Compare the Market Ltd v Karen Giles

Introduction

1. This is an appeal against a decision of the Valuation Tribunal for England (‘the VTE’) in which it dismissed the appellant’s appeal against the existing rating assessment of rateable value £945,000 effective from 1 April 2017.

2. The appeal concerns two office buildings in Peterborough and although they are separated by some 59 metres it is agreed that they should be assessed together as a single hereditament.

3. The appellant’s position is that the assessment should be reduced to rateable value £885,000. The respondent says that the VTE’s decision was correct and the property (‘the Property’) should remain in the rating list at the existing assessment.

4. I inspected the Property on 6 January 2026 accompanied by the appellant’s expert witness Mr Paul Rabbette MRICS. The respondent Valuation Officer (‘VO’) was represented by Ms Elizabeth Mellors MRICS and Mr Andrew Gausden MRICS. We also carried out external inspections of several comparable properties in Peterborough. In the previous week I had carried out external inspections of comparable properties in the Cambridge area.

5. This appeal was heard under the Tribunal’s simplified procedure. I am grateful to the parties for their submissions. The factual background

6. The Property is in Orton Southgate, part of Peterborough allocated for business uses when it was designated as a New Town in 1967. At the antecedent valuation date (‘AVD’) the locality was largely industrial in nature although there were some warehouses and office buildings, of which the Property was comfortably the largest. The Property is situated adjacent to Junction 17 of the A1(M) and the western boundary of the site abuts the south bound slip road. Peterborough city centre and the mainline railway station are about 4 miles to the north east.

7. The hereditament contains two separate office buildings, Pegasus House which dates from 1990 and Saxon House which was built in 2013. Pegasus House was not developed for a as single occupier but was built as three distinct units and intended for multiple occupation. The units are set in a horseshoe shape with the open end facing north east. The satellite image that follows paragraph 8 shows the site layout. This building is arranged over two floors and has brick and glass elevations. In its original configuration it had three separate receptions and service cores designed with multiple occupiers in mind. It can be seen from the image that the individual units are joined by corridors at ground and first floor levels.

8. The point in time when BGL Group (the parent company of Compare the Market Ltd) took full occupation of Pegasus House was not revealed in evidence, but by 2013 they had acquired an adjacent site and built Saxon House to satisfy their need for more space. Saxon House is an entirely conventional, brick built, three storey office building with a pitched roof covered in metal profiled sheeting. The site of Saxon House is large enough to accommodate another similar building, and the company had planned to develop a sister office closer to the A1(M). The intention was to relocate the teams in Pegasus House to the new building. These plans did not come to fruition; BGL Group (‘BGL’) conducted a sale and leaseback of Saxon House and dropped the aspiration to move from Pegasus House. Following the Covid-19 pandemic Saxon House was vacated and a disposal was sought by means of an assignment or subletting. In February 2025 BGL surrendered the lease and the freehold of the building was subsequently sold to the current occupier. The statutory context

9. Non-domestic rates are a tax on property and the unit of property which is the subject of tax is the 'hereditament'. Section 64(1) of the ( Local Government Finance Act 1988 ), defines a hereditament by reference to the definition in the 1988 Act section 115(1) of the , which provided that: General Rate Act 1967 '"hereditament" means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list.'

10. Schedule 6 of contains provisions about valuation for the purposes of non-domestic rating. Paragraph 2(1) provides that the rateable value of a hereditament is taken to be equal to the rent at which it might reasonably be expected to let from year to year if let on the antecedent valuation date on certain assumptions. the 1988 Act

11. The first assumption in paragraph 2(1)(a) is that the tenancy begins on the day by reference to which the determination is to be made. The second assumption, in paragraph 2(1)(b), is that "immediately before the tenancy begins the hereditament is in a state of reasonable repair, but excluding from this assumption any repairs which a reasonable landlord would consider uneconomic". The final assumption, in paragraph 2(1)(c), is that the tenant undertakes to pay all usual tenant's rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the hereditament in a state to command the agreed rent.

