Part 3: Unoccupied new and altered buildings and completion notices
Source: gov.uk (2025-02-17)

The Valuation Office Agency's (VOA) technical manual for the rating of business (non-domestic) property.

1. Bringing a property into assessment - Vacant new buildings

1.1 Since 1601, rating has been a tax on the occupation rather than ownership of land and buildings - there was no liability for rates on hereditaments that were vacant. This remained the case up to 1966 when the Local Government Act 1966 introduced an unoccupied rate. Since then, with the introduction of empty property rating, in most instances where a property is vacant the ‘owner’ may become liable for unoccupied rates. ‘Owner’ and the ‘class of property’ to which unoccupied rates apply are defined in the Local Government Finance Act [LGFA]1988 and subsequent Regulations and are covered in more detail in Rating Manual Section 2; Part 9:The Empty Property Rate and Demand in the Rating Hypothesis.

1.2 The introduction of the empty property rate altered the way new buildings were treated. Normally a hereditament should be entered into a rating list when it is capable of occupation for the purpose for which it was designed. If a property is incomplete and incapable of occupation, then it cannot properly be a hereditament and cannot be entered into the list. To prevent owners of newly constructed buildings avoiding rates by the simple expedient of not quite finishing the work, billing authorities were allowed to issue completion notices stating a date when they consider the building can reasonably be expected to be completed. After this date, the hereditament is deemed to be complete and the valuation officer can bring it into the rating list as if it was complete. The three or six month void period before the unoccupied rate becomes payable then runs from the completion day.

1.3 A property may be brought into assessment by one of two means:

a new building that is complete and capable of beneficial occupation for its intended use at the material day will constitute a hereditament to be shown in the rating list. As such, under the VO’s duty to compile and maintain the rating list [s.41 LGFA 1988], the rating list should be updated to reflect the new building. However, as referred to below difficulties can ensue in discerning whether a new building is sufficiently complete to be capable of rateable occupation.

alternatively, where a building is not regarded as complete and capable of beneficial occupation, the billing authority may serve a completion notice [s.46A of the LGFA 1988]. The effect of a completion notice is that the building is deemed complete, which allows the VO to assess it as if it were actually complete from the date stipulated in the completion notice.

2. New buildings without a completion notice

2.1 Where the billing authority has not served a completion notice, it will be necessary to consider whether the new building is practically complete and ready for occupation for the purpose for which it was intended. If this is not the case then the building cannot properly be described as a hereditament and cannot be entered into the rating list. If rateable items are absent, but their lack will not prevent beneficial occupation for the intended purpose, then the hereditament should be entered in the rating list.

2.2 The main test is: can the hereditament be beneficially occupied for its intended purpose in its current physical state? If the answer is yes, then the hereditament will be considered ready for occupation and will be entered into the rating list. If, however, the building lacks certain facilities, and even if the work to install them might be considered de minimis, then it is not a hereditament and should not be entered into the rating list.

2.3 If the building is in fact completed then the VO can, and should, enter it into the list. It is of course difficult on occasion to be completely sure that a building is in fact complete and the existence of a completion notice gives the comfort of certainty. A similar approach should be taken for properties which have been deleted from the list because they were rendered incapable of beneficial occupation due to works of redevelopment or reconstruction. In practical terms VOs should be wary of bringing into assessment unoccupied new properties, or unoccupied properties previously subject to works of redevelopment or reconstruction, without a completion notice.

2.4 In Porter (VO) v Gladman SIPPS (2011) RA-63-2008 the President of the Lands Tribunal, having reviewed the previous case law (Watford Borough Council v Parcourt Property Investment Co Limited [1971] RA 97; Ravenseft Properties Ltd v Newham London Borough Council [1976] QB 464; Post Office v Nottingham City Council [1976] 1WLR 624; and French Keir Property Investments Limited v Grice (VO) and Liverpool City Council [1985] RA 202), said, ‘a building is only a hereditament if it is ready for occupation, and whether it is ready for occupation is to be assessed in the light of the purpose for which it is designed to be occupied. If the building lacks features which will have to be provided before it can be occupied for that purpose and when provided will form part of the occupied hereditament and form the basis of its valuation it does not constitute a hereditament and so does not fall to be shown in the rating list. There is in consequence no scope for including in the list a building which is nearly, even very nearly, ready for occupation unless the completion notice procedure has been followed.’

