Rating Manual section 6 part 3: valuation of all property classes

Section 95: beach huts

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

This section covers Beach Huts.

There are a range of beach hut types varying from the traditional timber hut type to PVC or purpose built of concrete/ brick situated in blocks, either single or double storey. Structures may be permanently on the pitch or removed in winter for storage.

Occupation is invariably subject to restrictions imposed by the local authority or landowner, both precluding their use as overnight accommodation (normally between 10 pm and 6 am) and restricting the use to which the hut can be put. Most beach huts will be purely day huts which cannot be used for overnight stays and offer only the most basic of facilities and generally do not have mains services connected.

Usually beach huts will be located immediately on the sea front at resorts but some may be more remote. However, private shelters or huts used by fishermen or hill walkers should not normally be treated as beach huts.

2. List Description & Special Category Code

Description in the rating list is shown as ‘beach hut and premises’.

Bulk Class Miscellaneous
Primary Description code LH1
Special category code 022
Suffix letter G

3. Responsible Teams

This is a Generalist class of property and as such will be dealt with by generalist caseworkers.

4. Co-ordination

The Beach Hut class co-ordination team has overall responsibility for the co-ordination of this class. You can find the contact details here P:CEO1\Intranet\Reval 2017\VP & CCTs (VP and CCT Members). The team are responsible for the approach to, accuracy and consistency of valuations. The team will deliver Practice Notes describing the valuation basis or revaluation and provide advice as necessary during the life of the rating lists.

Caseworkers and referencers have a responsibility to:

*follow the advice given at all times – Practice Notes are mandatory *not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team *seek advice from the co-ordination team before starting on any new work

5.1 Identifying the hereditament

The hereditament will usually comprise the beach hut and its site. If the hut itself is moved into storage every year for the winter months it will not form part of the hereditament and just the site will be valued with the description in the rating list as “Site for Beach Hut”.

Generally, each privately owned or occupied beach hut comprises a separate hereditament if the occupation is not too transient e.g. an annual licence or longer interest. The description in the rating list will be ‘ beach hut and premises’.

Where a local authority or other landlord retains paramount control over two or more contiguous beach huts then they should be assessed together as a single hereditament i.e. this will be the weekly or daily lettings. These are to be treated as multiple units. Description ‘ beach huts (number) and premises’.

Where any such blocks are separated by a public highway or the occupation of another ratepayer, then each block will form a separate hereditament and be assessed accordingly.

5.2 Licence fees - used as evidence of value

Street v Mountford (1985) 274 EG 821 HL

Determined that the distinction between a licence and a lease or any other tenancy depends on the truth of the relationship between the parties involved, not the label which they choose to put upon it. In other words it does not matter if a lease or licence exists it is the length of the agreement that is important as to its rateability.

‘Licences that do not on the face of it appear to give rise to exclusive occupation of land should be considered alongside the facts as they present themselves on the ground. In other words, paramount control and the practical outworking of the licence should be explored, to confirm if exercise of the right effectively achieves rateable occupation of the land over which it is exercised.’

i.e. the fact that the premises is held on a licence and not a lease is not relevant.

5.3 Seasonal Use

Southend on sea v Wren 1900 64 JP 7

Whilst the property may only be used for part of the year e.g. a seasonal use, the agreement is for 12 months, as per the hypothetical tenancy, and therefore the rent paid reflects the fact that for part of the year the hypothetical tenant does not make use of the property.

So no adjustment is to be made regarding the annual licence that the hut may only be occupied for part of the year. i.e. the site rent reflects the seasonality of the unit.

5.4 Domestic / non-domestic borderline

Having correctly identified the unit of assessment, the non-domestic / domestic borderline has to be considered.

5.4.1 Domestic

‘Domestic Property’ is defined in s.66(1)(a) and (b) Local Government Finance Act 1988 (LGFA 1988) i.e.

S66 definition of domestic property 1.Subject to subsections (2) (2b) and (2e) below, the property is domestic if a.It is used wholly for the purpose of living accommodation b.It is a yard, garden outhouse or other appurtenance belonging to or enjoyed with property falling within para (a) above c.It is a private garage which either has a floor area of 25sqm or less or is used wholly or mainly for the accommodation of a private motor vehicle or d.It is private storage premises used wholly or mainly for the storage of articles of domestic use e.It is a yard, garden outhouse or other appurtenance belonging to or enjoyed with property falling within para (a) above

So property is domestic if “it is used wholly for purposes living accommodation” or alternatively is an “other appurtenance”.