11. Statute requires that the appeal Property be valued reflecting certain matters as they existed on the material day, which for the 2017 Non-Domestic Rating List is 1 April 2017, and by reference to values pertaining at the Antecedent Valuation Date (AVD) which is 1 April 2015. The matters which must be taken at the material day are set out in paragraph 2(7) of Schedule 6 . The matters relevant to this appeal are: Local Government Finance Act 1988 (a) matters affecting the physical state of the hereditament; (aa) matters affecting the physical enjoyment of the hereditament; (b) the mode or category of occupation of the hereditament; (c) .... (cc) .... (d) matters affecting the physical state of the locality in which the hereditament is situated; (da) matters which, though not affecting the physical state of the locality in which the hereditament is situated, are nonetheless physically manifest there, and (e) the use or occupation of other premises situated in the locality of the hereditament. Tenure

12. Pegasus House was originally let on fully repairing and insuring terms (‘FRI’) in December 2010, and the lease was renewed from 21 December 2016 for a term of 15 years. The original rent of £1,030,000 per annum did not change on renewal but with the grant of the new lease the landlord agreed to pay for works totalling £700,000, and if the works cost less, the balance was to be deducted from the rent. Part of the £700,000 was spent extending the staff café. The rent review due to take effect on 21 December 2021 was not triggered by the landlord.

13. The appellant had analysed the 2016 rent, including the contribution at £104.70 per m 2 , and considered that it carried no more than nominal weight.

14. Saxon House was occupied on a 15 year FRI lease dated 26 June 2014, which resulted from a sale and leaseback transaction. The rents under the lease were predetermined as follows: 26 June 2014 to 25 June 2019 £440,100 per annum 26 June 2019 to 25 June 2024 £485,906 per annum 26 June 2024 to 25 June 2029 £536,470 per annum

15. The appellant had also analysed the stepped rents discounted back to 2014, arriving at a figure of £175.78 per m2. Both parties agreed that the analysis should carry no weight. The parties’ respective positions

16. The parties have also agreed that both parts of the Property should be assessed at £95.00 per m 2 , the established tone for modern office buildings in Peterborough. Similarly, the relativities between the component parts of the Property are also agreed. The agreed floor area for Property is 11,657.47 m 2 and the parties concur that it is appropriate to make an adjustment for size or ‘quantum’, the valuation tone having been derived from smaller properties. The allowance for quantum has been agreed at 10%.

17. There are only two elements on which it has not been possible to reach a consensus, firstly the appropriate adjustment for layout and secondly how to reflect the physical separation between the two buildings in the valuation. This latter adjustment is normally referred to as an allowance for fragmentation. In their pleadings both parties adopted a single, holistic figure for these adjustments, the appellants sought 10% and the respondents 5%. The issues

18. Mr Paul Rabbette appeared as an expert witness for the appellant. He is a chartered surveyor and the managing director of Rabbette Limited, a firm he established in 2008. It has offices Worcestershire, Bristol and Staffordshire. The respondent’s expert witness was Mr Andrew Gausden. He has been employed by the Valuation Office Agency since 1991 and qualified as a chartered surveyor in 1999.

19. Before I move on to examine the experts’ views and the evidence adduced in support of their respective positions, it is worth mentioning that the parties referred to more than thirty comparables in evidence. This was an unhelpful approach, and a more nuanced selection of comparables would have been of greater assistance. For instance, the inclusion of new buildings on the Cambridge Science Park simply to prove that the Valuation Officer had not agreed allowances for quantum in that location was unnecessary, especially when quantum was not an issue at the Property.

