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Practice Note 1 : Appendix 1 - Understanding the Chargeable Dwellings Order 1992

1.0 Introduction

PN1 explains the meaning of Section 3 LGFA 1992 that creates the primary basis of a dwelling as a domestic hereditament. A hereditament is an old concept connected with rateable occupation, being a unit of property, either occupied or capable of occupation, to be shown in a valuation list. Thus the vast majority of dwellings comprise living accommodation in the form of houses, bungalows and flats, occupied by a single household. There are, however, exceptions to the ‘hereditament’ rule, and the power reserved in Section 3(5) to create different types of dwellings gave rise to the Council Tax (Chargeable Dwellings) Order 1992 (as amended) (CDO).

The CDO is one of the most misunderstood pieces of council tax legislation. This purpose of this appendix is to increase understanding and consistency in its application.

Section 3(5) of the LGFA 1992 states:

5) The Secretary of State may by order provide that in such cases as may be prescribed by or determined under the order -

a) anything which would (apart from the order) be one dwelling shall be treated as two or more dwellings; and

b) anything which would (apart from the order) be two or more dwellings shall be treated as one dwelling.

The CDO created principally two new kinds of dwellings, which are modifications to the hereditament rule.

● Firstly, the introduction of the concept of the self contained unit (SCU) being a possible basis. More than one SCU found within a single dwelling is to be treated as a dwelling.

● Secondly, the concept of amalgamating multiple dwellings found within a single self contained unit, into a single dwelling.

2.0 The Council Tax (Chargeable Dwellings) Order 1992 (as amended)

SI 1992 No.549

Note – The following paragraphs set out the CDO with comments in italics to explain the meaning of each part of the Order or emphasize the importance of understanding its application:-

The Secretary of State for the Environment, as respects England, and the Secretary of State for Wales, as respects Wales, in exercise of the powers conferred on them by section 3(5)(a) and (b) and section 113(2) of the Local Government Finance Act 1992, and of all other powers enabling them in that behalf, hereby make the following Order—

This Order may be cited as the Council Tax (Chargeable Dwellings) Order 1992 and shall come into force on 31st March 1992.

Comment: The following definitions are vital to understand to apply the provisions correctly.

2. In this Order—

"the Act" means the Local Government Finance Act 1992;

“care home” means a home within the meaning of the Care Standards Act 2000, in respect of which a person is registered in accordance with Part 2 of that Act in relation to Wales, or Part 1 of the Health and Social Care Act 2008, in relation to England.

Comment: Only Registered care homes are covered under this Order.

"multiple property" means property which would, apart from this Order, be two or more dwellings within the meaning of section 3 of the Act;

"single property" means property which would, apart from this Order, be one dwelling within the meaning of section 3 of the Act;

Comment: ‘..within the meaning of section 3 ..’ Understanding the concept of ‘multiple property’ and ‘single property’ is vital. A single property is a single hereditament, ie a single occupation or household. A multiple property is comprised of multiple hereditaments (separate occupations or households). Both being within the primary meaning of dwelling in section (3).

"self contained unit" means a building or part of a building which has been constructed or adapted for use as separate living accommodation.

Comment: definition amended in 1997, to relate to fixed property only. Thus caravans and boats are not SCUs, and are not covered by these provisions. This general definition has been discussed and refined in numerous High Court cases, as reflected in VOA CT Manual and public factsheets.

3. Where a single property contains more than one self contained unit, for the purposes of Part I of the Act, the property shall be treated as comprising as many dwellings as there are such units included in it and each such unit shall be treated as a dwelling.

Comment: Every SCU found within a single hereditament or household will be separately banded as a dwelling. ‘Single property’ does not relate to a single building or part of a building, but to a whole hereditament. That means the total boundaries of accommodation occupied as a single unit by a person or persons enjoying paramount control of that accommodation. That could be a mansion with servants quarters and grounds, or an ordinary house with an annexe.

3A. A care home shall be treated as comprising the number of dwellings found by adding one to the number of self-contained units occupied by, or if currently unoccupied, provided for the purpose of accommodating, the person registered in respect of it in accordance with Part 2 of the Care Standards Act 2000 in relation to Wales, or Part 1 of the Health and Social Care Act 2008, in relation to England, and each such unit shall be treated as a dwelling.**

Comment: 3A was added in 2004 to treat registered care homes as special cases, by aggregating all the SCUs found in them, disaggregating only those occupied by the registered person. Further amended in England by The Health and Social Care Act 2008 (Consequential Amendments) (Council Tax) Order 2012, in force from 23rd Aug 2012. Care should be taken to identify the care home part on sites where there is also sheltered housing.

4.—(1) Where a multiple property—

(a) consists of a single self contained unit, or such a unit together with or containing premises constructed or adapted for non-domestic purposes; and

(b) is occupied as more than one unit of separate living accommodation, the listing officer, may, if he thinks fit, subject to paragraph (2) below, treat the property as one dwelling.

In exercising his discretion in paragraph (1) above, the listing officer shall have regard to all the circumstances of the case, including the extent, if any, to which the parts of the property separately occupied have been structurally altered.

Comment: Requirements 1. Multiple Property. 2. A single SCU, occupied in separate parts. If either of these are not present, the paragraph cannot apply. The same definition of SCU applies here as defined in Article 2.

It has been a common fallacy when dealing with HMOs to go straight in and look for SCUs in the same way as under Article 3. This is quite wrong in law. Firstly identify section 3 dwellings, then the LO according to the proper exercise of discretion may aggregate parts into an underlying and recognisable SCU. Where structural alterations render the building or part of a building not recognisable as a single SCU then the LO is required to maintain separate bands.

3.0 Conclusion

See Practice note 5 which deals with disaggregation under Article 3

See Practice note 6 which deals with Aggregation under Article 4.

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