Government to change how it values non-domestic properties

Government to change how it values non-domestic properties




A Supreme Court ruling has forced the government to revise the way it values non-domestic buildings that are occupied by more than one person or a business.

The decision means that the Valuation Office Agency is now legally obliged to treat different areas of the same building that are accessed through communal areas as separate premises.

Occupiers of non-domestic buildings may now be issued separate bills for different parts of their property and their overall rates bill could increase.

The change may also affect business rates that have already been paid, with rates likely to be backdated to whichever is the more recent of either 1st April 2015 in England or 1st April 2010 in Wales, or the date occupation began.

Scott Marshall, director at Roma Finance, said: "It makes sense that councils assess business rates on non-domestic properties on the amount of space a business occupies.

“Shared, serviced, office spaces are becoming more common and it's a way for many businesses to keep operating costs to a minimum.

“From a commercial landlord point of view, let's hope the changes make them and the businesses they rent to more competitive in their markets to help drive the economy and the commercial property sector." 

The decision was made following the ‘Woolway v Mazars’ case, in which a business rates valuation officer appealed against a ruling that two separate leases or ‘hereditaments’ could be merged to form one premises.

The Supreme Court ruled in favour of the valuer, Mr Woolway, on the basis that if two or more premises are not joined by space owned by the common occupier, they should be treated as separate hereditaments.

Previously the Valuation Office Agency had valued separate but adjoining areas as a single property.

Bob Sturges, head of PR and communications at Fortwell Capital, added: “Inward investment and asset values have already taken a substantial hit following the Brexit vote and it's clear that confidence in the sector is low.

“Adding further pressure by threatening to raise rates now is probably the last thing [the] commercial real estate sector needs.

“I'm sure the government will be alive to this. If not, the lobbyists will soon make sure it is.”

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