20. It seems to me that the two matters that the parties had been unable to agree should be looked at individually as the layout issues only affect Pegasus House. I will therefore examine the experts’ views by dealing with the issues in turn. Issue 1 – the allowance for layout

21. At the hearing Mr Rabbette declined to split his allowance between layout and fragmentation. Mr Gausden, on the other hand, said that his figure of 5% could be divided equally between the two factors. The VO’s detailed valuation included in the hearing bundle was based on a cumulative approach to the end allowances, the 10% for quantum being a factor of 0.9 and the 5% for layout/fragmentation was 0.95. Taken together the total allowance was 14.5%. In arithmetic terms at least, the layout allowance was therefore 2.25%.

22. Mr Rabbette had identified several comparables where the assessments included an allowance for the internal layout. Two of these related to 28 and 29 High Street, Huntingdon. Both properties were small Georgian office buildings amounting to 256.9 m 2 and 227.20 m 2 respectively. Both had allowances of 7.5%. Mr Gausden said that neither was comparable to the Property because they were much smaller and were older. I agree. The same can be said for 10 Market Hill, St Ives which shared the same characteristics as the Huntingdon properties.

23. Mr Rabbette also identified the British Antarctic Survey premises at Madingley Road, Cambridge as a comparable. This property occupies a site close to Junction 13 of the M11. It is a mixed use campus of 12,957.4 m 2 containing offices, laboratories and storage. The assessment includes an allowance of 4.5% for layout. An aerial photograph of the site was included in Mr Rabbette’s report from which it is possible to discern a variety of building ages and specifications, spread across an extensive area. He described it as built between 1974 and 2017 and noted that it was a bespoke facility carefully developed for the occupier’s needs. Mr Gausden commented that the layout was worse than at the Property.

24. The next property on Mr Rabbette’s list was Unit 29 at the Cambridge Science Park, Milton Road, Cambridge. Mr Rabbette said that the site had been occupied by Cambridge Consultants Limited since 1979. It had been purpose-built by the occupier in a series of phases between the 1980s and 2019 culminating in a total built area of 11,187 m 2 . He considered it a carefully designed bespoke facility ‘a world away from the situation at the subject hereditament’ Nevertheless this property has an end allowance of 5% for layout. Mr Rabbette had not been able to gain access to the site or view the floor plans. He speculated that ‘there could well be internal layout issues which justify the -5% layout allowance’ and considered it ‘a good backstop for the allowance currently in place for the subject hereditament’. Mr Gausden commented that the allowance was for layout and piecemeal development.

25. The headquarters of the Holiday Property Bond, at 24-28 Old Station Road, Newmarket was also identified by Mr Rabbette as being of assistance. This property amounts to 884.92 m 2 , is Victorian in origin and appears to be an amalgam of three buildings. Mr Rabbette had not had access to the plans but judged it to be less severely impacted than the Property. The end allowance for layout is 12.5%. Mr Gausden said it was not comparable.

26. Mr Rabbette’s penultimate ‘layout’ comparable was Charnwood Council’s offices at Southfields, Southfield Road, Loughborough. This site contains a mixture of Victorian and modern buildings totalling 6,314.3 m 2 . The allowance for layout is 15%.

27. The final comparable is Units 2B, 3B 4-6 GF to 2nd Floors, Langford Arch, London Road Sawston, Cambridgeshire. Langford Arch is a three storey Victorian building converted to office use. The building has six suites per floor arranged over the three storeys. This particular hereditament covers about two-thirds of the accommodation, being three suites on the ground floor (Units 4A, 5A and 6A), five suites on the first floor (Units 2B, 3B, 4B, 5B and 6B), and three suites on the second floor (Units 4C, 5C and 6C). Mr Rabbette thought the layout issues to be ‘severe’, albeit better than at the Property. Langford Arch has an allowance of 18.54% for layout and Mr Rabbette declared that ‘this comparable property offers excellent evidence for valuing the subject hereditament’. Mr Gausden did not comment on this property.

