On 1 March 2017, the Supreme Court delivered a unanimous judgement in the case of Newbigin (Valuation Officer) v SJ & J Monk (a firm). The outcome could save thousands for property developers by potentially allowing commercial properties to be excused from business rates during the period in which reconstruction works to the property are undertaken, if at such time the property can not reasonably be occupied. Thus, a property undergoing construction would only have a nominal rateable value.
In this case, Monk, owner of a vacated office building, decided to renovate the property – stripping it empty and carrying out additional works. Monk requested a reduction in its property rates liability from a value of £102,000, at which the property had been assessed, to £1 to reflect the current rateable value. The case eventually escalated to the Supreme Court which found in favour of Monk.
The ruling of the Supreme Court means that where a property is assessed as undertaking renovation and, critically, is not capable of beneficial occupation, the rateable value should be reduced to £1. This is because a property should be valued in its present state, otherwise known as the ‘Reality Principle’.
There is scope for this principle to apply to appeals relating to reductions in rates and even retrospectively to completed works. As ever, all cases are considered on individual merit however the flood gates could now open.
Developers currently reconstructing properties, which are rendered incapable of beneficial occupation, have until 31 March 2017 to apply to reduce their rateable value. Beyond this date, and in relation to concluded works, developers have until 31 March 2018 to alter their rate however backdating is limited to 1 April 2015 in England.
For more information and advice, or if you have previously undertaken works to a property that is now reoccupied and wish to reduce the rateable value, please speak to one of our specialist commercial solicitors. Get in touch on 0845 287 0939 or complete our online contact form.