2.5 A more recent case, Aviva Investors v Whitby (VO) [2013] RA/3/2011, cleared up a question left over from the decision in the Gladman case about what to do with buildings which are not actually completed but where similar buildings are occupied in an incomplete state nearby. In the case the warehouse buildings were accepted by the VO not to be fully finished but she said similar buildings nearby were occupied in an unfinished state. This showed that the buildings did not lack features that would have to be provided before they could be occupied. The ratepayers argued evidence that a very small minority of occupiers with unusual or atypical requirements were prepared to occupy premises without undertaking otherwise essential works was not a reliable guide to the test from Gladman SIPPS of whether a building was ready for occupation.

2.6 The Tribunal rejected the VO’s arguments. It considered the examples provided by the VO did not represent use of the properties in the manner for which they were designed. The Tribunal found that additional lighting and power distribution in the warehouse areas of the appeal properties was required before they were ready for, or capable of, occupation.

2.7 It seems it is necessary to decide how a particular building would typically be completed to be used in the manner for which it was designed. If it is not fully finished to that standard then it will not be ready to be included in a rating list unless a completion notice has been served or it is, in fact, occupied.

2.8 Evidence of other similar buildings in the locality actually occupied in the same state as the property being considered will be of great assistance in confirming a property is complete and ready for occupation for its intended purpose. It should be noted this does not necessarily mean that it can actually be used for the purpose for which it is designed.

2.9 In the case of light industrial units the required level of fit out can vary significantly and therefore judgement will have to be made by reference to others in the locality. Each case will need to be judged on its merits and the locality not restricted to the actual estate or estates nearby.

2.10 The requirement stops short of fully equipping or furnishing a completed building. There will usually be things required to actually use the building for the intended purpose but their lack would not prevent occupation for the purpose e.g. desks, chairs and filing cabinets, or the non-rateable telecommunications equipment in Post Office v Nottingham City Council 1976 1 WLR 624 CA.

2.11 A useful test is - ‘will this item be part of the hereditament when provided?’ If it is, then, unless the unit is occupied (and that occupation in effect creates a hereditament), the unit is not complete until it is provided.

2.12 This might appear to be a paradox but the test recognises that factual occupation of a building can give rise to a rateable hereditament, whereas the same building left short of ‘completion’ within the Porter context and unoccupied may not be a hereditament in law unless there is a suitably occupied comparator in the locality.

2.13 In summary, in determining whether a new or reconstructed building or part of a building constitutes a hereditament that can be entered in a rating list without a completion notice being served, the following should be considered:
- it must be ready for immediate occupation for the purpose for which it was designed to be occupied - being very nearly ready for occupation is not enough;
- anything at all required to enable occupation must be present before a new hereditament can be entered in a list. This excludes features that would be useful to have but are not essential e.g. the staff canteen in the Watford case: ([Watford Borough Council v Parcourt Property Investment Co Ltd
- an examination of the facts of occupation of other similar hereditaments will enable a determination of whether any particular feature is necessary for occupation;
- will the item missing from the property be part of the hereditament when provided?
- is there evidence in the locality of similar types of property occupied in the same state of completion?
It is important to remember that a completion notice is not needed providing the building or part is in fact complete and ready for occupation.

3. New buildings with a completion notice

3.1 There are circumstances in which the owner may leave a new building incomplete (not capable of occupation), perhaps until a tenant can be found. In these circumstances the billing authority should serve a completion notice [s.46A LGFA 1988] on the owner stating the date it considers a building can be expected to be completed. A building which is a ‘shell’ without any services is likely to be incapable of beneficial occupation and therefore cannot be entered into the list without a completion notice.