28. The layout of Pegasus House is highly unusual, if not unique, and it is not surprising that the experts failed to find some common ground in valuing it. The lack of useful comparables was equally easy to appreciate. The VO had gone to considerable lengths to source floor plans for the comparables and I am grateful for their endeavours. I place no weight on small town centre offices as they share no characteristics with the Property. The offices at Newmarket and Sawston are also of no assistance; they are simply too different to the Property to offer any degree of insight in to how it should be valued. The council offices in Loughborough fall into the same category. That leaves the British Antarctic Survey and Unit 29 Science Park, Cambridge. They have allowances of 4.5% and 5% respectively. These two properties have some common features with the Pegasus House. They date, in part at least, from the 1990s. They are mostly arranged over two floors and occupy campus style sites close to motorway or major trunk road junctions.

29. In my judgement a prospective bidder for the Property would recognise the shortcomings inherent in the arrangement of the accommodation and the inefficiencies that result from the duplication of some facilities. Their bid would be reduced commensurately. It is difficult to say whether the resultant allowance should be more than that used for the two Cambridge comparables, but I doubt that it should be any less. I therefore adopt 5% for the layout issues at Pegasus House. Issue 2 – the allowance for fragmentation

30. I now turn to the question of how to reflect fragmentation in the valuation. I have listed below the comparables adduced by the parties that have allowances for fragmentation. Address Post Code Total Floor Area (m 2 ) Allowance 2017 list RV Subject Hereditament Pegasus & Saxon House Bakewell Road, Orton Southgate, Peterborough PE2 6YS 11,657.48 -10% size -5% split site £950,000 9/10 Office Village, Forder Way, Cygnet Park, Hampton, Peterborough PE7 8GX 788.9 -5% split site £82,000 Amina at Cirrus House, Glebe Road, Huntingdon PE29 7DL 762.26 -10% fragmentation/mixed use £72,500 2-4 Salisbury Villas, Cambridge CB1 2LA 1,020.20 -12.5% divided or split site £199,000 British Telecom, Long Road, Cambridge CB2 8HE 6,648.00 -10% size -5% split site £740,000 Churchill House, Selwyn House & Trinity House, Cambridge Business Park, Cowley Road, Cambridge CB4 0WZ 8,627.63 -7.5% split site £1,790,000 Team Consulting Ltd, Abbey Barns, Duxford Road, Ickleton, Saffron Walden CB10 1SX 2,070.50 -7% divided or split unit and size £360,000 The Lodge, Potton Road, Sandy SG19 2DH 5,949.96 -10% multiple buildings/ layout £272,500 Tun Abdul Razak Centre, Brickendon Bury, Hertford SG13 8NL 5,386.92 -12.5% fragmentation and mixed ages £307,500 Severn Trent Water Ltd., Raynesway, Derby DE21 7JA 5,887.90 -10% divided or split unit £260,000

31. Two of these comparables, the Office Village at Forder Way and the trio of offices at Cambridge Business Park, stand out from the rest. From a physical perspective these properties most closely resemble the situation at the Property, insofar as they relate to modern office buildings separated by car parking or estate roadways.

32. Dealing firstly with the Office Village property, Mr Rabbette said that 9/10 Office Village are a pair of two-storey “business park” office buildings. They are separated by a gap of some 34 metres the area in question being used for car parking. The two offices were brought into the 2010 Rating List as a single hereditament including a 5% end allowance for “split site”. This assessment was brought forward into the 2017 Rating List. The hereditament was split into six separate hereditaments with effect from 4th April 2022, but the allowance was not removed. The VO has subsequently removed the end allowance in the 2023 Rating List.

33. Mr Rabbette said that he had attributed reasonable weight to the original hereditament and considered that the Property ‘is affected significantly more than this comparable property’. His view was that a greater allowance was warranted.

34. Mr Gausden’s report portrayed a different version of events. He said that 9/10 had an allowance for split site as there were two separate offices occupied by the same occupier in one block, but there was no interconnecting access between them. When we inspected the site it was apparent that 8/9 and 10 were two separate buildings. The assessment Mr Rabbette referred to contained part of 8/9 and all of 10. They are indeed some 34 metres apart. Mr Gausden commented that the offices were very much smaller than the Property and therefore not comparable.

