A helpful case on business rates

Community-led housing & other organisations welcome a common sense decision that business rates may not be payable during significant building works.

Business rates

Did you know that you may have to pay business rates on an old commercial property you are converting, even if you have obtained planning permission for residential use?  If a property has not yet been physically converted to residential use, then business rates could still be charged until the conversion work is finished.   There has been a useful case recently which indicates that this liability for groups (or in fact, any developer) could be mitigated as soon as works begin rather than once they are completed – a welcome decision for any group converting non-residential property into residential  premises.

The Supreme Court has ruled on a long running dispute about whether a property can be deleted from a rating list during significant building works.

Background

Briefly, an office building was undergoing works involving returning it to a shell in order to create three new office suites. The ratepayer argued the property should be deleted from the rating list during the works as the property was incapable of beneficial occupation

The case was heard by the Valuation Tribunal initially and after 3 appeals, the Supreme Court unanimously allowed the ratepayer’s appeal.

Outcome

Generally speaking, this will be welcome news for community led housing groups converting office or other commercial buildings.  It means that buildings undergoing significant building works such as a refurbishment scheme or development to another use may not be liable to a rates liability whist the building is undergoing these works.

Naturally all cases turn on their own specific facts, so although this decision is helpful, community led housing  groups should take advice on their liability before budgeting for redevelopments

Case report: Newbigin (Valuation Officer) v SJ & J Monk (a firm) [2017] UKSC 14 (1 March 2017)