Use for domestic purposes (even for part of the year) should be considered at the material day. See Rating Manual section 2 part 4.

In Lewis v Christchurch Borough Council 1996 RA229 the High Court found that the beach huts (including the site) formed separate hereditaments and refuted the suggestion that the hut was removable or that the huts should be assessed as one unit of assessment. On the facts in this case the huts were found to be ‘Domestic Property’ as they were “used wholly for the purposes of living accommodation.” See Council Tax Manual Practice Note 8. Where a beach hut is wholly used for the purposes of living accommodation in that it provides sleeping and other facilities for living, with or without mains services, it will be treated as a cabin or chalet used as a holiday home and hence ‘Domestic Property’, falling to be assessed for Council Tax with a corresponding Charge Band entry in the Valuation List. Should VO’s have difficulty in deciding whether the facilities provided fall within this category reference should be made to the relevant Technical Adviser.

5.4.2 Appurtenance

In some cases the beach hut may be situated within the grounds of a dwelling or block of flats.

The definition of ‘Domestic Property’ as per section 1(b) LGFA 1988 includes “garden, outhouse and other appurtenances” that are within the curtilage of the domestic accommodation.

In Martin & Others v Hewitt (VO) 2003 RA 275 the President of the Lands Tribunal (having concluded that the word ‘appurtenance’ in sub-section (1)(b) LGFA 1988 should be given its ‘common law’ definition) stated:

“in my view, there is a clear indication that “appurtenance” in section 66(1)(b)[LGFA1988] was not intended to encompass land or buildings lying outside the curtilage of the property referred to in section 66(1)(a)” [LGFA1988].

Whether a Beach Hut is properly described as an ‘other appurtenance’ must always depend very much on the particular facts and circumstances in each case. See Rating Manual section 3 part 1.

To satisfy 1(b) a number of considerations will have to be taken into account.

a.does it pass in a conveyance of the principal subject matter (i.e. the dwelling house, flat etc.) without being specifically mentioned in the conveyance

b.the natural curtilage - e.g. presence of fences, hedges etc - i.e. what would naturally fall with the demise

c.layout and disposition of the dwelling

d.degree of propinquity - i.e. closeness to dwelling

e.physical connection

f.shared facilities e.g. common access, services etc

g.user of land and buildings - look at all the facts, use and title deeds, registration etc

To be considered as an appurtenance the hut must fall within the curtilage of the dwelling. If it is outside this then the hut will not be domestic property and will be subject to non-domestic rating.

5.4.3 Private Storage Premises – s66(1)(d) LGFA 1988

A beach hut will not be “private storage premises used wholly or mainly for the storage of articles of domestic use” within section 66 (1)(d) of the LGFA 1988.

In Alford v Thompson (VO) (unreported), [Beach Hut 4, Hordle Cliff, Lymington, Hampshire] the Lands Tribunal found as a matter of fact that swim wear, deck chairs, cutlery etc. were not articles of domestic use but articles of recreational use used in connection with the enjoyment of the beach. Moreover, the beach hut was a sui generis use. Its use had been agreed as ‘private’, but these were not ‘private storage premises’, as the words “wholly or mainly” connoted storage for its own sake, and did not include storage as an adjunct of the recreational use of the beach hut in connection with the beach.

The Lands Tribunal stated that the crucial part of section 66(1)(d) LGFA 1988 was that in so far as the beach hut was used for storage, it would have had to be used ‘wholly or mainly’ for the storage of articles of domestic use. The evidence showed that any articles stored in the beach hut were ‘wholly or mainly’ for use in connection with the enjoyment of the recreational use of the beach hut and the beach.

In deciding whether any articles stored in a ‘private storage premises’ are ‘articles of domestic use’ it should be noted that the word “Domestic” is derived from the Latin “domus” which means “home”. Moreover, in Martin & Others v Hewitt (VO) [see para 4.2 above] the President of the Lands Tribunal had difficulty in seeing that the storage in premises quite separate from the house of things to be used for recreation away from the house could constitute articles of domestic use. Scottish case law was distinguished on this point. See Rating Manual section 3 part 1 - Paragarph 3.14.

