Commercial surveying news from the Beattie Partnership

Taking a Break from Business Rates? Think Again

The current Monk v Newbigin (VO) appeal is an important piece of case law and it has big implications for property owners and occupiers considering redeveloping or refurbishing their commercial properties.

Agents could, at one time, assume that certain kinds of redevelopment project would result in them obtaining a nominal £1 rating valuation for the duration of the work. The Court of Appeal’s ruling in this case casts serious doubt on that assumption and with an appeal to the Supreme Court there still looks to be uncertainty.

The Court of Appeal has ruled that the nominal £1 rateable valuation won’t need to apply if a property in a state of redevelopment, however extensive, could, in theory, be repaired. And if the conclusion is that works undertaken are indistinguishable from repairs, then they will be classed as this. In short, this means no £1 nominal rateable value will be given unless they are uneconomic for a landlord to carry out.

Whereas the Court of Appeal’s decision in this regard has been unanimous, the position it has taken isn’t exactly helpful at a practical level. When appealing a business’s rateable value, at what stage during a project will we have to think in terms of either the property’s actual or assumed condition?

The Valuation Office (VO) has updated its own practice guidelines to try and tighten up how it assesses redevelopments and refurbishments.  They stress that repairs deemed to be “economically reasonable” won’t contribute to an adjusted rateable value of a nominal £1. In effect this puts the court’s ruling into practice by reinforcing its decision.

It will be up to us as business rates experts to determine how to proceed on a case-by-case basis. We need to be careful not give our clients unrealistic expectations.  We also should be aware of where there is any manoeuvrability in a given situation.

The lack of a solid, practical solution can potentially be an aid to appeal, as any residual ambiguity around the status of a refurbishment can leave it open to interpretation.