Upper Tribunal further erodes status of property guardians

A property tribunal decision in a long-running case about the taxable benefits of property guardians may prove “expensive for ratepayers”, according to lawyers following the case. The case centres on Ludgate House, which was at the southern end of Blackfriars Bridge in Southwark, SE1. Until its demolition in 2018, the building – formerly the home of Express Newspapers – was occupied between July 2015 and May 2017 by a number of property guardians who lived in the building, using it as accommodation, not office space. The owners of Ludgate House had used the presence of guardians to argue that it was not liable for non-domestic rates, valued at around £4m over the period. However, the London Borough of Southwark, which collects rates on the building, objected, leading to the case flip-flopping all the way to the Court of Appeal. In 2020, appeal judges backed Southwark and ruled that, because of the contract between the guardians and the freeholder, the building remained liable for business rates. As the ruling was about the specific nature of the Ludgate House scheme, it did not ban the use of guardians altogether. And the Court of Appeal did not deal with every aspect of the case, so it was remitted back to specialist panel the Upper Tribunal (Lands Chamber) for further adjudication. In a ruling handed down this week, the tribunal considered whether using property guardians changed the “mode or category of occupation” of the building, which is referred to as MCO on the day upon which rates are valued (the “material day”). The panel said: “The conclusion which we reach, in relation to the MCO of the building on the material day, is that the MCO should not be taken to be restricted to use of the building for occupation by property guardians pursuant to a scheme of property guardianship. “Rather, the MCO is correctly identified as use of the building for offices, subject to the temporary occupation of property guardians pursuant to a temporary scheme of property guardianship.” This ruling further erodes the use of property guardians, according to Roger Cohen, senior counsel at Bryan Cave Leighton Paisner. “The conclusion reached by the Upper Tribunal could prove to be expensive for ratepayers with empty buildings and for providers of guardian services,” he said. “What the tribunal has said is that an office is no less an office because it is earmarked for occupation by guardians. Guardianship is essentially temporary. That reduces the scope for ratepayers to seek reduced rateable values for their buildings.” The parties now have a month to decide whether they want to challenge the decision at the Court of Appeal. Ludgate House Ltd v (1) Andrew Ricketts (Valuation Officer); (2) London Borough of Southwark Re: Ludgate House, 245 Blackfriars Road, London SE1 8NW Heard on: 13-14 December 2022 Decision date: 14 February 2023 Photo © EG Radius