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RV – can demand be assumed?

To calculate the rateable value (RV) of a property, a valuation officer (VO) must work out what the open market rent would be for the property by applying the rating hypothesis. The purpose is to establish ‘the rent at which it is estimated the hereditament might reasonably be expected to let from year to year’.

The SC has considered a valuation case where it was agreed that there was no market for the property on the basis that the market in the area was saturated. SC had to decide when establishing the RV of the property whether the general demand for property in the area should be taken into account despite the fact that there was no actual tenant willing to pay more than a nominal rent for the property in question.

SC held that in the absence of other material evidence, the rent should be assessed by reference to a general demand assumed from the occupation of other similar properties even if in reality there was no such T. SC decided that whether the property was occupied or unoccupied, or whether or not an actual T could be found, was not critical. The rating hypothesis assumes a willing T even if the market is saturated.

The facts of the case are undoubtedly rare and it is interesting to note that this was a majority decision by the SC.

See Telereal Trillium v Hewitt [2019] UKSC 23 and Practical Law (subscription service).

 

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