Business rates are assessed on a “hereditament”.  The Supreme Court has held that the second and sixth floors of a multi-let office building occupied by the same tenant could not be a single hereditament.  It has re-calibrated the meaning of “hereditament” which will have implications for owners and occupiers of properties that are practically connected but physically apart.


This is the case of the solicitor for the accountant and the valuation officer.  The accountant Mazars, occupied the second and sixth floors of an eight storey office building under separate leases

A firm of solicitors occupied the first and third to fifth floors.  Mazars wanted their two floors to be a rated in a single assessment.

Mr Woolway, the valuation officer disagreed.

He saw the two floors each as a separate hereditament.

The story so far

The Upper Tribunal and the Court of Appeal decided that the two floors should be treated as one hereditament. The valuation officer appealed.

The Supreme Court decision

The Supreme Court, reversing a unanimous Court of Appeal decision, agreed with the valuation officer.

How, according to the UKSC does one test whether distinct premises occupied by the same occupier form a single hereditament ?

This is what you ask

  1. Geographically, do the spaces have visual or cartographic unity ? In other words are they geographically part of the same space?
  2. Where the premises are adjoining vertically or laterally, is there direct communication between them ?
  3. Where the premises are geographically distinct, is the use of one space necessary for the enjoyment of the other ( according to the “objectively ascertainable character” of the spaces not the business needs of the ratepayer).
  4. The application of these tests requires a large measure of professional common sense.

Affirmative answers to these questions suggest that premises are combined to make one hereditament. Negative answers suggest or confirm that the premises are separate hereditaments.

But, but …

Two remarkable caveats must be added.

  • A majority of the Supreme Court agreed with the comment that in applying the 4 tests above, “the concept of fairness … has no place”; and
  • Two out of the five judges acknowledged that there will be cases “where the guidance given on this appeal will be difficult to apply with any confidence.”


What do those tests mean in practice?

The merger of space into one hereditament or the separation of space into two or more rateable units can affect the rateable value of the space and the therefore the rates payable.

This decision will, in some cases, encourage results which are removed from the realities of business occupation. It will not make the task of ratepayers or of valuation officers any easier as they seek pragmatic solutions in a world in which common sense is required but fairness has no place.