The decision of the Upper Tribunal (Lands Chamber) in HostSoho Limited v Jackson (VO) (2019) UKUT 0166 (LC), concerned the rating assessment of offices on the first to fourth floors of a property in Berwick Street in Soho, London. The appeal property was affected by disturbance from nearby redevelopment projects, including the demolition and redevelopment of Kemp House which was situated immediately opposite the appeal property. The demolition works there were of a 17-storey tower, constructed of reinforced concrete. These were not the only works affecting the appeal property, as it was also affected by the redevelopment of nearby Walkers Court, and by other, smaller, schemes in the locality.
The ratepayers of the appeal property made a proposal seeking a reduction in their rating assessment to reflect the disturbance caused by these various schemes of works. They were unable to agree a revision to the assessment with the Valuation Officer and appealed to the Valuation Tribunal for England (VTE), which dismissed their appeal. The ratepayers appealed against that dismissal to the Upper Tribunal (Lands Chamber), which has now issued its decision.
The appellant ratepayers sought a reduction of 40% on the basis that some eight different buildings in the locality were undergoing redevelopment, and that the disturbance from these works, and the effect on the locality generally, had substantially reduced the value of their premises.
The respondent Valuation Officer contended that the allowance already given, of 10%, was sufficient to reflect the disturbance caused by the various sets of works. In support of this contention, Valuation Officer’s expert witness referred to six letting transactions, five of which related to shops in Berwick Street and one to tattoo parlour in Walkers Court. The Valuation Officer’s expert also referred to agreed reductions in assessment of other properties in the locality, which ranged between 5% and 11 ½%. He also referred to a decision of the VTE, which determined a 30% reduction in assessment for a property in Charing Cross Road affected by Crossrail works.
The Upper Tribunal found the Valuation Officer’s rental evidence to be unhelpful as it referred to properties used for different purposes, shops, as opposed to the appeal property, which was an office. The nature of the rental transactions was also unhelpful as they were, principally, rent reviews, where the lease terms would substantially affect the rent agreed. The one example referred to by the Valuation Officer where the rent incorporated an allowance for the effects of redevelopment works was unreliable, because the rent abatement offered by the landlord in that case was simply accepted by the tenant, without taking any professional advice.
The Upper Tribunal placed some weight on the assessment evidence referred to by the Valuation Officer but found that this related to rather different circumstances to those at the appeal property.
The Upper Tribunal found the Valuation Officer’s approach to the “prescriptively formulaic”, and one which failed to reflect the facts of the disturbance at the appeal property. What the Valuation Officer had not done was to “stand back and look”, before arriving at a valuation. Whilst the ratepayers’ suggestion of a 40% adjustment was excessive, the Tribunal was clear that hypothetical landlord and tenant would have agreed a reduction in assessment that was substantially higher than that proposed by the Valuation Officer. The Upper Tribunal determined that an allowance of 25% was appropriate for the effects of the various schemes of works.
The Upper Tribunal’s determination is a useful reminder to valuers that valuation for rating purposes, particularly where a number of different factors are involved, is not formulaic process and requires the application of common sense.