Four local rating surveyors from Gerald Eve, storeys:ssp, CBRE and Lambert Smith Hampton have saved Leeds rates-payers hundreds of thousands of pounds by their victory at a recent Valuation Tribunal.
Like a number of other major financial centres in the UK, Leeds has recently experienced an over-supply of office space. Undoubtedly a cause of this phenomenon has been the economic recession. However in Leeds it was made worse by a speculative building boom which resulted in a large stock of new offices coming to the market just as confidence started to wane.
Rating law allows ratepayers to challenge rating assessments where a material physical change in a locality causes a reduction in property values. In these circumstances evidence from economic factors (such as weak demand) must be disregarded. However physical manifestations (such as the empty 120,000 sq ft office building on Whitehall Road known as No.1 Leeds) and their impact on rents can be considered in arguing for reduced assessments.
Over 600 rating appeals have been made in Leeds on the grounds of office oversupply. The appeals were considered by the Valuation Office Agency (VOA) – an executive agency of HM Revenue & Customs. The VOA concluded that any fall in rents was solely down to the recession rather than over-supply and therefore resisted any reduction in assessments despite the fact that for example in the speculative Broadgate development on The Headrow almost two acres of offices remained vacant.
Many ratepayers were not convinced and a small group presented their appeals to the Valuation Tribunal the independent body which handles rating appeals. The appellants were represented by four local rating surveyors: Stephen Hornby of Gerald Eve LLP, Philip Clarkson of storeys:ssp, Robin Ellis of CBRE and Richard Wackett of LSH. All four surveyors gave evidence to the Tribunal over a hearing lasting three days where a substantial volume of local property market evidence was considered.
The Tribunal has recently found favour with the ratepayers, deciding that the rating assessments of the offices under appeal should be reduced by 10% from December 2008 due to over-supply. Following a short period of consultation with Government the VOA has decided not to challenge the Tribunal’s decision opening the way for the oversupply issue to be argued again in respect of the current rating assessments which took effect from 1 April 2010.
Commenting on the case Stephen Hornby, rating partner at Gerald Eve said: “The Tribunal’s decision means that hundreds of thousands of pounds in over paid rates will now be refunded to local businesses – welcome news in these times of weak economic recovery. The decision may well have ramifications for occupiers of not only city centre offices but also of the business parks around Leeds and I would urge ratepayers to seek professional assistance in order to ensure they are not paying too much property tax.”