5.4.4 Self Contained Self Catering Accommodation

Alternatively, if the Beach Hut is let out as self contained self catering accommodation for short periods [s.66(2B) LGFA 1988] then it will be Non-Domestic property which should be valued accordingly. Reference should be made in this respect to Rating Manual section 6 part 3: Section 480.

5.4.5 Non-domestic property

If the property does not qualify as domestic property under s66 LGFA88 then it is non-domestic property and has to be valued accordingly.

6. Survey Requirements

Single Huts

*Site plan showing location

*Measurement - GEA - verandas or decking - note as other additions

*Characteristics - age, construction , condition

*Position - location on front e.g. set back, proximity to facilities e.g. if adjoining cafes/ toilets etc

*Services - provided, availability of car parking

*licence fee details noting whether rates, services, VAT, payments for chattels (e.g. chairs and equipment) are included in the payment

*Restrictions regarding use plus details of any closures due to regular ‘events’ that may be held in the vicinity affecting the use and enjoyment of the hut. e.g. temporary closures of the promenade for events. such as marathons, air shows, etc.

Multiple huts

*n addition to the above, details of receipts and expenditures

*details of total number of huts, other facilities e.g. ice cream/ticket kiosk etc

*details of how the operation is run, seasonality details

*details of any voids etc and length of season

7. Survey Capture

Beach huts are normally data captured as miscellaneous bulk class in RSA.

Use code BH1
Area/use code 1 (number of units)
Line description should show size of hut and state if site or site and hut.
Other additions include area of balconies etc record area per sqm
Remarks enter site/hut size and any other remarks re location/position

Survey data / referencing.

Sublocation codes will be as for 2010.

Survey data should indicate size of hut on line entry description and number of huts in the appropriate box.

Verandahs, balconies, patios etc captured in other additions but will normally be reflected for valuation purposes.

8. Valuation Approach

8.1 Method of Valuation

The preferred method of valuation is by reference to rentals where sufficient evidence exists. Although historically some VOs have used the contractor’s approach to valuation, the rentals method should be adopted where possible.

There will however be few, if any, open market rents which accord with the statutory definition of rateable value and payments may need adjustment. e.g. to exclude payments for rates, services, equipment etc Nevertheless, some rental evidence will usually exist upon which a basis of valuation can be established.

8.2 Tone of List

In Marks v Easthaugh (VO) 1993 RA 11 the Lands Tribunal rejected the argument of the Valuation Officer that the assessment of a beach hut should follow the ‘tone of the list’ since, at the material day, no tone was established. The facts in Easthaugh are unusual as neither party directly addressed this issue and there was no legal representation.

In a later case, Jafton Properties Ltd v Prisk (VO) 1997 RA 137, the Lands Tribunal fully considered legal points on when a ‘tone of the list’ was established and held that whether a ‘tone’ has become established must be determined at the date of the hearing and not the material day.

The Lands Tribunal held that “…it is settled law that assessments of comparable hereditaments are admissible as evidence of value and there are three stages leading to the establishment of tone of the list. At first, when the list is put on deposit, the assessments carry little weight: they are opinions of value by the valuation officer, as yet unchallenged and untested by negotiation and determination. As time passes more and more assessments are agreed or determined by valuation tribunals or this tribunal. Finally, a stage is reached when enough assessments have been settled or are unchallenged to establish a pattern of established values, a “tone of the list”. The establishment of tone of the list at any particular time is a question of fact.”

When considering tone of the list, Marks v Easthaugh (VO) should not be followed and VOs should have regard to the principles as set out in the Jafton Properties Ltd v Prisk (VO) case.

8.3 Site Rents

Ample local evidence will exist of annual rents paid for a beach hut site subject to a licence agreement. These licences will normally stipulate the specification of the hut to be erected and any restrictions on its use. It should be established if the payment is for the site and hut or site alone.

8.4 Seasonal Lettings

Many huts will be let for the normal summer season but payments received will generally include amounts for rates, repairs, management and possibly chattels and services. After adjustment these payments will represent the closest approximation of annual value on the assumption that the value of beach huts during the winter months is likely to be nominal.

8.5 Daily/Weekly Lettings

This evidence is unlikely to provide any assistance as such lettings are likely to relate to the peak season and not therefore representative of an annual rent.