3.2 For the sake of clarity, completion notices are only applicable to buildings and not to property that consists primarily of land and/or structures. They can also be served on just part of a building [s.46A(6)(a) LGFA 1988].

3.3 The serving of a completion notice has four implications:

It sets the date at which the building is deemed to be complete and should be entered into the rating list,

it sets the effective date,

it sets the date for unoccupied liability,

it determines the date of deletion for any hereditament from which the new hereditament is created.

3.4 The primary legislation is contained in s.46A of the Local Government Finance Act 1988 (https://www.legislation.gov.uk/ukpga/1988/41/section/46A) and Schedule 4A of Local Government Finance Act 1988 (https://www.legislation.gov.uk/ukpga/1988/41/schedule/4A). These were inserted into the Act retrospectively by the Local Government and Housing Act 1989 s139 and Sch. 5; the Local Government Finance Act 1992 Sch.13 para 83; the Local Government and Public Involvement in Health Act 2007 s.220(1) Sch.16 paras 2 and 4; and the Non-Domestic Rating Act 2023 para 7.

3.5 The Appeals Regulations include provisions relating to completion notices in respect of effective dates and proposals. The Non-Domestic Rating (Material Day for List Alterations) Regulations 1992 SI No. 556 (as amended) make provisions for determining the material day in connection with a completion notice. Under para 3(5) the material day is the day proposed in the notice as the completion day in relation to the building, or the day subsequently agreed or determined.

4. Altering the Rating List following a Completion Notice

4.1 S.46A says that Schedule 4A shall have effect where:

i) a completion notice is served under Schedule 4A, and

ii) the building to which the notice relates is not completed on or before the ‘relevant day’,

then, for the purposes of s.42 (contents of local lists) and Schedule 6 (Non-Domestic Rating: Valuation) the building shall be deemed completed on that day [s.46A(2)]. The completion date is therefore the date at which the property is deemed complete for the purposes of making a rating list alteration.

4.2 The effect of a completion notice is that the building is deemed complete, which allows the VO to assess it as if it were actually complete from the date stipulated in the completion notice. Although the VO must assess following service of a completion notice, it should be remembered that an owner can agree in writing a different date with the billing authority [para.3(1) of Schedule 4A] or appeal to the Valuation Tribunal against the date in the completion notice [para. 4(1) of Schedule 4A]. If successful, the outcome of such an appeal will have an impact on the effective date of the assessment and may even result in a deletion of the assessment. See section 11 below for more on Appeals against Completion Notices.

5.’Relevant Day’

5.1 The ‘relevant day’ in relation to a completion notice is defined as [s.46A(3)]:

i) where there is an appeal against the notice (under para 4 of Schedule 4A) the day stated in the notice, and

ii) where there is no appeal, the day determined under that Schedule as the completion day in relation to the building to which the notice relates

6. Unoccupied Property - Liability

Where a day is determined under Schedule 4A as the completion day and that building is not occupied on that day, then it shall be deemed for the purposes of s.45 (Unoccupied hereditaments: liability) to become unoccupied on that day [s.46A(4)].

7. Structural Alterations to Existing Building

7.1 Where a completion day is determined under Schedule 4A and that building is produced by structural alterations to an existing building, then the existing building shall be deemed to have ceased to exist and to have been omitted from the list from this day [s.46A(5)].

7.2‘Building’ for the purposes of these regulations includes part of a building [s.46A(6)(a)]. New buildings can also include buildings produced by structural alterations to an existing building which becomes a different hereditament as a result of the alterations [s.46A(6)(b)].

7.3 New building includes buildings produced by structural alterations to an existing building which becomes a different hereditament as a result of the alterations [s.46A(6)(b)].

7.4 Prior to the Non-Domestic Rating Act 2023, the definition of new building left a gap in the law whereby a completion notice could not be served in respect of a building which had been subject to reconstruction/ redevelopment that made it temporarily incapable of beneficial occupation and so not a hereditament to be shown in the list, as the works were more in the nature of refurbishment/ alterations and did not create a ‘new building’ through structural alteration.

