Altus Group celebrates ‘timely victory’ on empty rates

Altus Group has won what it describes as a “groundbreaking” case before the Valuation Tribunal for England (VTE). The VTE found that a landmark Supreme Court ruling on empty rates in relation to office and retail properties undergoing refurbishment also applied to a warehouse unit in Feltham, west London. The VTE found that the unit has been incapable of beneficial occupation since June 2018, so its rateable value should be reduced to £1. The group said that the victory builds on its track record in applying the Supreme Court judgment in SJ & J Monk v Newbigin [2017] UKSC 14; [2017] EGLR 211 across key real estate sectors, and that the VTE’s decision helps further clarify business rates liabilities while properties are under refurbishment. It added that the Valuation Office Agency (VOA) now needs to “mend its ways in its less favourable treatment of industrial property”. Acting for a client of Orchard Street Investment Management, Altus successfully argued that a warehouse unit on the Griffin Industrial Estate in Feltham was incapable of beneficial occupation for the purposes of business rates from 12 June 2018, the date that physical works to strip out and refurbish the property commenced. It took the case to the VTE after the VOA rejected its challenge under the “Check Challenge Appeal” system. The VOA had argued that the unit was undergoing repair works rather than a course of refurbishment. However, the VTE panel said it was “satisfied, based upon the evidence before it, that the refurbishment works to the subject property did render it incapable of beneficial occupation”. It added: “Therefore, the panel is satisfied that the subject property should be shown in the list at a nominal rate from the date the physical works to strip out commenced.” The VTE noted that refurbishment seemed “more likely” than repair because the premises had just been vacated by the previous tenant. Robert Hayton, head of UK business rates at Altus Group, said: “The VOA continues to drag its feet in implementing the Supreme Court’s ruling in the Monk case. It has been particularly dismissive of the commercial realities in refurbishing and reletting industrial property. The distinctions they make are spurious and deny prompt relief to landlords. “Long-term reform of empty rates regulations by the government is needed to recognise that the current three- and six-month exemption periods are woefully inadequate to allow commercial properties to be refurbished, marketed and relet. “In the meantime, this is a timely victory for landlords, who cannot claim any of the Covid-19-related reliefs in respect of their empty properties and yet are facing some months of rent holidays and tenant failures.” It remains open to the VOA to appeal the decision. To send feedback, e-mail jess.harrold@egi.co.uk or tweet @estatesgazette