Recently-announced Changes to the Planning Use Classes Order (UCO) that come into play on 1st September could affect the assessment for rating and ratepayers will be interested to know about the ramifications for use and value judgements once the changes take place.

The business rates rule (follows legal precedent) in making a rates assessment provides that ‘actual use’ should predominate and should be considered alongside the physical extent and ‘fit out’ of any non-domestic occupation. In effect there are two considerations – use and physical state.

Problems arise when the rating surveyor is seeking out market evidence and where there is a temptation to ‘borrow’ from a similar but different use to that being valued. The removal of the need for planning permission opens the possibility of a more expansive approach to evidence retrieval, but subject to specific rating law.

One of the ‘special’ rating factors permitting an interim change between rating revaluations is where there is a change to the ‘mode or category of use’. Although this does not directly mean a planning change, it follows that the easing of the UCO certainly opens the possibility of a ‘material change’ with the potential for a change in value should the Valuation Officer decide that planning restrictions on use have been eased at 1/9/20. In effect the VOA may regard the UCO change as a ‘matter’ allowing them to reconsider value if he believes that the ‘mode and category’ have changed. The ratepayers can do the same, assuming it helps them to demonstrate that there is evidence of value below their assessment had the amended UCO been in place at the antecedent valuation date (1/4/15).

By way of illustration and assuming that no significant physical alterations will be required to change the use, a retail use could be considered where the property has a (current) B1 planning as an ‘office’. The key to valuation will be first demonstrating that the ‘alternative’ is physically possible and then showing demand for that use at 1 April 2015.

Current rating law on the point of use follows the Scottish & Newcastle pub case where the courts held that the use of a retail unit in an arcade in Milton Keynes must be valued as a public house. The key considerations were around ‘physical adaptation’ as well as use (A3). The outcome however was beneficial to the ratepayer because the established approach to assessment of pubs produced a much lower rateable value than an assessment as a ‘shop’.

Careful consideration will be advisable!

More seriously the next rating revaluation has now been announced to take place at 1 April 2023. The antecedent valuation date will be 1 April 2021. Any assessments at the revaluation must take account of the new planning flexibility. The valuation exercise might become more interesting and litigation is likely to follow.