Wei Xiaoli v Nicola Johnson (Valuation Officer)

In rating valuation, the statutory rental hypothesis must be applied to the property’s physical state at the material day, while the rental value is assessed at the antecedent valuation date. A zoning method may be used in a secondary retail location where it is applied consistently to the subject property and comparable properties. Post-antecedent-date rental evidence may provide retrospective assistance when earlier evidence is scarce, but its weight reduces as it becomes more remote and its reliability must be tested against intervening market changes. Rental growth assumptions require evidential support. Ancillary accommodation situated behind a structural wall may be valued separately from the zoned retail area.

The appellant appealed against the Valuation Tribunal for England’s determination of the rateable value of a retail shop in Clapham at £17,500 in the 2023 rating list. The Valuation Officer accepted that a reduction was appropriate but contended for £15,000, relying on rental evidence from other shops in the parade and a revised Zone A rate.

The appeal concerned the correct floor areas, the use of a two-zone-and-remainder method in a secondary retail location, the treatment of staff and storage accommodation, and the weight to be given to rents arising after the antecedent valuation date of 1 April 2021.

1. Appeal allowed. The assessment was determined at a rateable value of £16,000.
2. Under paragraph 2 of Schedule 6 to the Local Government Finance Act 1988, the valuation was the rent reasonably expected for the hereditament at 1 April 2021, on the statutory letting assumptions. The physical state and physical enjoyment of the property were treated as at the material day, 1 April 2023.
3. The Valuation Officer’s floor areas were preferred. The use of a 4.57m/7.62m/remainder zoning pattern was acceptable because it had been applied consistently throughout the parade and the rental analysis used the same approach. Non-structural partitions enclosing the treatment rooms and staff room were properly ignored when calculating net internal area under the applicable measuring practice.
4. The structural wall at the rear marked the end of the zoned retail area. The stores behind it were properly valued at A/8, and the staff room was ancillary accommodation rather than Zone B retail space.
5. In Chifley Holdings Limited (BVI) v The Commissioners for His Majesty’s Revenue and Customs [2024] UKUT 00301(LC), the Tribunal’s guidance on post-valuation-date evidence was applicable. Such evidence may assist retrospectively where it illuminates market conditions around the valuation date, but the valuer must account for intervening events, market expectations and the increasing unreliability of more remote transactions.
6. There was insufficient evidence to support the Valuation Officer’s rental-growth adjustments. The unadjusted rents were therefore used. Giving appropriate weight to the available evidence, the Zone A value was assessed at £410 per m², producing a total valuation of £16,137, rounded to £16,000.

• Upper Tribunal (Lands Chamber): allowed the appeal against the Valuation Tribunal for England’s assessment of £17,500 and determined the rateable value at £16,000.