Canary Wharf decision finally ends empty rates circus
Rates should not be payable on buildings that are incapable of occupation
In March 2017, BNPPRE was delighted to report the Supreme Court’s “common sense” judgement in Monk v Newbigin, upholding a £1 rateable value on an office floor in building that was incapable of occupation during a prolonged refurbishment.
The judgement confirmed that reinstatement was beyond what could be assumed under a repairing covenant and therefore, was outside the scope of a rating valuation.
Aggrieved with the judgement, the Valuation Office Agency (VOA) identified floors at Canary Wharf tower, which at lease end had been stripped back to a bare shell ready for marketing to prospective tenants who would install their own “Cat A” fit-out.
At their appeal to the Upper Tribunal (Lands Chamber) the VOA’s legal team spotted a chink in the Monk judgment that enabled it to argue a “building under reconstruction exception”. The VOA contended that regard should be given to whether the accommodation was objectively ascertainable as being under reconstruction. This approach accorded with their policy of defending full rateable values on properties in a stripped out condition that were idle pending the commencement of construction work in earnest.
The Tribunal swiftly dismissed the appeal, with the subsequent decision stating that the VOA’s argument was “..plainly contrary to the decision of the Supreme Court in Monk”.
The VOA has since updated its policy and rating appeals – some dating back to 2010 – are now being concluded.
Whilst this latest decision is the panacea that the property industry wanted, refurbishment projects will still require professional advice in order to ensure the maximum rates reduction is achieved, as the approach will need to comply with the legal decisions and new VOA policy.