This article was first published on Lexis®PSL Property on 24 January 2019.
Fiona Sawyer, professional support lawyer in the planning team at Herbert Smith Freehills LLP, and Frances Edwards, senior associate and specialist real estate litigator at the firm, point out that although the government’s ‘open doors’ scheme will certainly help reinstate the high street as a destination for the community, the reality is that town centre rents need to be cheaper and action taken to ameliorate the cost of business rates to enable community uses to occupy town centre premises on a longer-term basis.
Author: Martin Dawbney, Partner, Real Estate, London
Not many outside the business rates bubble will have been following the twists and turns of the Mazars case and its aftermath. Stripping away the jargon, the Supreme Court decided that each floor in a multi-occupied building should be subject to a separate rates bill even where immediately above or below another floor occupied by the same entity, unless linked by a private staircase or lift. This is of relevance because especially large floors enjoy a discount, which only applies if all floors occupied by the entity in the building are taken into account.
The Government surprised the rating world by announcing in the Autumn 2017 Budget that legislation would be introduced to restore the practice of the Valuation Office (responsible for setting the rateable values of commercial properties) prior to the Supreme Court decision.
After a consultation process the draft bill has now been published. In short, once it becomes law (intended to be before the end of the current session of Parliament) floors will be treated as one provided they are occupied (or, if vacant, were last occupied) by the same entity and are “contiguous”. Contiguous means they either touch or are separated only by a void (e.g. a raised floor accommodating landlord’s services).