Friday, 26 January 2018

Business Rates Major Victory

Owners of empty business premises rejoice. The Court of Appeal has just provided them with a possible escape route from being condemned to pay punitive rates (after three months of emptiness) despite the fact that they are not receiving a bean by way of rent. The case is Telereal Trillium v Keven Hewitt (Valuation Officer) [2018] EWCA Civ 26 in which judgment was given last Friday.

The case was about a three-storey office block in Blackpool. Although empty, it was given a rateable value of £490,000. The valuation officer had sought to follow the valuation hypothesis set by statute by adopting the estimated rent for which the building could be let on a yearly tenancy. The valuation tribunal to which the owners appealed was unimpressed and valued at £1! But it was later agreed by the valuation officer that nobody would have been prepared to occupy the building and pay a positive price. ‘So what?’ was the valuation officer’s retort to the Court of Appeal. The rating hypotheses requires the valuer to assume demand that does not in reality exist and what did exist was a general demand because other comparable office properties had been let.

The Court of Appeal held that in the absence of any actual demand, there was no principle of law which required such a demand to be assumed. The evidence was that the relevant market was saturated. However, every case will turn on its own facts and any owner intending to rely on this decision will need to show that there is no general demand in the area for premises such as theirs. Extensive efforts by them to find an occupier - if only a 'pop up' selling plastic cups for a few weeks - would be useful.

The rulings could encourage more appeals to valuation tribunals or higher tribunals and some applications for an extension of the appeal time limit.

STOP PRESS 
This decision has been reversed by the Supreme Court on 15 May 2019 by a majority of three to two (see [2019] UKSC 23). But the argument raised by the tenant may not be dead for ever where the facts support it.