On March 1st a landmark ruling by the UK Supreme Court resolved whether owners of commercial properties will need to pay business rates during renovation or development work.
Our rating team first started work on the S J & J Monk v Newbigin case in 2013, when the Valuation Office Agency stated they would base the rateable value of an office, during renovation and subdivision, on its pre-scheme rateable value.
The decision meant that the owners, S J & J Monk, still had to pay business rates on the 15,000 sq ft Sunderland office space, with a rateable value of £102,000, despite it having being stripped to a shell and unable to be occupied during the renovation.
The case was taken to Valuation Tribunal by Rating Partner, Richard Farr, who appealed the decision on the basis that until then, properties undergoing major work had been given a nominal rateable value of £1. Farr later won the appeal at Lands Chamber, but the decision was subsequently overturned at High Court.
However, the ruling by the Supreme Court concluded that the property should be given a nominal £1 rateable value, on the grounds that it is undergoing significant refurbishment which restricts it from being a functional office space.
Richard Farr commented, “I am delighted by the eventual ruling at the Supreme Court, four years after I first started this case. Thedecision is welcome news for ratepayers, who will not be required to pay business rates on properties that are undergoing construction.
“This is of course also good news for the industry, with the threat of unnecessary rates bills no longer creating barriers for developers and investors.”
The nominal assessment will not be automatic, and affected ratepayers will need to seek advice from a professionally qualified rating surveyor.