8.6 Contractor’s Basis

In Marks v Easthaugh, (see paragraph 8.2 above) the Lands Tribunal having rejected the Valuation Officer’s evidence was obliged to have regard to the valuation evidence presented by the ratepayer. This comprised site rent of the subject property with an additional value for the hut arrived at on a contractor’s basis.

Notwithstanding that this approach has been adopted in some localities it is considered that valuation by reference to rents, where available and provides a more reliable basis.

8.7 Other

Huts used for weddings and other events - please refer to CCT or Technical Adviser for guidance - however details of how they are used plus receipts/expenditure etc will be required.

Multiple huts (non-foreshore assessments) - Will possibly be valued in relation to receipts on the NBS.

9. Valuation Support

*Rating Support Application (RSA)

*Survaid

*Class Co-ordination Team

Practice note 1: 2017 - Beach huts

1. Market Appraisal

In many locations beach huts are still very popular despite the recession. This is especially so in traditional seaside resorts where Council waiting lists are typically 10-20 years.

The increase in popularity have seen some huts hitting headlines with sales well over £120,000. Unfortunately capital values will not assist in arriving at a value for rating purposes other than to demonstrate high demand.

Generally local authorities charge a site rent and the occupier places their own hut on the site or the site and hut are let together reflecting location. Some authorities do however adopt varying approaches based solely on size regardless of location or on length of frontage as an alternative method.

The approach adopted in this class for revaluation reflects both the size, type and location within a single annual rental sum.

2. Changes From The Last Practice Note

There are no significant changes to the previous practice notes for 2010.

3. Ratepayer Discussions

There are no national organisations relevant to this class of property. However there are many local beach hut associations and some liaison should be made with these groups.

4. Valuation Scheme

4.1 Method of Valuation

The preferred method to valuation is by rentals approach.

Rental values will vary from location to location and the local authority or land owners e.g. National Trust are likely to be able to provide details of their lettings for both site rents and for the hire of beach huts. Plenty of evidence is also freely available on the Internet.

If the local authority charge a lower site rent to local residents then a reasonably expected rent is likely to exceed this but may be less than the rent paid by non-residents depending on local demand.

The VO should request details of each authority’s policy towards beach hut lettings as valuer judgement will be needed when considering the range of charges levied. Demand indicated by high rentals, capital values or long waiting lists needs to be considered and weighed against lower values with concessions for local residents.

During co-ordination neighbouring authorities may have differing site rents and these should be balanced carefully when ascertaining the open market rental value.

Huts should be individually assessed if let on annual licences/leases or longer periods.

When considering the evidence i.e. annual rents/ fees - adjustments should be made for:-

Annual Fee X

Less i.VAT ii.maintenance -repairing liability reflects construction of the hut & degree of exposure iii.insurance iv.rates v.other services and equipment e.g. furniture, etc

NET FREE Y

Y = RV subject to rounding rules.

In order to determine the annual hypothetical rent applicable to the unit (hut and land).

In some cases beach huts may be valued using a shortened contractors approach.

4.2 Consideration of costs where limited rental evidence

Site + annual equivalent cost of Hut i.site rent - X ii.cost price of hut iii.ground works iv.erection costs v.decapitalise ii) + iii) + iv) = Z vi.Rateable Value = X + Z

4.3 Scheme descriptions

It is intended that the scheme for beach huts reflects the size and location of the huts together with any other amenities e.g. verandas, patios etc. It does not include huts used for overnight accommodation. These facts should be clearly stated in the scheme/matrix descriptions.

4.4 Multiple Huts

Where there is a hereditament comprising multiple huts and the operator lets individual huts on a daily or weekly basis, often there will be a ticket kiosk or ice-cream kiosk as well.

In these cases, the receipts should be obtained. If full accounts are not available then a suitable percentage of fair maintainable gross receipts should be adopted for valuation purposes. NB this should exclude VAT.

If there are a number of separately assessed blocks, for which accounts are not available , typically council owned ones - then these should be valued adopting the prevailing levels for the area with no allowance for management or voids as due to the high demand for such units it is thought such deductions are not appropriate for this type of holding.

