Justin Allen (Valuation Officer) v Tyne & Wear Archives and Museums

For rating purposes, a museum’s rateable value is the rent which the hypothetical tenant would be willing to pay for its occupation. Quantified socio-economic value to the public does not itself establish value to the occupier or an overbid in rent.

A positive assessment requires a reliable method and evidence linking public benefit to the local authority occupier’s willingness to pay rent. Affordability merely excludes rents which cannot be paid; it does not prove agreement to pay an otherwise unsupported rent. A percentage-of-gross-receipts approach requires rigorous comparable rental evidence or full receipts-and-expenditure assessments. Museums must be valued as museums as a whole, not by analogy with the cost or value of storage space.

The Valuation Officer appealed the Valuation Tribunal for England’s decision of 3 December 2020, which reduced the 2010 rating-list assessments of three museums operated by Tyne & Wear Archives and Museums to nominal rateable values of £10.

The museums were free to enter, operated at deficits and had no realistic tenant other than the relevant local authority. The parties agreed that the receipts-and-expenditure method produced nominal values. The Valuation Officer nevertheless contended that quantified socio-economic benefits justified an overbid and positive assessments, calculated by reference to percentages of gross receipts. The central issue was whether that evidence established a rent which the hypothetical local-authority tenant would pay.

1. The appeals were dismissed. The Valuation Tribunal for England was correct to retain nominal rateable values. The agreed receipts-and-expenditure method was the only valuation method supported by the evidence.

2. Under Schedule 6 to the Local Government Finance Act 1988, valuation is directed to the rent reasonably obtainable in the hypothetical letting. The relevant question is the value of occupation to the hypothetical tenant, rather than the aggregate socio-economic and cultural benefit enjoyed by the public.

3. The Tribunal accepted that the museums generated socio-economic value and that the ACE guidance was an industry-standard means of measuring social value for public-expenditure and funding purposes. But that methodology measured benefits to a wide public and did not translate them into value to the local authority occupier. Nor was there a methodology or evidence translating such occupier value into willingness to pay any rent or a particular overbid.

4. The local authorities could have afforded the proposed rents at the antecedent valuation date, but affordability only rules out an unaffordable rent. It does not show that a tenant facing competing budgetary demands would agree to pay an additional rent for already subsidised museums.

5. The storage analogy was impermissible. The hereditaments had to be valued in their existing mode and category of occupation as museums, as a whole; valuing part of their space as storage gave an unrealistic and false comparison. The shortened gross-receipts method also required rigorous reliable rental evidence or a substantial body of comparable full receipts-and-expenditure assessments, neither of which was available.

6. Accordingly, the asserted socio-economic factor could not distinguish the case from Hughes (VO) v Exeter City Council [2020] UKUT 7 (LC). The proposed positive rateable values were not established.

• Upper Tribunal (Lands Chamber): dismissed the Valuation Officer’s appeals and upheld the Valuation Tribunal for England’s nominal assessments.
• Valuation Tribunal for England: by a decision dated 3 December 2020, determined each museum’s rateable value at £10, effective from 1 April 2015.