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What is a “Dwelling”? New High Court ruling on Council Tax

Sarah Sackman

Mr Justice Andrew Baker handed down judgment in Corkish v Berg offering welcome clarity on the construction of a “dwelling” under section 3 of the Local Government Finance Act 1992 and the proper approach to the “splitting” of a single dwelling into multiple dwellings.

The Respondent ratepayer was the occupier of a single main dwelling which was entered into the Council Tax list at band F. The Respondent had made a series of improvements to his property over the years which had resulted in a material increase in value however no change was made to the list. This was due to the regulation 3 of the Council Tax (Alterations of Lists and Appeals) Regulations 2009 which provide that no alteration may be made to the list unless there is a material increase in value and a relevant transaction. The Respondent then built an Annexe to the main dwelling which he rented separately. It was common ground that the Annexe was in separate rateable occupation and thus constituted a new s.3 dwelling.

The Listing Officer proceeded to delete the entry in the Council Tax List and replaced it with two new entries: one for the main dwelling which was now valued at band G (due to the improvements to the property) and one for the Annexe (band B).

The ratepayer appealed the new listing of his main dwelling and contended that the “original single dwelling” continued to exist and thus reg. 3 prevented any alteration to the list. The VTE agreed and the Listing Officer appealed its decision.

The central issue in the appeal was whether the “original” dwelling entered into the list continued to exist. The Judge agreed with the Appellant Listing Officer that where a dwelling is divided so as to create two dwellings neither of which are the same geographic unit of occupation as the original dwelling the original dwelling ceases to exist and two new dwellings are created and must be be valued accordingly. This analysis was supported by first, the statutory definition of a “dwelling” under s.3 which provides that a dwelling is a domestic hereditament which includes any “yard, garden, outhouse or other appurtenance belonging to or enjoyed with the property” and, secondly, by the application of the geographic test laid down by the Supreme Court in Woolway v Mazars. Applying that test for identifying a hereditament, it was clear that the dwelling originally entered into the list i.e. the main house plus garden, was not the same dwelling which existed following the creation of the Annexe. The creation of the Annexe had altered the boundaries of the original hereditament thus giving rise to two new dwellings.

Sarah Sackman was instructed by HMRC and represented the successful Appellant listing officer.

A copy of the judgment can be found here.