Property developers across the UK who have been disputing the level of business rates they pay on buildings undergoing renovation have been boosted by a Supreme Court ruling.

The case focuses on S J & J Monk, a property developer from the north east of England. The business owns the freehold of the first floor of a three-storey office building which underwent a major renovation and refurbishment so as to attract new tenants.

On the 6 January 2012, the date for determining the rateable value of the property, the premises were empty and stripped to shell. The developer proposed to the valuation officer that the property description should be altered to ‘building undergoing reconstruction’ and the rateable value should be reduced to £1 as the property could not be occupied due to the building works. In the 2010 rating list listed the property as ‘offices and premises’ with a £102,000 rateable value.

The Supreme Court has today agreed and declared that S J & J Monk, should not have been charged business rates on a property as if it were fully usable when it was undergoing refurbishment. 

The decision overturns an earlier Court of Appeal decision in 2015 and will not only mean a reduced rates bill for the company; it is expected to reduce business rates bills for other property developers in the same situation. 

This is an important test case and will no doubt be welcomed by property developers from across the UK. There are a significant number of cases involving valuation officers and developers which have been awaiting the outcome of this dispute and it is expected that they will be settled quickly now that there is greater clarity on the issue.