[2025] UKUT 224 (LC)

In his report Mr Willetts explained that the market for Grade A offices in Liverpool was, at the AVD, characterised by lettings in Category A condition but with substantial inducements. Typically, leases were for a term of ten years but with a rent-free period of around two years. Most contained break clauses at the fifth year. The letting to Mando Group largely fitted this profile although the rent free period was longer.

Mr Willetts analysed the Category A rent for the Mando Property letting at £79.45 per m² using the methodology deployed by Mr Brown for the Manchester rents. He assumed that Mando Group had activated the break clause and he therefore spread the rental incentive over five years even though in reality the break was not exercised. We accept that that is the appropriate methodology, approved in Acenden (see paragraphs 50 to 58 of Acenden).

Mr Willetts analysed seven other Category A transactions which ranged between £74.60 per m² and £110.88 per m², a high degree of variance. On the basis that the VO argues for a value at the low end of the range we are content to accept, as did the VTE, a figure of £80 for the effective category A rent for the Mando Property. Mr Bailey agreed with Mr Willetts; he commented that in the Grade A markets with which he was familiar (we assume in the south of England) Category A rents are generally in excess of £150 per m², and that the Liverpool Grade A market has unusually low rents.