[2025] UKUT 224 (LC)

Mr Willetts and Mr Bailey both look at a limited range of what they referred to as Category B rents in the Liverpool area. None were bespoke Category B lettings as required by the rating hypothesis. The comparables were as follows:

This property was let in Category A condition in 2013, with inducements from the landlord in the form of a capital contribution of £654,380 and a service charge holiday worth approximately £120,000. Mr Willetts and Mr Bailey agreed that the effective rent was £111 per m². The floor area for this property is 2,080 m².

Mr Willetts referred to this as a new Category B letting in 2015; but we would regard it as a “second-hand” Category B letting where the fitting out was done by the previous tenant in 2008 (seven years prior to the AVD). In 2015 the landlord paid a capital contribution of £96,000 and the tenant spent £89,450 on bespoke works. The lease was for 5 years 1 month but a 25-month rent free period was granted. Mr Bailey and Mr Willetts agreed that the Category B rent was £98 per m², ignoring the 2015 inducement but taking account of the rent free period. The only conclusion that we are able to draw is that a dated Category B fitting out which required expenditure could be acquired in a building of similar quality to 5 St Paul’s Square for about £19.00 per m² over the prevailing Category A level. The floor area extends to 589 m².

This property of 3,170 m² was acquired as two sub-lettings in 2017 as part of a business takeover between Keoghs and Hill Dickinson, two firms of solicitors. The space had been fitted out to Category B condition but it is not clear exactly when these works took place. Mr Bailey and Mr Willetts agreed that the aggregated Category B rent was £141 per m².

This was another “second-hand” Category B letting in December 2018, when the fitting-out was two years old £210,000 was paid by the outing tenant to the incoming one. The rent analyses to £106 per m² on a floor area of 564.9 m².