Valuation of factory undergoing works

The Upper Tribunal (Lands Chamber) has dismissed an appeal made by the occupier of a factory to delete or reduce the rating assessment of the property whilst works were going on to the electrical services to the building. The decision in R3 Products Limited v James R Salt (VO) (2014) UKUT 0333 LC concerned a factory building in Ecclesfield, near Sheffield.

The Appellant ratepayer company took a lease of the building from June 2011 and began work to reinstall the high voltage electricity supply, which had been disconnected and the high voltage cabling removed. The ratepayer made a proposal to delete the rating assessment of the property during the works.

At the Upper Tribunal hearing the Appellant contended that there was no beneficial occupation of the property during the works to the high voltage electricity services, that the property was incapable of beneficial occupation and, because of this, that the assessment should be deleted from the rating list. In the alternative, if the assessment was not to be deleted, the Appellant contended that a nominal value was appropriate during the works and that the property should be reintroduced into the rating list in phases as the works were completed.

The Respondent Valuation Officer contended that the ratepayer had been in beneficial occupation and that the property remained capable of beneficial occupation throughout the works and, because of this, the assessment should not be deleted. The Valuation Officer also contended that the Appellant’s alternative contention of a nominal assessment was outside the scope of its original appeal and could not be pursued. Finally, the Valuation Officer contended that there was no mechanism for a phased reintroduction of the property to the rating list.

The Tribunal determined that the Appellant was in beneficial occupation of the property throughout the works, for the purposes of undertaking refurbishment work and making it suitable for the Appellant’s particular requirements. Because of this the Tribunal found that there was no basis to delete the assessment from the rating list as being incapable of beneficial occupation.

The Tribunal found that it was open to the Appellant to contend, in the alternative, for a nominal value during the works, commenting that this was the Appellant’s “first exposure to the esoteric world of rating and he should not, in my judgment, be penalised for it”.  However, the Tribunal found that the works being undertaken by the Appellant were works of repair and, as a result, the property had to be valued in a reasonable state of repair, which meant that there was no basis on which to find a nominal value. Having made that finding, the Tribunal did not have to decide whether the assessment should be reintroduced on a phased basis but commented that “there is no basis in the legislation for that to be brought about”.

This decision will inevitably be compared to the Tribunal’s recent decision in SJ & J Monk (a firm) v Newbigin (VO) where the Tribunal reduced to a nominal figure the assessment of an office undergoing works. The Monk decision is under appeal to the Court of Appeal but, in any event, there is an important difference in this case which is that it was only the high voltage electrical supply which had been removed, a domestic supply remained in place rendering the property capable of beneficial occupation.

All of which goes to show that property owners cannot rely on obtaining a deletion or reduction in assessment during works, and the valuation of properties undergoing works is likely to remain a contentious area – particularly whilst empty rates remain at 100% of the occupied rate liability.