Resources

Airport judgement could have far reaching effect on business rates

The Lands Tribunal for Northern Ireland gave its judgment in a landmark ruling this week that could have a major effect on non-domestic rates across the UK.

The judgement itself concerned Belfast International Airport and has far-reaching implications on how properties should be valued using the contractors’ basis of valuation – a method of “last resort” where a property is not easily comparable with others, where there is no rental market or where a valuation by reference to the occupier’s accounts is difficult or not appropriate.

It is generally used where the success of the occupation is not measured by a pecuniary profit or in respect of specialised properties such as: steel works, airports, bus garages, breweries and chemical works.

This particular case has worked its way slowly through the appeal system over the past two years but the Lands Tribunal for Northern Ireland this week found in favour of the appellant and ratepayer Belfast International Airport, represented by Dunlop Heywood.

The airport was originally entered in the Valuation List at Net Annual Value £3.315m but, following evidence and submissions, the Tribunal directed that the NAV should be £2.3m –  a £1.015m reduction.

The case didn’t take two years to progress for no reason and the details are particularly complex.

The President of the Tribunal, along with the Tribunal Member, examined the date at which the economic circumstances should be taken when undertaking rating valuations in Northern Ireland and how the contractors’ basis falls to be applied with particular focus on; obsolescence described by the appellant as “superfluity” or “over capacity” and also the appropriate allowance to be made at stage five of the valuation method.

One of the legislature’s purposes for the broad framework of the rating system was to secure uniformity and fairness between ratepayers. The rateable value is how the system seeks to achieve those ends and the different methods of valuation are just a means to the same end.

The Tribunal agreed with the submission of BIA that demand is fundamental to the assessment of value. 

They said that the suggestion by the respondent that on the revision of an assessment, employing a date different to that employed when compiling the valuation list “makes no sense” confirming that the valuer has little chance of achieving the right answer if in his revision valuation he takes general economic conditions (including demand) at a date different from the date at which they were taken for the original list revaluation.

The Tribunal further confirmed that a specific allowance for “over capacity” was warranted at stage two of the valuation and that the most accurate means of assessing the “over capacity” allowance had been provided by the appellant.

In addition, that the stage five allowance in this case should apply to reflect the location and the additional operating costs of the subject property. The steps to be taken by those undertaking contractors’ basis valuations are set out in the decision.

Your Comments

Read our comments policy here

Subscribe to our newsletter