BNPPDS(J) Limited & Anor v Amanda Hitchings (Valuation Officer)

For rating purposes, the assumption that a hereditament is in reasonable repair under Local Government Finance Act 1988, Schedule 6, paragraph 2(1)(b), applies only after it has been determined that the premises are capable of beneficial occupation. The distinction between disrepair and redevelopment is objective. It requires consideration of the property’s physical condition and the whole programme of works underway at the material day.

Works which remove existing features, materially remodel premises and form the first stage of a coherent scheme to repurpose them may amount to redevelopment rather than repair. If the premises are thereby incapable of beneficial occupation, they are not a hereditament and cannot be valued by assuming completion of repairs.

The appellants challenged the 2017 rating-list assessment of a warehouse in Newcastle upon Tyne. The Valuation Tribunal for England had dismissed their case for a nominal assessment during works undertaken between November 2022 and March 2023.

The owners removed lighting, power and heating, dismantled a substantial mezzanine, renewed parts of the building and prepared it for a new tenant. The tenant then fitted the premises out as a delivery kitchen. The material day was 15 December 2022.

The central issue was whether the works left the premises incapable of beneficial occupation as a warehouse, so that they were not a hereditament, or whether they were merely repairs to which the statutory reasonable-repair assumption applied.

1. Appeal allowed. The assessment was reduced to rateable value £1 with effect from 28 November 2022.

2. The distinction between works remedying disrepair and redevelopment works is critical. It is a factual distinction to be assessed objectively, having regard both to the building’s condition and to the programme of works being undertaken. The statutory assumption of reasonable repair in Local Government Finance Act 1988, Schedule 6, paragraph 2(1)(b), does not answer the logically prior question whether premises are capable of beneficial occupation and are therefore a hereditament.

3. On the material day the warehouse could not beneficially be occupied as such. It lacked heat and light, and the retained mezzanine made safe occupation impracticable in the circumstances. Although some works addressed disrepair, the interior works involved removal of features which were not to be replaced, substantial remodelling and preparation for the incoming tenant’s delivery-kitchen use.

4. The landlord’s works and the incoming tenant’s fit-out were properly viewed as one scheme. Their object and timing showed that the initial removals could not realistically be treated in isolation as easily reversible minor fitting works. The programme went materially beyond end-of-tenancy repairs and was redevelopment. The repair assumption could not create a hypothetical tenancy of the former warehouse in reasonable repair.

5. The Tribunal did not decide whether the delivery-kitchen use involved a different rating mode or category of occupation, as the evidence was insufficient and the conclusion did not depend on that issue. The conclusion was fact-specific and did not establish a new principle. There was no need to use the Tribunal’s powers under regulation 38(7) of the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009 to determine the later assessment.

• Upper Tribunal (Lands Chamber): Allowed the appeal from the Valuation Tribunal for England and reduced the assessment to rateable value £1.
• Valuation Tribunal for England: Dismissed the appellants’ appeal seeking a nominal assessment during the works.