4.5 Huts in Council Foreshore Cumulo Assessments

These will normally be included in the accounts on which the cumulo assessment is based as these will reflect the management costs and voids. The accounts may include other costs which would need to be disregarded e.g. management, voids etc of huts not included within that hereditament as they are separately assessed for rating purposes.

Practice note 1: 2010 - Beach huts

1. Co-ordination Arrangements

This is a Group Class. Co-ordination responsibilities are set out in Rating Manual - section 6 part 1

For R2010 Special Category Code 022 should be used. As a Group Class the appropriate suffix letter should be G.

2. AVD Conditions (written March 2008)

Although always popular, beach huts have seen a renewal in their popularity in recent years particularly at the more popular traditional seaside resorts where it can take 5 or 6 years to reach the top of the waiting list to rent a beach hut. In some locations they can be so popular that waiting lists have been closed until availability improves.

This increase in popularity has seen some private beach huts hitting the headlines when sold for in excess of £100,000. This is, however, exceptional and capital values will not assist in arriving at a value for rating purposes other than to demonstrate a keen level of demand.

The traditional timber beach hut is being replaced in some areas by huts made from glass fibre or with UPVC cladding.

3. Valuation Guidelines

Whilst it is recognised that a number of approaches to valuation are possible the preferred method is by reference to rents.

Rental values will vary from location to location and the local authority are likely to be able to provide details of their letting charges for both site rents and for the hire of a beach hut.

Where a beach hut is let per week or per season by the local authority the rent will probably include an amount in respect of site rent and any services provided and require adjustment to that extent.

If the local authority charge a lower site rent to local residents then a reasonably expected site rent is likely to exceed this but may be less than the rent paid by non-residents depending upon the actual demand for beach huts in the locality.

VOs should seek an explanation of each authority’s policy towards beach hut lettings as valuer judgement will be needed when considering the range of rental charges levied. Demand, indicated by high rental or capital values in the open market needs to be measured and weighed against lower values which may reflect apparent or implied concessions for local residents or other sectors of the local community. Conversely, as local authorities observe the general increasing popularity of beach huts a greater share of increased site rents may be sought.

During co-ordination if differences in the site rents passing between neighbouring authorities are identified these should be fully investigated and understood before arriving at the reasonably expected site rent as part of the valuation process.

Further valuation guidance on this class is outlined in Rating Manual section 6 part 3 - Section 95 paragraph 7.

Where there is limited site rental evidence and some cost evidence the analysis and valuation considerations are set out below: a. analysis of a fully inclusive rent:

i) deduct VAT if appropriate;

ii) deduct for internal and external repairs reflecting the construction of the hut and the

iii) degree of exposure;

iv) deduct insurance costs (actual costs may be available);

v) deduct rates passing at the date of the rent a. site rent plus annual equivalent of cost price:

Site rent paid to local authority (exclusive of VAT) = X

i) cost price

ii) ground works

iii) erection costs

iv) decapitalise i)+ii)+iii) = Z

Rateable value = X + Z

Practice Note 1: 2005: Beach huts

1. Co-ordination Arrangements

This is a Group Class. Co-ordination responsibilities are set out in [Rating Manual - Section 6 : Part 1] (https://www.gov.uk/guidance/rating-manual-section-6-chhallenges-to-the-rating-list/part-1-co-ordination)

For R2005 Special Category Code 022 should be used. As a Group Class the appropriate suffix letter should be G.

2. AVD Conditions (written September 2003)

Although always popular, beach huts have seen a renewal in their popularity in recent years particularly at the more popular traditional seaside resorts where it can take 5 or 6 years to reach the top of the waiting list to rent a beach hut.

This increase in popularity has seen some private beach huts hitting the headlines when sold for in excess of £100,000. This is, however, exceptional and capital values will not assist in arriving at a value for rating purposes.

3. Valuation Guidelines

Whilst it is recognised that a number of approaches to valuation are possible the preferred method is by reference to rents.

Rental values will vary from location to location and the local authority are likely to be able to provide details of their letting charges for both site rents and for the hire of a beach hut.

Where a beach hut is let per week or per season by the local authority the rent will probably include an amount in respect of site rent and any services provided and require adjustment to that extent.

If the local authority charge a lower site rent to local residents then a reasonably expected site rent is likely to exceed this but be less than the rent paid by non-residents.

Further valuation guidance on this class is outlined in Rating Manual Section 6: Part 3: Section 95