News & Insights

Business rates on properties which are being renovated

Marcus Francis considers a recent case in which the Supreme Court decided that stripped-out office developments should not be liable to business rates. 

The case involved the stripping out of an old office building by an office developer back to shell condition so that it could be converted into three new office suites. The developer (Monk) argued to the Valuation Office Agency (VOA) that the building should be deleted from the rating list whilst the works were ongoing arguing that the property was incapable “beneficial occupation”. The VOA disagreed and contended that, despite the condition of the property, the works to put it back into repair were “economic” and therefore it should not be deleted.

The Supreme Court decided the case in favour of Monk. Heralded by many as a “common sense” decision, the Monk case means that buildings undergoing significant building works such as a major refurbishment or development for another use will now have no business rates liability until they once again become capable of beneficial occupation.

The case is likely to lead to numerous VOA cases now being settled with ratepayers receiving refunds of business rates they were not liable to pay.