In our previous rating updates we have reported on the landmark Newbigin V Monk rating case, which focused on the issue of landlords and developers having to pay rates whilst a property is undergoing redevelopment.
The Court of Appeal had previously found in favour of the Valuation Office, which established a principle of assuming the property to be ‘in a reasonable state of repair’ and that any works were purely economic. The consequence being that rating assessments were not deleted during the works and a full rates liability was charged during the works. However, in light of the outcome, the case was appealed to the Supreme Court earlier this year. Thankfully the decision was reversed, resulting in a ‘common sense’ approach now being applied to relevant cases.
This common sense approach involves reviewing whether the property can be ‘beneficially occupied’ during the period of works. If the answer is no then, the rating assessment should be reduced to a nominal value, with zero rates payable during the time period.
This Supreme Court decision is undoubtedly a positive one, but many ratepayer appeals were left in limbo for a number of years awaiting the result. Following this, the Valuation Office have now updated their own guidance on how they should deal with appeals concerning buildings in disrepair. In a positive move, they are now looking to adopt the ‘reality principle’ and establish if a building is uninhabitable and if extensive redevelopment works are taking place.
If these two points can be proved, then we have found that the Valuation Office are willing to enter into discussions to consider reducing the rating assessments to nominal value. If this could be achieved then it would wipe out the rates liability during the works.
So what does this mean for ratepayers going forward? If you are carrying out any refurbishment or redevelopment works, then you should certainly be considering raising an appeal with the Valuation Office, seeking a nominal value. However, each case should be judged on its own merits and is by no means a guaranteed result.
This is where the experience of the Cushman & Wakefield rating team can be helpful, providing you with expert advice. We are already seeing positive results for clients following this decision, so please contact one of our team should you need assistance.
CLICK HERE to view our Summer 2017 Rating Newsletter.