[See examples Tull Properties Ltd v South Gloucestershire Council [2014] RA 180 and Delph Property Group Ltd v Alexander (VO) and Leicester City Council [2019] RA 233 set out in Appendix 1]

7.5 The Non-Domestic Rating Act 2023 amended the definition of a ‘new building’ in section 46A.

The former definition of a new building at para (6)(b) becomes subsection (6)(b)(i) and the definition is widened with the addition of subsections (ii) and (iii):

(b) references to a new building include references to a building

(i) produced by the structural alteration of an existing building where the existing building is comprised in a hereditament which, by virtue of the alteration, becomes, or becomes part of, a different hereditament or different hereditaments.

(ii) a building situated in England which a hereditament shown in a list comprises or includes, or which a hereditament that was previously shown (but is no longer shown) in a list comprised or included, and that has been subject to alterations;

(iii) part of a building situated in England and added to an existing building which a hereditament shown in a list comprises or includes or which a hereditament that was previously shown (but is no longer shown) in a list comprised or included.”

7.6 The changes mean that a completion notice may now also be served by a billing authority in England in respect of a building which, although not new in itself, was temporarily unoccupiable because of a programme of redevelopment and has been deleted from the rating list. The amendment allows for such converted or refurbished buildings even where there has been no ‘structural alteration’ to be returned to the list, using the same completion notice process as for completely new buildings and closes the gap that existed in the former legislation referred to at para 7.4. The alteration also includes provision for where part of a building is added to an existing building, for example as an extension or creation of a new floor.

7.7 The changes come into force on 26th December 2023.

8. Service of completion notices

8.1 The billing authority can serve completion notices on the owner of a new building where:

i) it comes to the notice of a BA that the work remaining to be done on a new building is such that the building can reasonably be expected to be completed within three months [Schedule 4A para.1(1)],

ii) it comes to an authority’s notice that a new building has been completed [Schedule 4A para. 1(2)].

8.2 The authority must serve the notice as soon as is reasonably practical unless the VO directs otherwise in writing. This might occur if the VO is about to take action to enter the hereditament in the list although such circumstances will be extremely rare.

8.3 The three month time period should not be confused with the three month exemption period between the completion day and the commencement of unoccupied rate liability. The two run consecutively, so there could be six months between the service of the completion notice and the commencement of unoccupied rate liability.

8.4 There are rules in the Regulation for the serving of completion notices [Schedule 4A para 8]. In UKI (Kingsway) Ltd v Westminster CC [2019] RA 53 the Supreme Court considered both the requirements for service and the validity of a notice addressed to ‘the Owner’ of a building. It held that a completion notice was successfully served by being hand-delivered by the billing authority to a receptionist employed by the owner’s managing agents even though they were not instructed to accept service. The receptionist transmitted a copy electronically to the owner who received that copy. The Supreme Court was content the notice was both actually received by the owner and there was a sufficient causal link with the actions of the BA.

8.5 As a completion notice has a significant effect for liability purposes the VO should satisfy himself that the completion notice has been properly issued. As the President of the VTE said in the Delph case (para 40) “Valuation Officers should satisfy themselves that the notice they receive complies with the law and that they are correctly making an entry in the rating list”. Where the validity of the completion notice is challenged as part of a challenge or proposal the VO should review the circumstances and seek technical advice from CVG.

9. Withdrawal of completion notice

9.1 A completion notice may be withdrawn by serving a subsequent notice on the owner [para 1(3) Schedule 4A]. This is prevented in two instances:

i) where an appeal has been made against the completion notice the notice can only be withdrawn with the consent in writing of the owner;

ii) a subsequent notice cannot be issued once a day has been determined as the completion day.

