The Upper Tribunal (Lands Chamber) has considered this question in Robert Dyas Holdings Ltd v Moore (Valuation Officer) [2025] UKUT 163 (LC) concluding that rental evidence is the most important element.
The case concerned the assessment of a purpose-built distribution warehouse in Hemel Hempstead, Hertfordshire leased by the appellant. The commencing rent under the lease was £990,570 per annum in 2014 rising to £1,250,000 at review in July 2019.
The property was originally assessed in the 2017 rating list at £880,000 which the Valuation Tribunal for England reduced to £875,000 in August 2024. The appellant sought a further reduction to £750,000, the VO restoration of the original assessment.
The VO used a factorised approach to the analysis of rents and valuation of distribution warehouses. It adopted a rate in respect of the main space and expressed the value of each part of the building as a factor of the rate applied to the whole. It had adopted a main space rate of £67.50/£68 per square metre in Hemel Hempstead.
The appellant argued there was sufficient rental evidence from local transactions agreed close to the valuation date to indicate the value parties were prepared to agree. The VO argued that greater weight should be attached to the basket of comparable evidence.
The tribunal was guided by the approach in Lotus and Delta Limited v Culverwell (VO) and Leicester City Council [1976] RA 141: (a) the rent should be a starting point where the hereditament is actually let; (b) the more closely the circumstances of the rental agreement relate to the statutory assumptions the more weight it should have; (c) rents of similar properties where available are to be considered; and (d) rating assessments of other comparable properties are relevant but where there are none it is difficult to reject the actual rent.
Focusing on the rental evidence available to the hypothetical tenant at the valuation date the tribunal excluded lettings which were too big, too distant in time or materially different. This left the property itself and one comparable.
Analysing the rents for the two properties the tribunal concluded that an appropriate main space rate for distribution warehouses in Hemel Hempstead was £65.75 per square metre. Applying this rate with an end allowance resulted in a figure of £825,000 for the property.
The check, challenge and appeal methodology had changed ratepayers’ approach to alteration of the rating list. The absence of co-ordinated exchange of rental information between advisors and the VO had resulted in a lack of awareness and the establishment of a tone was less clear cut.
Louise Clark is a property law consultant
