[2025] UKUT 00291 (LC)

Mr Mak was correct to remove the rent for No. 31 Landor Road from consideration. It is clearly an outlier and the rent review took place a little over two years after the AVD. At the AVD none of the four transactions relied upon by Mr Mak would have been available to the hypothetical tenant, the earliest took place at the beginning of February 2022 and the latest at the end of August 2022.

The starting point for the rental analysis must be the 2019 rent on the Property itself. By reference solely to that rent it would be difficult not to conclude that the assessment ought to be at least rateable value £16,100. On the VO’s floor areas the analysis is £409 per m². However, we know next to nothing about the circumstances of that transaction other than Ms Xiaoli was not professionally advised.

In Chifley Holdings Limited (BVI) v The Commissioners for His Majesty’s Revenue and Customs [2024] UKUT 00301(LC) the Tribunal (Peter McCrea OBE FRICS FCIArb) examined the circumstances in which it is appropriate to consider post valuation date evidence:

“47.

From all of the above I take these points. First, events after the valuation date, which would not have been known to either the valuer or (because every valuation begs the question of what a property would have sold for) the hypothetical buyer and seller, should not be taken into account.

48.

Secondly, what can provide retrospective assistance is what comparable properties were selling for around or some months after the valuation date, especially in the case of a transaction on the subject property, or very similar properties in close proximity. In conjunction with pre-date transactions, these can help inform the valuer as to the state of the market in the months around the valuation date. I accept that there may be a tension between those two principles, to the extent that some transactions might have been affected by impermissible events, and in that respect the valuer must be alive to outliers or sudden changes in market levels that might have been affected by post-date events, for instance a general election or a change to interest rates. The valuer must make a judgement as to whether the market, at the valuation date, anticipated a future event, which would be legitimate to take into account. With the passage of time, some market expectations become reality and some do not, and it is necessary to consider with any post-valuation date evidence whether something has changed in the intervening period which undermines the reliability of the evidence as a measure of value of the subject property at the valuation date. As ever, valuation is an art.

49.

Thirdly, for these reasons, as regards post-review transactions there can be no doubt that the further one moves away from the valuation date the less weight should be applied to a transaction, because it becomes ‘progressively unreliable’….”

In this case there is a paucity of evidence before the AVD and it is therefore apposite to consider the post AVD rents to form a view of the state of the market around the AVD. These show a significant variance amounting to 25.5% between the highest and the lowest. I note that at the effective dates of the rent reviews on Nos. 27 and 29 the new leases on the Property and No. 25 had not commenced and these latter two rents are therefore more likely to be indicative of market levels. For that reason, and because in principle a letting is a more reliable guide to value than a rent review, I therefore agree with Mr Mak that of the four rents it is appropriate to place most weight on the evidence of the new leases.

It is apparent from what Ms Xiaoli said about the Property that the rent had increased from £16,100 per annum in 2019 to £17,000 per annum in 2022. In other words it had risen by 5.6% over approximately 3 years. Mr Mak had included the leases for each shop in the parade and I note that the rent for No. 27 was £13,000 per annum when the lease was granted in 2012. At the review in 2017 it had risen to £16,000 per annum. The lease for No. 29 shows an increase from 2017 to 2022 of just £1,500 per annum or 12.5% in simple terms over the five years.

The CoStar report relied upon by Mr Mak ran to 97 pages and for the large part was not very useful. It contained scant particulars of 18 ‘Peer Property Details’ including 7 in Landor Road but none incorporated any tenure or rental details. The document included a page headed ‘Peers Historical Leasing Data’ which showed, on a quarterly basis, changes in asking rent growth. The data started in Quarter Two 2022 which had a value of nil. A further page headed ‘Rent Analytics’ contained data for ‘market asking rents’ for the peers and the whole of Lambeth. The former showed growth of 1.7% and 2.3% for 2021 and 2022. The latter showed values of 0.7% and 1.3% for the two years. It was therefore not entirely clear where the statistical basis for Mr Mak’s adjustment had come from. Bearing in mind that the statistics were based on borough wide changes in asking rents I do not place any weight on his conclusions about rental growth.

The evidence from the Property, notwithstanding the obvious limitations to its usefulness, shows that rental growth took place between 2019 and 2022 but there is no evidence to conclusively demonstrate that rental growth of the magnitude espoused by Mr Mak occurred between the AVD and 2022. It is unlikely that growth happened uniformly between 2017 or 2019 and 2022 and taking in to account that for much of 2021 the United Kingdom was experiencing the effects of the COVID-19 pandemic, it would be unwise to rely on an assumption. I have therefore had regard solely to Mr Mak’s unadjusted rents.

Taking all of the evidence into account it is my judgement that the Property should be valued at a zone A value of £410 per m².

The revised assessment is therefore as follows: