Our client occupied a large former runway for the purposes of storage. The total extent of the occupation was in excess of 20 acres. The site is in a relatively isolated location and the number of occupiers that require sites such as these are limited.
There were a number of seperate assessments in the 2017 Rating List for the site with a total Rateable Value of £111,000.
We first inspected the site and noted that the runway was in a relatively poor condition and that, as the runway areas were contiguous, the assessments should be merged.
In rating there is an assumption that the property/site is in a reasonable state of repair for the purposes of valuation. However, if it can be argued that it would be uneconomic for a Landlord to carry out repairs then an adjustment can be made to the valuation to reflect this.
We therefore recommended to our client that we first lodge an appeal to merge the property and then challenge the £/m2 rate applied to the runway to reflect the fact that it is in a poor state of repair and that for the Landlord it would be uneconomic to repair the land.
The assessments were first successfully merged at the Check stage of the appeal. By doing so the Rateable Value fell as the £/m2 rate applied also fell. This is simply due to economies of scale, generally a tenant will pay less per metre squared for a larger unit than for a smaller one. The same logic applies in Rating where the Rateable Value represents the amount of rent a hypothetical tenant would pay to a hypothetical landlord for 12 months occupation as at the Antecedent Valuation Date.
With the merger secured we lodged a fresh Check against the merged assessment with our argument that an adjustment should be made to reflect the poor quality of the runway land. We aregued that the reasonable state of repair assunption could be put to one side in this instance. We considered it unlikely that a hypothetical Landlord would spend a large amount of money on a relatively isolated plot of land with a linited market for tenants.
The Valuation Office agreed with our position and ultimately we negotiated a 25% reduction in the Rateable Value of the property. Accordingly, our client's rating liability also fell by 25%