Booming London office market could mean business rates savings

According to the latest London Crane Survey from Deloitte (2024), developers continue to put their faith in the London office market.

Whilst the volume of new builds in the City has fallen from 2023’s record high, it remains well above the ten-year average at 4.2 million sq ft.

With some 8m sq ft of office space in development, the London skyline is peppered with more cranes than ever. But it’s not just new build offices underway.

According to Deloitte, it is the eighth consecutive survey where refurbishments outstrip new builds in new construction activity, exceeding some 2.5m sq ft of space across the city.

So, what does this have to do with business rates, you ask? Well, it’s all about saving you money, as business rates expert Nigel Katseph explains.

With such high rates of office construction and refurbishment, some London occupiers are likely to be affected by building works associated with this.

With construction comes disruption and with disruption to your company comes the potential to save money through the business rates system via rates relief or disturbance allowances.

Discretionary / Empty Rates Relief

If undertaking refurbishment works to your own accommodation, including roving refurbishment or dilapidations, you could be entitled to claim a temporary business rates relief through your local council or charging authority.

Not only this, discretionary reliefs can also be applied to new buildings that you are refurbishing ahead of moving into.

For example, if you are undertaking a phased vacation of a property whilst refurbishing new premises and dealing with dilapidations liabilities on your existing premises, you could be entitled to temporary reliefs on both.

How to apply for rating reliefs

Our business rates experts would work with the council in question on any applications for reliefs. Once the council agrees with the application, the Valuation Office Agency (VOA) would prepare a revised valuation which the Council would then apply to your rating bill.

This ensures that you only pay business rates on the occupied part of your premises.

You are also entitled to apply for a disturbance allowance through the Check, Challenge, Appeal system if you are affected by a Party Wall matter such as construction work on adjoining premises.

Disturbance allowances

This allowance can be applied for if your premises is affected by severe local disruption such as a river bursting its banks, rendering your property unusable for a period of time. Or you might be affected by physical works to your own building or nearby building works such as redevelopment programmes including roadworks or public realm works.

Retail premises are particularly affected where adjoining properties are scaffolded or hoarded which can mask the façade and may then affect footfall, resulting in a loss of revenue or disruption to operations.

In these circumstances, an appeal can be lodged through the Check, Challenge, Appeal system with the VOA under a Material Change of Circumstance. Mostly importantly, however, you must be registered with the VOA on their portal before any appeal action can be undertaken.

Depending on the extent and duration of the works, you can be awarded a sizeable disturbance allowance, but it all depends on the extent of the works and the degree of evidence provided.

For retail premises in particular, this will include trading figures and footfall statistics, as well as comparable agreements on other similar works. Meanwhile for offices, you may just need to supply evidence of agreements.

For the VOA to consider an appeal, the duration and severity of the works you have been impacted by is important and would generally need to be in excess of three months.

You only have to look at London’s skyline to see how well the office market if doing here. But cranes and construction programmes can cause a headache for occupiers affected by building work. If you are one of them, Vail Williams can help.

Acting on your behalf, our business rates advisers can help you to save money on business rates and will relieve you of the burden of managing the process from start to finish.

We will apply for any reliefs or disturbance allowances on your behalf, exploring eligibility criteria and the evidence required to make a formal application or appeal.

If an application for relief is denied or if we believe the relief granted is inadequate, we will revert to the Council to review their decision. Should a disturbance allowance be refused or not meet with our professional opinion, we can appeal the VOA’s decision through the Check, Challenge and Appeal process.

For an informal, no obligation discussion about your business rates needs, get in touch with our London business rates advisers.