Buzz Group Limited v Kay Salmon (Valuation Officer)

A valuation scheme based on fair maintainable trade is a guide to the statutory rating hypothesis, not a rule that overrides it. It should ordinarily be used where it provides a reliable valuation, particularly where it has been applied consistently across the relevant class of hereditaments. A departure requires a sound evidential reason.

For bingo halls, the shortened fair-maintainable-trade method values the expected trade of a competent notional operator, rather than floor area. A reduction in floor area does not justify a proportionate reduction in rateable value where the evidence shows that the same trade could be maintained from the smaller premises.

Buzz Group Limited appealed against the Valuation Tribunal for England’s assessment of its reduced bingo club at £161,000 rateable value from 28 November 2016.

The appellant had divided its former bingo hall and sub-let part to a gym operator. It contended that the retained club should be valued by reducing the former assessment in proportion to its reduced floor area. The valuation officer relied on the established valuation scheme, under which rateable value was derived from fair maintainable trade.

The central issue was whether the club’s right-sizing justified departure from that scheme and, if so, how the altered hereditament should be valued.

1. Appeal dismissed. The Upper Tribunal confirmed the Valuation Tribunal for England’s entry of the bingo club at a rateable value of £161,000 from 28 November 2016.

2. The valuation scheme was not legally binding and did not override the statutory rating hypothesis. It was, however, a generally used and carefully developed method whose consistent application was an important consideration. Its own terms allowed departure where application would be inappropriate. A valuer seeking not to use it nevertheless required a substantial and credible justification, particularly where all comparable bingo-hall assessments had been made under the scheme.

3. The appellant had not attempted to value the altered club under the scheme and had not established that the scheme could not reliably be applied. The asserted change in market conditions did not demonstrate that the relationship between fair maintainable trade and rateable value had ceased to be reliable.

4. The appellant’s hybrid, floor-area method was fundamentally flawed. The scheme valued expected trade under the management of a notional operator, not the size of the premises. The original premises had excess space for the trade they generated. The commercial premise of right-sizing was that broadly the same bingo trade could be achieved in smaller premises. Applying the former rate per square metre to those smaller premises wrongly treated the lost, under-used space as revenue-generating.

5. The evidence did not establish that reducing the premises would have reduced fair maintainable trade at the antecedent valuation date. The available rental evidence also gave no support to the proposed valuation. The appeal was therefore without foundation.

• Upper Tribunal (Lands Chamber): Appeal dismissed; the Valuation Tribunal for England’s assessment of £161,000 rateable value was confirmed.
• Valuation Tribunal for England: Directed that the former single entry be replaced by separate entries. The bingo hall was entered at £161,000 rateable value and the part under reconstruction at nil.