20th November 2014

Business rates – Relief for stripped out buildings

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20th November 2014

Business rates – Relief for stripped out buildings


Rating relief on empty properties was abolished in 2008. Relief remains available where a building is being refurbished and / or isn’t fit for occupation but claiming these reliefs has become increasingly difficult given the stricter approach being taken by local rating authorities.

For the purposes of determining liability for business rates, properties are assumed to be in a state of reasonable repair. This assumption is dis-applied to the extent that it would be “uneconomic” to put premises into good repair (such as where they have been vandalised). The application of this assumption was considered in a recent Upper Tribunal decision (SJ & J Monk v Newbigin) concerning an office building in which ceiling tiles, the suspended ceiling grid had been removed together with approximately half of the raised floor, comfort cooling equipment, sanitary fittings and electric wiring. The cost of reinstating these items would have been in excess of £300,000 (three times the rateable value).

The property owner sought a nominal valuation (of £1) on the basis that there had been a “material change of circumstances” in respect of the property. The rating authority argued that the statutory assumption (that the property be deemed to be considered in a state of reasonable repair) should apply and that the liability for business rates should not therefore be altered.

The liability for business rates was referred to the Upper Tribunal which took the view that even if the statutory assumption as to the state of repair were to apply, the fact that a number of essential items of equipment and fixtures had been removed (and given the costs which would be incurred in reinstating the premises) there was no basis for valuing the premises at anything more than a notional £1.

This decision will have far-reaching implications for many local authorities and it seems likely that the decision will be appealed. In the meantime, owners of buildings which have been wholly or partially stripped out should consider whether they are mitigating their business rates liability to the full extent possible.

If you wish to discuss any of the points raised in this blog please contact Mark Withers.