The Valuation Tribunal has dismissed an appeal by a student accommodation provider over the application of council tax exemptions to student flats.
In Student Union Lettings Ltd v Leicester City Council a Valuation Tribunal ruled that the dwellings at the centre of the appeal did not qualify for a ‘class M exemption’ from council tax.
Class M in the Council Tax (Exempt Dwellings) Order 1992 as amended provides a year-round exemption covering: “a dwelling comprising a hall of residence provided predominantly for the accommodation of students which is either:
(a) owned or managed by an institution within the meaning of paragraph 5 of Schedule 1 to the Act or by a body established for charitable purposes only; or
(b) the subject of an agreement allowing such an institution to nominate the majority of the persons who are to occupy the accommodation so provided”.
A further exemption, also relating to students, is Class N:
(1) a dwelling which is either –
(a) occupied by one or more residents all of whom are relevant persons; or
(b) occupied only by one or more relevant persons as term-time accommodation;
(2) for the purposes of paragraph (1)
(a) “relevant person” means –
(i) a student;
(ii) a student’s spouse, civil partner or dependant... [subject to various conditions, none of which are relevant to the present appeals]; or
(iii) [a person to whom Class C applies, also not relevant to the present appeals);
(b) a dwelling is to be regarded as occupied by a relevant person as term time accommodation during any vacation in which he –
(i) holds a freehold or leasehold interest in or licence to occupy the whole or any part of the dwelling; and
(ii) has previously used or intends to use the dwelling as term time accommodation.
If Class N applied, the appellant – a charity set up to manage university acccommodation – would be liable for council tax during the periods when the flats were not let out to students.
The accommodation in the various blocks comprised either self-contained flats for individual accommodation, or alternatively ‘cluster flats’; self-contained units in which were situate a number of separate bedrooms with en-suite bathrooms, which were each served by a communal kitchen and lounge area.
Leicester classified this accommodation as Class N, prompting the appellant, which described the situation was "an administrative nightmare", to bring the case.
The Valuation Tribunal panel said it agreed with counsel for Leicester City Council (Jenny Wigley of No5 Chambers) that the Class M exemption “cannot be read as if the words ‘a dwelling comprising a hall of residence’ do not exist, and rejects [appellant counsel’s] contention that fulfilment of M(a) or (b), i.e. control or management of the accommodation, is sufficient in itself to satisfy the exemption in circumstances where the accommodation is provided predominantly for student accommodation.
“This conclusion is supported by the fact that the class N exemption provides a further avenue for student exemption from council tax. It is clear, in the Panel’s view, that Parliament anticipated more than one way in which a student would be exempt from council tax. Had Parliament intended that any student accommodation would qualify for exemption under class M if it was owned or managed as anticipated in M(a) or (b), the words ‘a dwelling comprising a hall of residence’ would not appear in the provision at all; they would be otiose. The words must therefore be given effect as one of the conditions to be fulfilled for the exemption to apply (Attorney General’s Reference (No. 1 of 1975)  1 QB 773). To read the provision in any other way would be unnatural.”
At issue in the case was the meaning of ‘hall of residence’, with the panel noting that neither party was able to define it. “This is not surprising; there is no definition in the Order," it said.
The panel rejected the appellant’s argument that a single unit of accommodation, for the occupation of a single student, as in each of the appeals could satisfy the definition of a hall of residence.
It added: “In our view, the balance in the present appeals falls on the side of the Respondent. By its ordinary and natural meaning the phrase ‘a dwelling comprising a hall of residence’ implies something greater than a single self-contained flat, which is the reason the use of the word ‘students’ does not lend itself to interpretation in the singular per the provisions of section 6 of the Interpretation Act 1978 and Annicola, as [the appellant’s counsel] contended. The use of the plural in this provision is, in our view, no mistake but rather a deliberate choice by Parliament, which must be given effect as such.”
Commenting on the ruling, No5’s Wigley said: “It is not yet clear whether the decision is to be appealed but it is potentially of great significance to how council tax exemptions are applied to student accommodation in many towns and cities across the country.”