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When is a new building sufficiently complete that rates are payable?

    • Real estate dispute resolution


    Aviva Investors Property Developments Ltd and PPG Southern Limited v Margaret Whitby (Valuation Officer) and Adrian Mills (Valuation Officer) [2013] UKUT 0430 (LC)

    In relation to newly constructed buildings yet to be occupied, if the billing authority considers that any remaining work should reasonably be completed within three months it can serve a ‘completion notice’ on the owner specifying when it considers the building can be expected to be completed. It can also serve a notice if it considers the building is already complete. Provided the billing authority follows this procedure (and the owner does not successfully appeal the notice) the building is deemed to have been completed on the date specified in the notice (even if in reality the completion works have not been done) and can then be entered onto the rating list.

    Where no completion notice is served it is a question of fact whether the building is completed to the point where it should be included on the list. The Valuation Tribunal in Porter (VO) v Trustees of Gladman SIPPS [2011] RA 337 held that a building is only a hereditament if it is ready for occupation, assessed in light of the purpose for which it was designed to be occupied. If a building lacks features which will need to be provided before it can be occupied for that purpose, and which when provided will form part of the hereditament, it does not constitute a hereditament and should not be on the rating list. There is “no scope for including a building in the list which is nearly, even very nearly, ready for occupation unless the completion notice procedure has been followed”.

    In the recent Aviva & PPG v Whitby & Mills case the billing authorities had failed to serve completion notices. The issue was therefore the factual enquiry as to whether the properties in question were ready for occupation on the date they were included in the list. The Valuation Officers argued that a property is capable of occupation provided it does not lack any features that are essential for occupation for the purposes for which it was intended, and relied on the fact that other similar properties had been occupied without the additional features.

    On the facts the Upper Tribunal found that additional lighting and power distribution was required in the buildings (and in one case a gas connection to the boiler) before they were ready for, or capable of, occupation. This meant that all of the properties lacked features which would have to be provided before they could be occupied, and they should therefore be removed from the list.

    The Upper Tribunal was very critical of the billing authorities for not having served completion notices and it is evident that Valuation Officers can expect little sympathy where the statutory mechanism has not been followed . The decision will encourage many property owners who seek to mitigate the rates payable on unoccupied properties by holding off completion. Property owners should be aware that where the billing authority serves a completion notice on an uncompleted property that notice must be appealed in order to avoid inclusion on the list.