9.2 It is not uncommon for a BA to purport to withdraw a completion notice. It is clear however from Schedule 4A para 1(3) that a BA may only withdraw a completion notice by serving a subsequent completion notice. Where a BA purports to withdraw a completion notice outside the 28-day period in which to make an appeal under Schedule 4A para 4(1) the matter should be referred to CVG for advice.

9.3 The billing authority’s power to withdraw a notice was considered by the VTE in Derwent Holdings Ltd v. Whitehead (VO) & Preston City Council, Appeal No. 234522321829/538N10, 20 January 2015. Whilst not definitively deciding the point, the President of the VTE did not accept that there was an unlimited power to withdraw beyond that expressly provided for in para 1(3). He said that any general power to withdraw a completion notice must be read in the context of the relevant statutory provisions and in the VTE’s judgement once the completion day has been reached the process was at an end and the billing authority has no continuing jurisdiction. In the subsequent case of Provincial** Real Estate Burton Ltd v Virk (VO) and East Staffordshire Borough Council [2015] **the President confirmed that his decision in Derwent Holdings “acknowledges that a completion notice may be withdrawn, other than by issuing a new notice or by written agreement, up until the completion day, even without a new notice or agreement.”

10. Contents of completion notice

10.1 There is no prescribed form for a completion notice. The legal requirements in Sch.4A, para. 2(1) provide simply that a completion notice shall specify the building to which it relates and the completion day.

10.2 If when the completion notice is served the building is not completed, the completion day shall be such a day, not later than three months from the day on which the notice is served, as the authority considers is a day by which the building can reasonably be expected to be completed. However, if the building is complete the authority shall propose the day on which the notice is served as being the completion day.

10.3 In Hermes Property Unit Trust v. Roberts (VO) and Trafford Council (2022) RA 1 it was held that the completion notices were invalid as the completion day stated in the notices was before the date of service.

10.4 It is possible to agree a different day as being the completion day [Schedule 4A para 3] even if this is more than three months from the date of service of the notice. In Newham London Borough Council v Rad Phase 1 Type B Property Co No.1 Ltd [2020] R.A. 384 the Upper Tribunal held ‘there is nothing to prevent the parties agreeing, or the VTE determining, a date outside of the three-month period specified for the purposes of the initial notice.’

10.5 Billing authorities are ultimately responsible for service of completion notices and for their content. But as illustrated at 12.1 (#Validity) and in the cases at Appendix 1 (#Appendix) the implication of invalidity through incorrect service or the contents being wrong can have significant repercussions for ratepayers and billing authorities.

10.6 Some recent decisions, notably Delph Properties (#Delph) have stated that whilst the onus is on the billing authority to ensure they undertake the process properly, Valuation Officers are to satisfy themselves that the notice they receive complies with the law and that they are correctly making an entry in the rating list.

10.7 VO checks need not be far reaching but when a Valuation Officer receives a copy of a completion notice, they should satisfy themselves that, looking at the notice at face value, it is substantially compliant with Schedule 4A. In other words, it must be clear that: the notice has been served by the billing authority (as opposed to a private contractor); what basis the notice has been served on; that the property has been correctly identified and that the notice is not ambiguous and sets out what it intends to achieve.

10.8 A BA will often specify whether the notice is issued under Sch. 4A para. 1(1) (for an incomplete building) or para. 1(2) (for a complete building) but there is no requirement to do so. In the VTE case of Royal London v Bunyan (VO) [2023] R&VR 177 counsel for the appellant argued the notice was defective since it referred to paras 1(1) and 1(2) stating a future completion date of 7th August 2019 but did not refer to which para it was being served under. The VT was satisfied the notice was clear in its communication.

10.9 In Henderson v Liverpool Metropolitan District Council [1980] RA 238 where a new house was under construction in the garden of an existing house, a completion notice bearing the name of the existing house which was subsequently to be demolished was held valid in respect of the new house because it clearly related to the new house and the notice fairly conveyed to the recipient the subject matter of the notice. The notice must specify the building to which it relates and the test of validity on its face is does the notice “fairly convey to the recipient what is the subject matter of the notice”.

