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News Release

London

City Rating agents reach agreement with Valuation Office Agency


An agreement between the Valuation Office Agency (VOA) and the consortium of City Rating agents (known as the G7) led by Jones Lang LaSalle has been reached that will see reductions to assessments in the 2005 Rating List for Grade A City offices of 5 percent between 01 April 2009 and 31 March 2010 to reflect market oversupply.

Tim Beattie, Head of Rating at Jones Lang LaSalle, who led the discussions for the group of City Rating agents, said: “This is the culmination of more than two years of discussions between the VOA and private practice and will see City occupiers receive business rate refunds estimated to be over £20 million during the coming months as appeals are settled.”
 

 

John Powell, director in Jones Lang LaSalle’s Rating team, added: “We are delighted to be able to have reached agreement following long and complex negotiations with the VOA, which will see many businesses receive savings not only in 2009/10 but also in 2010/11 and 2011/12 due to the workings of the government’s transitional schemes.”

– ends –
 

 

 
Notes to Editors

 

 
 Valuation & Legal Framework
 

Oversupply appeals were made between December 2009  and March 2010 on the grounds of a material change in circumstance.  Discussions between the VOA and the agents consortium commenced in May 2010 and were concluded on Friday 17 August 2012.

 

The physical factors that can be taken into consideration at the material day in relation to appeals citing a ‘Material Change of Circumstance’ are governed by the Local Government Finance Act (LGFA) 1988 (as amended), and are as follows;
 
Schedule 6 paragraph 2 (7)
             

 

The matters are-
(a)           matters affecting the physical state or physical enjoyment of the   hereditament,
(b)           the mode or category of occupation of the hereditament,
(c)           the quantity of minerals or other substances in or extracted from the hereditament,
(cc)         the quantity of refuse or waste material which is brought onto and permanently deposited on the hereditament,
(d)           matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there, and
(e)           the use or occupation of other premises situated in the locality of the hereditament.”
 
For the purpose of the appeals relating to Oversupply in the City office market the schedule 6 factors to be assumed are those in (d) and (e) above and included newly (post 01 April 2005) constructed offices whether vacant or occupied, and vacated space previously occupied. 
During the discussions it was necessary to ascertain the likely effect on value, if any, by applying the Material Day matters above to the Antecedent Valuation Date (AVD) of 01 April 2003.

 

The matters to be considered at the AVD include general economic conditions, interest and inflation rates and rental levels relating to the hereditatments in question.

During the relevant period over 12 million sq ft of new grade A space was created through the construction of new buildings and refurbishment of existing buildings.  It proved to be very difficult to establish the level of vacant stock over the relevant period.  The availability of stock is documented by all the main market commentators and this remained broadly flat however availability includes space that may be occupied and does not capture ‘grey space’ (vacant but not available in the market) held by many companies since the recession started.


Composition of G7
 

The G7 was formed ahead of the 1990 Rating Revaluation to coordinate matters of mutual interest between City Rating agents and the VOA.  The original composition was Jones Lang Wootton, St Quintin, Richard Ellis, DTZ, Hillier Parker, Matthews & Goodman and Dron & Wright and now comprises:

Tim Beattie (Chairman) Head of Rating at Jones Lang LaSalle
John Powell Director, Jones Lang LaSalle
Tim Johnson Director Jones Lang LaSalle
Tony Dann Head of Rating at CBRE
Mark Henderson Head of Rating at DTZ
Ian Tanner of Ian Tanner Rating and Dron & Wright
Richard Bailie of Matthews & Goodman 
All of whom contributed to the above negotiations