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

The property16.It was surprising to find that the experts had not been able to agree more of the factual issues, the property being neither large or complex. They were unable to agree a devaluation of the rent agreed for the property in October 2018, but had come to a consensus that, as I have already mentioned, the American Barn contained 22 boxes. 17.Mr Marriott made several initial adjustments to the rent to put it in terms where it could be used to inform the assessment. The first of these involved taking an average of the rent payable over the term of the lease to arrive at a figure of £24,500 per annum. 18.He then deducted 5% for the landlord having responsibility for external repairs and 3.5% because the landlord paid for the insurance. He made a further adjustment of 7.5% for the landlord’s return on the horse walker and a tenant’s contribution to the cost of maintaining the access roads and gallops. He was unable to explain how he had arrived at this percentage other than saying that it was a matter of ‘valuer judgement’. Taken together, these adjustments resulted in a net rent, of £20,580.19.However, Mr Marriott did not stop there. He explained that it was a BHA stipulation that a licenced yard needed to have someone on site 24 hours a day. There was no living accommodation at the property, so an agreement had been reached with the tenant of The Beeches (which is adjacent) for their ‘Head Lad’ to cover both operations. An e-mail from Mr Milton Harris of The Beeches was submitted by Mr Marriott confirming that:“when we took the lease on an allowance of £5k per annum was agreed within his rental payments….”20.He then provided details of the arrangements concerning the grazing licence for the paddocks. He submitted an e-mail from Mr George Windsor Clive MRICS of Windsor Clive International who were involved in the letting of the property. The e-mail confirmed:“When we let The Beeches at Sutton Veny the grazing was let for a token sum under licence so the landlord could keep the Basic Payment. The tenant would NOT have taken the yard without it. You should therefore take into account £200/acre when assessing the actual value of the stables.”Mr Marriott had duly allowed £2,132 per annum, being the product of 10.66 acres at £200 per acre. Information from the owner confirmed that grazing at the property totalled 10.66 acres. However, as I have already noted, 2.33 acres were within the demise. Mr Marriott was therefore wrong to value all the grazing and should, on his methodology, have simply taken 8.33 acres.21.Mr Marriott then turned his attention to the horse walker which he valued at 4.4% of its 2009 cost of £45,000, this figure he said related to the rateable elements. Before attempting a final devaluation to arrive at a value per stable Mr Marriott also subtracted the value of the lunge ring at £984. This element was later agreed at £1,020. These various deductions resulted in a value for the stables and loose boxes of £10,670 which he said equated to £485 per stable and £242.50 per loose box as the latter were valued at 50% of full stable value. It is worth noting that agreement on the number of stables was not reached until just before the hearing and Mr Marriott’s conclusion on the stable value was erroneously based on 20 stables rather than 22. His analysis should therefore be revised to £447.50. The decision of the VTE was also based on stable numbers that were subsequently revised upwards.22.Mr Albert’s approach was notably less complex. He took a ‘time weighted approach’ to the adjustment of the stepped rent, noting that his methodology resulted in a minimally different figure of £24,405 per annum. He queried Mr Marriott’s assertion that the landlord paid for the insurance and said that a Form of Return completed by the tenant stated that the cost was shared. The correct apportionment would in his view lead to an adjustment of 1.75%. He thought it inappropriate to deduct anything for the horse walker, the access road or the gallops noting that Mr Marriott had not provided an explanation of why he considered these items should be deducted. Similarly, the grazing licence covered an area of land which did not form part of the demise and in his view should not therefore be part of any analysis. His approach to the cost of the Head Lad was also to exclude the fee payable. He explained that it was not mentioned in the lease and appeared in the Form of Return as a service provided by the landlord from 2020.23.Mr Albert’s approach therefore began with an equivalent constant rent of £24,405 per annum from which he deducted 1.7426 acres of grazing paddocks at £200 per acre. This area was contained within the demise. A further subtraction of 6.75% was made for the landlord’s external repairing liability and the shared costs of insurance. This resulted in a net rent of £22,433. He then deducted the unlicenced loose boxes at £1,350 (£337.50 each), the horse walker at £400 (8 compartments at £50 each) and the lunge ring at £1,020. This left £19,633 as the value for the stables in the American Barn. Since there are 22, the value for each was £894, exactly double Mr Marriott’s revised analysis.24.I prefer the simplicity of Mr Marriott’s equated rent methodology. He had provided a copy of the lease as part of his evidence and it was relatively easy to resolve the areas of dispute. The lease stipulates that the landlord pays the insurance costs of the premises, and the tenant pays any excess should the need arise. In any given year a claim might not arise and in any case no figure was provided for the excess. The landlord is responsible for repairs to the structure and exterior of the equipment as well as some items of maintenance such as hedge cutting. The tenant is responsible for external decoration but the extent to which this will be an issue in a 5 year lease is unclear. As far as common items are concerned, the lease also states that the tenant shall pay the landlord a ‘fair proportion of all costs payable by the landlord for the maintenance, repair, lighting, cleaning and renewal of all service media, structures and other items used or capable of being used by the property in common with the other property.’ This seems to me to be a service charge in all but name and as such should not fall to be included in the analysis.25.Similarly, access to the gallops is by means of a separate licence and if it was intended that the costs were shared, I would have expected the lease to have been explicit on this point. Mr Marriott had included the horse walker in his allowance of 7.5% but it was not entirely clear what proportion was allocated. His approach appeared inconsistent as he included the horse walker elsewhere in the devaluation. I accept Mr Marriott’s treatment of the costs of the Head Lad at £5,000 per annum as it was verified by Mr Harris and the yard would not have gained a licence without this service. Access to grazing is also a prerequisite of a properly run yard. In this case it was available at no cost to the appellant and since it is outside the demise, I choose to reflect its presence in the stable value. The parties had both simply deducted the adjustments from the net rent. Since the objective was to put the rent on a basis that reflected the assumptions in the statutory definition of rateable value it would have been more appropriate to divide the net rent by 1.085, as that would have properly accounted for the items requiring adjustment and would have produced a rent in terms of rateable value of £17,972 per annum. However, for the purposes of analysis I will follow the parties’ methodology.The first element of the devaluation is therefore as follows:Average rent £24,500Less Head Lad costs -£5,000Less landlord’s repairing liability (5%) -£975Less landlord’s insurance costs (3.5%) -£683 Adjusted rent £17,84226.I now turn to the remaining parts of the devaluation starting with the horse walker. Mr Albert said that there was agreement elsewhere in the country that for rating purposes walkers were to be valued at £50 per compartment. Mr Marriott’s approach was to treat the walker as if it were an item of plant and machinery, but he made no adjustment to bring the cost in to 2015 terms or any allowance for age and obsolescence. I prefer Mr Albert’s approach; if the methodology is agreed elsewhere, I see no reason to depart from it. The lunge ring is agreed at £1,020. The four unlicenced loose boxes were valued at 50% of full value by Mr Marriott and at £337.50 each by Mr Albert, the latter having regard to the normal stable tone. I will adopt Mr Marriott’s approach, and this results in an ‘in terms of the licenced stables’ figure of 24. The second part of the devaluation is as follows:Adjusted rent £17,842Less horse walker -£400Less lunge ring