10.10 The VO need not be concerned with the method of service in terms of proof of posting or evidence of delivery, but a basic check should be made by looking at the date of the notice and the completion date, to check that the notice does not fall foul of the situation in Hermes referred to at 10.3 (#Hermes). This check should ensure that the dates gave adequate time for service. If the dates were the same or less than four working days apart, this could be insufficient time to allow service and the notice may be deemed invalid. If the date on the notice is within four days of the completion date colleagues are advised to check with the billing authority the means of service.

11. Appeals against Completion Notices

11.1 A person on whom a completion notice is served has the right of appeal direct to the Valuation Tribunal under Schedule 4A para 4(1). The only ground of appeal under this provision is that the building to which the notice relates has not been, or cannot reasonably be expected to be, completed by the date stated in the notice. It is not possible to challenge the underlying validity of the completion notice under this provision.

11.2 The owner has 28 days from the date of service of the completion notice in which to make an appeal under Schedule 4A para 4(1) [Reg 19 2009 SI 2268] although late appeals can be considered [see Reg 19(3) 2009 SI 2268].

11.3 There are no provisions for the VT to notify the VO that an appeal has been made. The VO is not a party to any such proceedings and should not be involved in any stage of the appeal. The VT will send a notice of any VT decision to the relevant VO.

11.4 Whilst the appeal is pending then empty property liability (under s.45) shall apply (by virtue of s.46A(4)) as if the day stated in the notice has been determined under this Schedule. This does not actually determine the completion day [Schedule 4A para 6].

11.5 A completion notice relating to a newly erected workshop unit was quashed by the Lands Tribunal because the workshop unit could not reasonably have been expected to be completed within three months of the service of the completion notice since the lack of electrical wiring and lighting, and the absence of a fire alarm system, meant that the property was not complete and there was no prospect that an independent electricity supply would be made available within that time. (Spears Bothers v Rushmoor BC [2006] RA 86)

11.6 In Newham London Borough Council v Rad Phase 1 Type B Property Co No.1 Ltd [2020] R.A. 384 the Upper Tribunal considered whether, as in Spears Brothers v. Rushmoor, the Valuation Tribunal for England was correct to quash a completion notice where the works could not reasonably be completed by the date in the completion notice. After considering legal argument the Upper Tribunal (Lands Chamber) held that the VTE had no power to quash a completion notice but ‘there is nothing to prevent the parties agreeing, or the VTE determining, a date outside of the three-month period specified for the purposes of the initial notice.’

11.7 Should a ratepayer wish to challenge whether a valid completion notice was in force in relation to an entry in a rating list, the VTE has held that the correct way to do this is through a proposal seeking removal of the entry in the rating list under Reg 4(1)(h) 2009 SI 2268 on the basis that it ‘ought not to be shown in the list’. [Delph Property Group Ltd v Alexander (VO)[2018] R.A. 343].

11.8 For pre 2017 list appeals of this type in England, and any list appeal in Wales, the VT should be asked to give a direction to add the BA as a party under reg 11(2) of 2009 SI 2269 as often the issue in contention surrounds whether the completion notice has been correctly addressed or served and these are facts that only the BA has and can speak to. The VO will normally have only a limited input into such appeals.

11.9 For the 2017 list onwards in England under CCA the BA cannot be a party to the Challenge, unless it is a property for which it is actually an interested or former interested person. The VO should seek evidence from the BA in relation to the completion notice at an early stage of challenge and must then provide a copy of that evidence to the proposer. The evidence should be included in any initial response and decision notice. Should the case then be appealed the VO can call the BA as a witness at any later VTE hearing.

11.10 It is possible to ask the VTE, at the appeal stage only, to make the BA a party to an appeal under reg 11(2) 2009 SI 2269 as for pre 2017 list appeals. However, under the amended 2017 Regs the position of the BA as a potential party at any VTE hearing is more restricted than previously. VOs need to be prepared to proceed on the assumption that the BA will only be a witness at any hearing and the VO will need to advocate the whole case. Early contact with the BA is essential in such circumstances. Should the validity of the CN become an issue then the VO should review the circumstances, establish the facts and seek technical advice from CVG.

