excessive. Given that neither expert provided any evidence of values of similar residential accommodation I do not propose to undertake a detailed analysis of their approaches, notwithstanding that it formed such a significant part of the rent. The lack of evidence was a noteworthy failing on both their parts and bearing in mind that this property was the only one of the four leasehold comparables that pre-dated the AVD, I would have expected a more rigorous appraisal.43.For the purposes of arriving at a rate per stable I prefer to use Mr Marriott’s residential figures as they are the more realistic of the two. After deducting the horse walker at £300 (6 compartments) and 3.6 acres of grazing at £720 per annum I arrive a value per stable of £351 each. This figure is based on Mr Marriott’s calculation of the total number of stables (36.5) and if I adopt Mr Albert’s (37.9) the analysis equates to £338 per stable. I am not convinced that Major’s Farm is a useful comparable; it is too dissimilar to the appeal property and there are too many question marks over the apportionment of the residential parts and this aspect has a profound effect on the analysis.Wilsford Stables, Wilsford, Amesbury, Wiltshire SP4 7BL44.Wilsford Stables is another traditional yard but in this case situated in the village of Wilsford about 6 miles north of Salisbury and 1.75 miles south west of Amesbury. In terms of the number of stables it is close to the property under appeal but that is where the similarities end. Some of the stables are traditional in style and others are within a barn. The site has residential accommodation in the form of a bungalow and two flats, 26 acres of grazing and there is access to a 3.5 furlong gallops. The gallops are situated about 500 meters to the north of the stables and are equipped with a fibre sand surface. The cost of installation was £40,000 with the landlord paying 75% of the cost and the tenant meeting the remainder. 45.The property is held on a 10 year lease from 1 November 2015 at £23,000 per annum on fully repairing and insuring terms. Mr Marriott provided copies of e-mail correspondence confirming that the lessee, Mr Mullins, had renovated the bungalow and had converted the two flats from rough storage. Mr Mullins also confirmed the acreage of grazing land.46.Mr Albert believed the landlord to be responsible for external repairs but having read the lease, that is not the case. He also considered that the landlord was responsible for insuring the premises and although he is responsible for securing insurance it is the tenant who pays for it by means of an ‘insurance rent’. It is not therefore, appropriate for any deduction to be made from the passing rent for these two items. 47.The experts did not agree on the value of the bungalow, Mr Albert adopting £5,400 per annum and Mr Marriott £4,200 per annum, the latter reflecting the unimproved state in which the property was demised. Mr Albert’s approach to the two flats was to reflect their value in the value of the stables whereas Mr Marriott adopted £10 m2 as storage value. Similarly, there was no agreement regarding the grazing, Mr Albert disregarding it altogether and Mr Marriott accounting for it at £200 per acre. The gallops proved to be equally contentious, Mr Marriott reflected within his analysis that the landlord had paid 75% of the total cost whereas Mr Albert excluded them on the basis that they were not included within the demise. It is worth noting that the assessment in the Rating List contains an end allowance of 10% for access. At the hearing it was confirmed that this adjustment referred to the remote location of the property rather than to access to the site itself. Having visited the site by car, I have no doubt that it would be equally accessible by a horse lorry and have therefore disregarded it.48.I conclude that Mr Marriott is correct in relation to the value of the bungalow and that Mr Albert is right about the value of the two flats. This being the case the only deductions from the passing rent are for the bungalow and the grazing land and taken together these amount to £10,000 per annum. The gallops are not included within the demise and are therefore excluded from the analysis. The rent remaining for the stables is £13,000 per annum and the experts have, on this occasion, being able to agree that there are 26 stables to be included within the analysis. The value per stable is therefore £500. I now turn to the final leasehold comparable.Conkwell Grange Estate, Limpley Stoke, Somerset BA2 7FD49.This property comprises an extensive range of stable buildings, 105 acres of grazing, a 4.5 furlong gallops, two horse walkers and a manège. It is situated