35. Churchill, Selwyn and Trinity Houses are three modern office buildings at Cambridge Business Park. They are at the far eastern end of the Park and are all occupied by Qualcomm. They are arranged around three sides of a rectangular area laid out as estate roads and landscaping. The distance between Churchill House and the other two is about 25 metres and the distance between Selwyn and Trinity Houses is about 88 metres.

36. Mr Rabbette said that the three buildings were merged into a single assessment on the 2010 rating list (with effect from 1 December 2014). Following the decision of the Supreme Court in Woolway (VO) v. Mazars LLP [2015] UKSC 53 the principal test for ascertaining whether multiple demises comprise one hereditament is whether they benefit from cartographic unity, in other words is it possible to ring the demises on a map? If the answer is “yes” then the multiple elements may be one hereditament.

37. He had obtained copies of the three leases and noted from the demise plans that the three buildings are not contiguous to each other; there are clear areas of the landlord’s retained estate which separate each building. In his view this property should be split into three separate hereditaments and consequently he treated this assessment with extreme caution. He further noted that it had not been the subject of a proposal or appeal since it was originally merged, prior to the Mazars judgement and, he had no doubt that it is currently materially inaccurate.

38. He went on to say that ‘the end allowance of -7.5% on the face of it looks to support the Valuation Officer’s assertion that -5% is sufficient on the subject hereditament, as it is three buildings not two’. Mr Gausden confirmed that the assessment included an allowance of 7.5% and said that since there were three buildings the problems underlying the allowance were worse than at the Property.

39. The remaining comparables had varying degrees of relevance to the Property but Team Consulting Ltd, Abbey Barns, Duxford Road, Ickleton, Saffron Walden was another site containing three office buildings. Two of the buildings are connected by a covered walkway, and all three appear to be high quality converted barns. As a whole it is relatively small and in a rural location but has been the subject of a ‘challenge’ which resulted in an allowance of 7% for a divided/split unit and, surprisingly, quantum. Mr Rabbette considered that this property showed that the overall allowance proposed for the Property was too low. Mr Gausden considered that the location and size limited its comparability. At the hearing he said that the quantum element of the allowance was likely to be the smaller of the two components.

40. Salisbury Villas in Cambridge are a series of detached Edwardian houses which have been converted into offices. They are near the station amongst several purpose-built offices. This comparable covers three adjacent buildings, separated by gaps of about three metres. The assessment contains an allowance of 12.5%. Mr Rabbette considered it a ‘very helpful comparable’ but thought the severity of the issue (the divided nature of the occupation), as ‘not as great as the subject’. Mr Gausden said that he could not see how this property was comparable, it being much smaller and older than the Property. I concur with his view.

41. The residual comparisons are of questionable significance. Amina at Cirrus House, Glebe Road, Huntingdon is a single building in three occupations. In my view it is not comparable and I disregard it entirely. The same can be said for British Telecom, Long Road, Cambridge, because although there is more than one building on the site, they are essentially one. Both appear to be connected to the other, and they can be accessed via a walkway.

42. The Lodge, Potton Road, Sandy (the headquarters of the RSPB) and the Tun Abdul Razak Centre, Brickendon Bury, Hertford, are respectively part visitor centre and a research and promotion centre for the Malaysian Rubber Board. Both sites contain mansion houses and a series of other buildings of varying specifications, uses and ages. The allowances are 10% and 12.5% respectively. They have very little in common with the Property.

