Insurance company Thomas Miller has won a landmark case against the Valuation Office Agency which sets a new precedent on the treatment of rent-free periods.
The Valuation Tribunal for England ruled in favour of the insurer after it challenged the VOA’s attempts to introduce a new approach for the treatment of rent-free inducements.
Thomas Miller, advised by Knight Frank, argued that most of its 24-month, rent-free period should be taken up in the first five-year rent review, in line with the approach of previous rating lists.
But in a change of course, the VOA had sought to spread the inducement over 10 years, a move which effectively increased the rateable value by 20%.
While the tribunal said it considered the Knight Frank’s approach correct, it ruled that other factors should be taken into account, such as rents paid by nearby occupiers.
It ruled that 18 months of the rent-free period should be taken up in the first five years, with the remaining six months in the second.
The decision effectively cuts the insurer’s rateable value from £1.8m to £1.4m, and paves the way for a raft of appeals to follow.
Knight Frank head of business rates, Keith Cooney, said: “This is an important decision for the City of London ratepayers because it establishes a precedent on the treatment of the vital rental evidence which underpins the business rates assessment.
“We welcome this decision, which provides clarity to ratepayers and their representatives as well as the Valuation Office Agency. This should now enable a full and proper scrutiny of the evidence to proceed, and levels of value adjusted accordingly. This will ensure the ratepayers are treated fairly and are not charged excessive business rates.”
Bjorn Bowles, partner at Knight Frank, added; “This decision provides a precedent in how to treat rent-free periods on offices in the City of London. It ensures a consistent approach is adopted between previous rating lists and the City and West End markets”
jack.sidders@estatesgazette.com
