In the recent property case of the Court of Appeal held that a property that had been undergoing internal refurbishment was not exempt from business rates. But the question for many tenants and their legal advisors must be â€œwhat classes as internal refurbishment?â€
In the case above the situation was this: on the valuation date various major building elements had been removed such as the air conditioning system, electrical wiring, sanitary fittings and most of the ceiling tiles. The court decided this was not sufficiently extensive so as to remove the liability for business rates on the basis the property could be put back economically into its former state of repair. In effect, it could be construed that the works were not “necessary”.
The court decided that based on the facts the replacement of the removed, non-structural, parts were repairs and the property was already in a good state prior to the works, this was not refurbishment and so the property should not be assessed at a nominal rateable value.
Landlord and Tenants alike need to be mindful of this distinction and ensure they have fully quantified and assessed the works to be done.
If you would like further information please contact one of our commercial property lawyers.