approximately 3 miles southeast of Bath and 0.75 miles northwest of the village of Winsley.50.It is let on a six year lease from 1 July 2016 on fully repairing terms at a commencing rent of £50,000 per annum for the first year with a reversion to £53,500 per annum for the remainder of the term. On Mr Marriott’s methodology the equated rent was £52,030 per annum and Mr Albert’s figure was £51,950 per annum. There was no agreement about who paid for insurance, Mr Albert thought it was the tenant and Mr Marriott, the landlord. According to my reading of the lease, it does in fact fall on the tenant.51.In an appeal characterised by a lack of agreement about the property and most of the comparables I was not in the least surprised to find the experts were some distance apart when it came to the facts at Conkwell Grange. The primary issue between them was simply the number of stables included in the demise. For the record Mr Marriott stated that there were 108 and Mr Albert based his calculations on 84. Mr Marriott submitted a detailed e-mail from the BHA who are the licensing body for the sport. This showed there to be 108 stables on site when an inspection took place in June 2012. However, it was not readily discernable from the lease whether the demise included the entirety of the licensed stables and on my inspection, it was obvious that further facilities had been developed since the start of the lease which made identification more difficult. Accordingly, I have some doubts about the precise number of stables to be included in the analysis52.As far as the other elements of the analysis are concerned there is agreement between the experts on the value of 55 acres of the grazing (£11,000 per annum) but not on the remainder. Mr Marriott had used £150 per acre and Mr Albert £100 per acre. They also disagreed about the gallops, Mr Albert relied upon his tone of £610 per furlong and Mr Marriott preferred a figure of £478 per furlong deduced from the Tribunal’s decision in Hobbs v Gidman (VO) (2017) UKUT 63 (LC) (P D McCrea FRICS FCIArb). This decision related to the 2010 List.53.The analysis is therefore not straightforward. I start with the rent and for the sake of consistency I will take an average, arriving at a figure of £52,917 per annum. I will split the difference between the experts on the second area of grazing and adopt the 2017 tone for the gallops. The horse walkers should be taken at £50 per compartment (£500 for the pair) and the manège is agreed at £858 per annum. On this basis using Mr Marriott’s stable numbers I arrive at a figure of £300 per stable, and adopting Mr Albert’s total, £382.50 per stable. These values reflect an allowance for quantum which Mr Marriott identified at 25% on the agreed scale. The values adjusted for quantum are £456 and £580 per stable respectively. The existing assessment has an allowance for access of 10% but bearing in mind that racing yards tend to be in rural locations the arrangements at Conkwell did not appear, to me at least, to be materially worse than any of the other yards.54.I consider it appropriate at this point to pause and summarise the results of the leasehold analysis for racing yards within 20 miles of the property. It is worth noting that the Lower Barn and The Beeches figures are for American Barns whereas the remainder are expressed in terms of traditional stables. To adjust for this factor, I take the view that it is necessary to add between 5 and 10% to American Barn values. The values below do not include this addition.55.Mr Marriott and Mr Albert both included within their evidence details of a letting at DML Racing at Rock Farm, Rock Cross, Rock, Kidderminster, Worcs. DY14 9SA, a racing yard some 81 miles north (110 miles via the M5 Motorway) of the property. This property was let on FRI terms with effect from March 2017 on a 5 year term at a rent of £66,000 per annum. According to Mr Marriott it comprises a modern, high quality, purpose built racing stables consisting of a series of inter-connecting American barns. A letter from the landlord confirmed that the site includes 57 stables, 2 horse walkers, an indoor school, 24 acres of turnout paddocks, a four-bedroom trainer’s house, and the shared use of the adjacent gallops for which the landlord is responsible for the upkeep. In his expert report Mr Marriott said that the 2017 List rating assessment had been reduced from rateable value £52,500 to rateable value £40,250 which corresponded to a value per stable of £489.50. However, in his detailed analysis he arrived at a figure of £470 per stable. Mr Albert supplied an analysis of an interim assessment of rateable value £43,750 which referred to a figure of £550 per stable.