Insight

Upper Tribunal clarifies law on rating of buildings undergoing redevelopment

Another important decision has been handed down by the Upper Tribunal Lands Chamber this month, ruling on the approach to the valuation of buildings, incapable of beneficial occupation due to redevelopment.

The latest ruling adds to the Supreme Court’s decision in Newbigin (VO) v SJ & J Monk [2017] which I have covered previously.

Jackson (VOA) v Canary Wharf Ltd [2019] UKUT 0136 (LC) concerned a number of floors in Canary Wharf’s 1 Canada Square tower. As is usual practice, when the tenants moved out, the floors were stripped back to their shell,  followed by upgrading to the risers in the core.

The fitting out works were not started until after a tenant was identified and the Material Day for the appeal fell during the “pause” between strip out and fit out. It was agreed that at the Material Day the property was incapable of beneficial occupation.

However, the VOA argued that, in the absence of a programme of works, there was no admissible evidence of a scheme of redevelopment capable of bringing the property within the umbrella of Monk. The VOA valued the floors as though they were offices in repair, action the VTE rejected, resulting in an RV of £1 – the VOA appealed.

The legal machinations continued as The Upper Tribunal rejected the VOA’s appeal, stating The Rating Manual was mistaken and held that Monk was establishing an exception to the repairing assumption. Overall, if a property is incapable of beneficial occupation, then it is not a hereditament and the only basis it could be entered/stay in the List was at a nominal RV for administrative convenience.

The Tribunal held that the VOA’s acceptance that the properties were incapable of beneficial occupation was “the beginning and end of the appeal.” As to Monk itself, the Tribunal confirmed that: neither the existence of a detailed programme of works, nor the outline of the proposed future development of the property, nor the splitting of the hereditament into three, were prerequisites for the treating the property as a building under construction in the Monk sense; these were simply evidence of a scheme.

The Tribunal went on to state: “the most cursory investigation by the VO would, and did, readily reveal that refurbishment was inevitable”. The absence of a known end-date for the scheme, or of a contract showing how or when the floors would be refurbished, didn’t stop that outcome.

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