Closed For Repairs, But Not For Business (Rates)

In Newbigin (Valuation Officer) v SJ&J Monk (A Firm) [2015] EWCA Civ 78, the Court of Appeal ruled that even vacant buildings undergoing redevelopment will be liable for rates unless the building is beyond economic repair.

Facts

In 2010 the owners of a vacant floor of an office building planned to redevelop the floor into three self-contained units. In order to carry out these works the air-conditioning system, ceiling tiles and sanitary fittings were removed and the electrical wiring was stripped out.

The owner and the rating valuation officer, Mr Newbigin, disagreed on the rateable value of the property. The owner argued that, due to the physical state of the property, it should not be liable for rates.

When assessing the rateable value of a property, the rating officer is to consider the factors set out in The Local Government Finance Act 1988 ("the 1988 Act"). These include the fact that the property is in a reasonable state of repair. However, any repairs that a reasonable landlord would consider to be uneconomic are excluded. As a result, the Upper Tribunal (Lands Chamber) held that, as the property was not capable of beneficial occupation, the property had a rateable value of just GBP 1.

Decision

Mr Newbigin appealed to the Court of Appeal arguing that on the date that he had valued the property it was indeed in a state of disrepair but that a hypothetical owner would rather carry out the necessary repair works than leave the building in its state as of the date of valuation. Therefore he argued that the repairs would be economic and should be assumed to have been carried out in order to satisfy the 1988 Act.

Despite the...