The first place to start when assessing a property is whether it is capable of beneficial occupation.

Below we detail our approach when dealing with properties that are both unfit and fit for occupation

 


 

Property is unfit for occupation

If the property is not fit for occupation, it may be removed from the rating list completely, thereby removing the liability entirely.

The test of whether a property is fit for beneficial occupation can be nuanced and will depend on a myriad of factors.

 

Properties Undergoing a Programme of Alteration/Redevelopment

Office building under constuction

A property can be removed from the rating list if it is no longer capable of occupation due to ongoing alterations or redevelopment. Removal from the list is only possible once the works have begun. Properties that are demolished are also no longer rateable. Light refurbishment works such as a new shop fit do not always justify a removal from the rating list.

The VOA often challenge appeals related to alterations and redevelopment and will require proof of works including, for example, that planning permission exists or evidence that demolition/strip out has begun. We typically supply a broad spectrum of relevant information to build the strongest, most defensible case to the VOA.

 

“We advise our clients through the transition into new premises and ensure the process is in place to deliver high quality, agile workspaces.”

 

Delaying Completion

A new build or redeveloped property becomes liable for rates on the date it is completed, so developers may try to delay formal completion until they have tenants ready to occupy the space. This can be achieved in a number of ways depending on the circumstances and the type of property. Some local authorities are more proactive than others in monitoring building works, but most go through a formal process to formalise completion for business rates purposes.

The local authority may serve a completion notice if they believe the property could be completed within three months. The 3-month or 6-month rate relief period will then commence after the property is completed. This gives developers a potential for a minimum of 6 months where rates will not be payable.

 

Properties in a State of Disrepair

Properties that are damaged and “beyond economic repair” will benefit from rates relief.

Firstly, the works must be deemed as repairs and not renewals or improvements by the VOA. Then the VOA will consider if the required repairs are worth the landlord carrying them out. Both the nature of the repair and the economic worth of the repairs are subject to legal tests defined by previous case law.

If the repairs are substantial, and can be demonstrated to be uneconomic for the landlord to undertake then we can seek for the property to be removed from the rating list.

What constitutes a repair over a renewal or improvement depends on the circumstances, and the same applies for determining what is economically reasonable. A full assessment of the property and its circumstances will be carried out to ensure the best outcome.

It is worth noting that when determining a property’s rateable value, the property is valued by the Valuation Office Agency (VOA) as if it were in a state of good repair, regardless of the actual situation. Therefore, a property that is not fit for occupation will stay on the Rating list unless it is challenged.

Severe Damage

Broken WindowsWhere a property becomes incapable of occupation due to a flood or storm or other external factor such as a fire, the property can be removed from the rating list. In this case, the damage to the property would need to be severe enough that substantial repair works will need to be carried out to bring it up to a level where occupation is possible.

 

 


 

Property is fit for occupation

If the property is deemed to be fit for occupation there are several exemptions and methods to help to eliminate or reduce the rates bill. Exemptions are awarded by the Local Authority, so it can be a more efficient alternative to appealing a historic rates bill with the VOA.

A full assessment of the property and its circumstances will be undertaken by us before we can determine what exemptions apply to the property and identify the most appropriate solution.

 

Exempt Properties

Commercial property, such as offices and shops qualify for 100% relief for a continuous period of 3 months. Industrial properties, such as warehouses and storage units qualify for 100% relief for a continuous period of 6 months. The relief period is triggered when the property becomes vacant after a period of occupation lasting more than six weeks.

Other exemptions include property:

  • Listed by Historic England or a property that is partially listed.
  • That can’t be occupied due to being prohibited by law, such as a breach of building regulations.
  • That is closed due to the action of public authority such as breaching health and safety regulations.
  • That is empty and has a rateable value below the minimum threshold of £2,900.
  • That is empty, whose owner is entitled to personal possession.
  • That is empty, whose owner is entitled to possession as a trustee under a deed of arrangement.
  • That is empty and owned by individuals subject to bankruptcy or a company subject to a winding up order or that is in administration.

 

Discretionary Relief for Partial Occupation

Shopping center interior

When the property is partially occupied, such as when some of the space is surplus to requirements, the local council has discretion to grant relief if the property owner applies for an informal split of the assessment to reflect the occupied and unoccupied areas.

 

Supply and Demand

A property may be removed from the rating list or be subject to a reduced rateable value if it is deemed there is no demand for the property and therefore commands nil rent. The VOA determines whether there is demand or not by considering comparable properties in the locality and whether the absence of demand is due to surplus properties that are similar or due to the owner’s actions.

 

Zero Rating

An exemption exists where a property is empty and the owner is either a charity or a Community Amateur Sports Club (CASC) and when the property is re-occupied it will be mainly used for either charitable purposes or used for the purposes of a CASC, whether that is the owner occupying or another charity or CASC.