Following our recent update on business rates, we are warning developers to look at their budgets for statutory compensation that may be due at the end of a 1954 Act protected tenancy because of the VOA’s reassessment of rateable values, which comes into force next April 2017. The timing of the notices served to end the lease could change the amounts to be paid very substantially.
Key Business Rates Changes
- On 1 April 2017, the rateable value of properties will be reassessed for the first time since 2010.
- Some occupiers know they are facing a substantial increase in rateable value.
- The Valuation Office Agency published its draft revised valuation list on 30 September 2016 and the government’s business rates calculator can now be used to check what the rateable value for specific properties will be from 1 April 2017.
Effect on Statutory Compensation Payments
- 1954 Act statutory compensation payments are calculated based on the rateable value of the relevant property at the date of the relevant landlord’s notice (more on this below).
Timing
- The rateable value used to calculate the statutory compensation due to a tenant is based on the valuation list in force at the date either of the following is served:
- The landlord’s notice ending the tenancy (section 25 notice); or
- The landlord’s counter-notice opposing the tenant’s request for a new tenancy.
- 31 March 2017 is the last day on which the old valuation list will be in force and so the timing of service of either of the above notices could have a significant impact on the amount of statutory compensation due to some 1954 Act protected tenants.
- The service of the section 25 notice by the landlord can, of course, only take place during the last 6-12 months of the lease term.