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Case law: Property may be given a rateable value that assumes a willing tenant can be found, even if it is unlettable

Landlords with little prospect of finding a tenant for a property may find this will be ignored for rating purposes; and the rateable value for the property could be set by reference to rents being paid for other, similar properties in the area.

July 2019

This update was published in Legal Alert - July 2019

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

Office premises were used by government departments for many years but they became vacant in March 2009. In 2010, the premises were given a rateable value of £490k on grounds that similar premises in the area were let for rents at that level.

Initially, the landlord persuaded the Valuation Tribunal that there was no market for this particular building, successfully arguing that it the property was pretty much unlettable because other similar properties in the area had already satisfied demand. The Tribunal reduced the rateable value to £1.

The Supreme Court had to decide whether the rateable value should only take into account the prospects of letting the particular premises; or should also take into account the demand for that type of property in the area generally. Both parties agreed that “nobody in the real world” would be prepared to occupy the property at more than a nominal rent.

  • the premises should be valued on the basis a willing tenant could be found, even if, in fact, the market was saturated;
  • when assessing the level of rent a prospective tenant was treated as prepared to pay, rentals payable in the area for local premises with similar characteristics could be taken into account.

The Court therefore ordered the rateable value to be set at £370,000.

Operative date

  • Now

Recommendation

  • Landlords with little prospect of finding a tenant for their property, but similar properties in the areas are successfully let, should consider what the rateable value of the property may be, given that the valuer may lawfully ignore the difficulty they will face letting their particular property in those circumstances.

Case law: Telereal Trillium v Hewitt [2019] UKSC 23

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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