43. The final comparable is Severn Trent Water Ltd., Raynesway, Derby. This property appeared to comprise part of a much larger site some of which related to the water company’s operational activities. The part in the quoted assessment comprised two office buildings dating from 1971 and 2010 and separated by about 70 metres. The other parts of the site contain workshops, stores, a pipe yard, a fuelling point, a bunker and a facilities block. The allowance for the split nature of the site is 10%. Mr Rabbette thought this property to be a useful comparable whilst acknowledging that it was purpose built. Mr Gausden said it was of mixed ages, on an industrial estate, and 70 miles from the Property. Given the nature of the operations on this site I attach little weigh to it.

44. I note that in terms of floor area Saxon House is very much ancillary to Pegasus House, the split of the total area being 23.3% to 76.7%. The appellant owned the site of Saxon House and could, subject to obtaining planning permission, have built it closer to Pegasus House. Mr Kit Rabbette submitted that the leasehold ownership of Pegasus House prevented the appellant from joining the two buildings together. Although the arrangement of the buildings on the site was tailored to the wishes of the appellant, they do not strike me as being bespoke to the degree that the appellant could be considered the only potential occupier.

45. In my view the three most helpful comparables are at the Office Village, Cambridge Business Park and Abbey Barns at Ickleton. Only the latter property has been the subject of a ‘challenge’. The respondent says that the assessment at the Office Village was a mistake and that it should have been entered into the list as two hereditaments. Neither party provided any evidence, such as a copy of the lease plan, which would have assisted in confirming whether the VO had made a mistake. In the circumstances the assessment simply provides guidance as to the VO’s approach to allowances for fragmentation where two self-contained buildings separated by 34 metres apart are assessed together.

46. Churchill, Selwyn and Trinity Houses at Cambridge Business Park were said by appellant to be incorrectly assessed. Mr Rabbette said that the single assessment covering all three buildings pre-dated the Mazars decision and should have been reviewed afterwards. Had the VO done so, Mr Rabbette said that their methodology would have been found to have been at odds with the decision in Mazars. In this case the lease plans supported his view. I conclude that the assessment confirms that where three self-contained buildings are assessed together the VO considered a 7.5% allowance to be appropriate. It is at least consistent with Office Village where the allowance was 5%.

47. Abbey Barns also seems to fit the pattern shown by the other two. The assessment contains three buildings, but they are positioned close to one another, a distance of 2-3 metres, and the inherent disabilities are therefore limited. Mr Gausden said that the allowance contained an element for quantum, but it was the smaller of the two components. He went no further than that. If I allow 2% for quantum I am left with 5% for fragmentation. In comparison to Office Village and Cambridge Business Park, a figure of 5% for three buildings which are close to one another appears correct.

48. In my judgement the separation of the two buildings at the Property warrants an allowance of 5%. I acknowledge that the gap between the buildings is large, but Saxon House is very much the subsidiary part of the hereditament. Determination

49. Applying the two allowances results in the following valuation: Floor area (m 2 ) £/m 2 £ Pegasus House 8,944.40 95.00 849,719 Less 5% for layout -42,486 Subtotal 807,233 Saxon House 2,713.10 95.00 257,742 Subtotal 1,064,975 Less 10% quantum -106,498 Less 5% fragmentation - 53,249 Total 905,229 Say £ 905,000

50. The assessment is determined at rateable value £905,000 with effect from 1 April 2017. Mark Higgin FRICS FIRRV 23 February 2026 Right of appeal Any party has a right of appeal to the Court of Appeal on any point of law arising from this decision. The right of appeal may be exercised only with permission. An application for permission to appeal to the Court of Appeal must be sent or delivered to the Tribunal so that it is received within 1 month after the date on which this decision is sent to the parties (unless an application for costs is made within 14 days of the decision being sent to the parties, in which case an application for permission to appeal must be made within 1 month of the date on which the Tribunal’s decision on costs is sent to the parties). An application for permission to appeal must identify the decision of the Tribunal to which it relates, identify the alleged error or errors of law in the decision, and state the result the party making the application is seeking. If the Tribunal refuses permission to appeal a further application may then be made to the Court of Appeal for permission.