VOA splits repair and redevelopment rating guidance across Parts 8A and 8B

Business-rates valuers get a new two-part map for dilapidated and redeveloping property. Part 8A of the Valuation Office Agency rating manual now covers repair and the economic test on its ownGOV, with the redevelopment material moved to a new Part 8BGOV. The reorganisation adds genuinely new guidance: a replaced element may be assumed replaced with a modern equivalent rather than like for like, and a £0 rateable value keeps the entry in the list with an amended description where the property still exists but has no value.

The starting point is the property's actual state on the day the facts are fixed: the compilation day for a new list, or the Material Day for an alterationGOV. The valuer asks whether it is reasonably fit for occupation by the likely tenant. If it is, nothing is assumed. If not, two questions follow. First, the repair question: can the works needed to restore reasonable repair properly be described as repairs — restoration by renewal or replacement of subsidiary parts, per Lurcott v WakelyGOV? Second, the economic question: would a reasonable landlord, judged at the antecedent valuation date, consider the works uneconomic, comparing likely rental income if repairs are done, less their cost, against the value in disrepair?

Replacement can still be repair: a defective window may more economically be replaced than mended, works required by Building Regulations in force at the antecedent valuation date do not stop works being repairs, and new section 4.11 states the replacement can be a modern equivalent — an old single-glazed wooden window can be assumed replaced by a modern double-glazed window. The economic test is applied part by part: it may be economic to repair a shop's roof and ground floor but not a dilapidated first floor and damp basement, with only the economic parts assumed repaired and the rent adjusted down. Beyond economic repair, the property is valued in its actual state at the Material Day, which can mean £0: new section 8.3 explains the hereditament still exists but has no value, so the entry stays with a description such as Workshop and premises (beyond economic repair). The assessment is deleted only where the property is demolished or undergoing a scheme of reconstructionGOV. Economic repair works already underway at the Material Day are deemed done with no allowance.

Part 8B states the logically prior question from Newbigin (VO) v Monk [2017] UKSC 14: is there still a hereditament at all? Where damage indicates a scheme of reconstruction — including significant refurbishment or refitting as well as demolition and rebuilding — and has rendered the property as a whole incapable of beneficial occupation, it ceases to be a hereditament and the repair assumption cannot applyGOV. The scheme is identified objectively. Stripping out alone is simple damage, but following Jackson (VO) v Canary Wharf the reconstruction phase need not be explicitly planned. Offices stripped to shell are deleted, as are Category A strip-backs removing the elements needed for occupation; a warehouse refurbished for McDonald's including removal of a large mezzanine floor was one redevelopment scheme. By contrast, water ingress fixed by sealing a basement joint (Carey Group v Ricketts) and end-of-lease light refurbishment leaving most of a warehouse intact (Aviva Investors v Bunyan) remain repair cases. Where an early deletion proves to be mere soft stripping, the entry can be reinstated at its original level from the deletion date.

Legal basis: Local Government Finance Act 1988, Schedule 6 paragraphs 2(1), 2(7) and 8A, as amended by the Rating (Valuation) Act 1999; Newbigin (VO) v Monk [2017] UKSC 14.