Rating manual volume 4 section 5

See RM Nevertheless regard should be had to both the next likely use and to the previous use when considering the use limb of the rebus sic stantibus rule. This is a matter which must be considered on the facts of each case, in line with the guidance and approach outlined above. Any rent passing on the property to be valued and rents and assessments of hereditaments used for a purpose within the same mode or category of occupation as the hereditament being valued will normally form the best evidence.

This does not however mean that rents and assessments of properties used for another mode or category of occupation are irrelevant. The Tribunal made a comparison with valuers adjusting for different physical and locational characteristics, and commented that valuers should adjust for use in a similar way. The weight given to the actual rent will depend on how closely it conforms to the terms of the rating hypothesis.

Weight should also be given to rents of comparable hereditaments, but again the degree of weight will depend on how closely the terms match those of the hypothetical tenancy. One of the terms of the hypothetical tenancy is that the hereditament can only be used for a use within the same mode or category of occupation as the actual use. Whether this is correct will depend on the evidence - if there are a number of offices in former shops, with rents at different levels of Zone A in accordance with changes in retail values in the street, then the conclusion would be that offices pay the same as shops and so the example holds.

In some cases this will require a closer investigation of the rental and other evidence than may in practice have been undertaken in the past. And on reviews, how much weight should be placed on a rent agreed for a review clause which assumes a wider use than that to be assumed for rating?

The weight to be given to such evidence will depend on the facts of each case. This must carry considerable weight and in such circumstances, in most cases, the rent will not require any adjustment for use. Unless evidence is provided of rents paid by restaurants, on the assumption of a restaurant use only, being at a lower level than the subject rent, such an argument should be resisted; the actual occupier must have considered the rent paid to reflect the value of that property and location for restaurant use at that time.

Not infrequently the reviewed rent will assume a wider use than is actually permitted under the user clause of the lease. Similarly, on renewal the rent will be on the basis of the terms of the new lease, including the use assumed for review. The weight to be given to such evidence will again depend on the facts of each case and the other evidence available. If a restaurateur agrees to a lease with reviews to a value for general shop use it could be argued that, from his perspective, the future value as a restaurant will be at least as great as that for a shop.

If in the locality restaurant rents had generally moved in a similar way to shop rents this would give additional weight to such a view. If however it were shown that shop rents had risen much faster than restaurant rents since the start of the lease this would reduce the weight that should be given to a passing rent on a restaurant agreed on a review clause assuming a general shop use.

There will of course be other factors involved in agreeing to the lease terms, but just because the reviewed rent passing is on the basis of a general shop use it does not mean that the rent necessarily has to be reduced to accord with the rating hypothesis. It may be that values for restaurant use have increased above those for shops. Rents on comparable hereditaments would normally be the next best evidence, and the actual use of the hereditaments and the use s reflected in the rent would be factors to take into consideration.

In the absence of any reliable rental evidence, assessments of comparable assessments normally form the next best evidence. In both these scenarios if, for example, one was trying to establish a link between restaurant use and shop use, the valuer would have to establish that relationship in respect of the comparables and then use his skill and judgement to translate the relationship to the circumstances of the subject property. The present decision also reinforces the point that the two limbs of the rebus rule must be considered separately.

It is important that the scope of this decision is fully appreciated and that any arguments seeking a more restrictive interpretation than justified by the decision are resisted. More detailed investigation will be required into the level of rent paid by different uses, into terms of leases and in particular the use to be assumed on review. To help us improve GOV. It will take only 2 minutes to fill in. Cookies on GOV. UK We use some essential cookies to make this website work. Accept additional cookies Reject additional cookies View cookies.

Hide this message. Part 2: appendix 1 - The City Duck Case. The decision. Summary of practical implications. Sub-paragraphs a and b read as follows: a.

Basis of valuation. Sub-paragraphs a and b read as follows: a matters affecting the physical state or physical enjoyment of the hereditament, b the mode or category of occupation of the hereditament.

Physical limb of the rebus sic stantibus rule. Conclusion on the physical limb 5. Use limb of the rebus sic stantibus rule. The relevance of planning paragraph 72 of the Court of Appeal decision 6.

Unoccupied properties 6. Conclusion on the use limb 6. Rebus sic stantibus and the evidence. Rental evidence and the effect of other uses in the real-world market 7. Rents on a new letting 7. Rents on review or lease renewal 7. Non-rented properties 7.

Conclusion on rebus sic stantibus and the evidence 7. Cookies on GOV. UK We use some essential cookies to make this website work. Accept additional cookies Reject additional cookies View cookies. Hide this message. Home Business rates. Guidance The Rating Manual. Published 1 January Related content Rating Manual section 4: valuation methods Rating Manual section 6: valuation practice Rating Manual section 6 part 3: valuation of all property classes Rating Manual section 2: maintaining the rating list Rating Manual section 1: statutory authority and legal background Collection Valuation Office Agency manuals.

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