Business rates ruling and the impact it has on occupiers

The new business rates implementation which took place on April 1st 2017 has been well documented in the media, with many occupiers seeing increases in their business rates bills in the South East and Central London. Fringe areas such as Shoreditch and Clerkenwell have seen huge rental growths over the last seven years, and as such, business rates in these areas have risen considerably – upwards of 80%. However, two recent significant legal cases will undoubtedly impact how and when business rates are paid.

The Mazars Case (Woolway v Mazars, 2015) centred on the notion of quantum discount. Previously, companies that occupied more than one floor in a building benefitted from their business rates being calculated as a single unit, allowing for discounts of up to 15%. However, the Mazars ruling now means that each individual floor must be valued on a separate arrangement – i.e. the quantum discount has been dropped. This will have implications for any company occupying multiple floors in a single building, unless there is evidence that the floors are continuously linked.

The other, more recent case is Newbigin v Monk, which focused on whether business rates should be paid when extensive refurbishment or redevelopment works are being carried out. The court ruled in favour of SJ & J Monk, and now any property carrying out significant building works can be removed from the rating list. A small victory for developers.

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.