12. Case law relating to validity of completion notices.

12.1 Since 2011 the VTE has heard a number of appeals relating to the validity of completion notice. Appendix 1 sets out a brief resume of the main cases.

13. Billing Authority Duty to Inform VO

13.1 A billing authority shall supply the VO with a copy of a completion notice [Schedule 4A para 7(1)]. It shall also inform the VO if it withdraws the completion notice or agrees a different day as the completion day.

13.2 The VO should be prepared to liaise with the BA over whether a building is capable of being entered into the rating list. However, the VO has no statutory power in the completion notice proceedings and it is ultimately the BA decision whether to issue a completion notice and at what date.

14. Works done after building substantially complete (Fitting Out)

14.1 In the case of work which is customarily done after the building is substantially completed, then it is assumed that the building has been or can reasonably be expected to be completed at the end of such period beginning with the date of its completion apart from the work, as is reasonably required for carrying out the work [Schedule 4A para 9].

14.2 This would apply to buildings which are fitted out as a separate operation after the completion of the main structure (often when a tenant is found), for example, a ‘shell shop’ or a ‘category A’ fit out of an office building. This provision allows for the serving of a completion notice on hereditaments where the fitting out cannot be completed within the three months period required for a completion notice. Without this provision it would be impossible for a BA to serve a completion notice until the fitting out works had less than three months to completion.

14.3 Where work remains to be done to a substantially completed building of a kind customarily done after substantial completion, the building may be treated as completed for unoccupied rates on a date arrived at by adding on to the date of substantial completion (not the date of the notice) the time reasonably required for carrying out that work [Graylaw Investments Ltd v Ipswich 1979 QBD RA 111].

14.4 The period ‘reasonably required’ for carrying out work remaining to be done does not include time for finding a tenant willing to occupy the building (see J.G.L. Investments v Sandwell DC 1977 CA RA 78)

14.5 In Royal London v Bunyan (VO) [2023] R&VR 177 the appellant invited the VTE to hold that the completion notice was defective and that the assessments should be deleted as it had been issued prior to the property reaching the stage of substantial completion, but the tribunal declined to do so.

14.6 In the event of a dispute over the wording or meaning of para 9, Schedule 4A the VO should seek technical advice from CVG.

15. Valuations for Completion Notices

15.1 Overview

Following the service of a completion notice there are three issues the VO must address;

i) the unit of assessment,

ii) the assumed standard of completion,

iii) the timing of alterations and effective dates.

15.2 The Unit of Assessment

Completion notices are served in respect of new buildings – not hereditaments. The two may or may not align. It will be for the VO to determine the unit of assessment in relation to what appears to be the most likely pattern of future occupation. This is regardless of whether the billing authority serves one completion notice for the whole building or several notices for each part. The VO determines the number of hereditaments. See British Railways Board v Hopkins (VO) 1981 RA LT and Camden LBC v Post Office 1978 CA RA 57.

15.3 Assumed Standard of Completion

If the building subject to the completion notice is not actually complete, it will be assumed to be ready for, or capable of, occupation for the use appropriate to that particular hereditament. A building should be deemed ready for occupation for the purpose for which it was intended (as a shop, office, factory etc.) and not only when the furniture and equipment necessary for its actual occupation is installed when occupation will have commenced (see Post Office v Nottingham City Council 1976 1 WLR 624 CA.). However, a newly erected building is completed for the purpose of a completion notice only when it is ready for occupation and not when it is structurally complete (see Ravenseft Properties Ltd.v Newham LBC 1975 CA RA 410 and London Merchant Securities PLC and Trendworthy Two Ltd v Islington LBC 1987 RA 99).

Difficulties may be encountered as to what standard and final design will the building eventually be completed to. In determining the standard of the final finish the VO should liaise with the billing authority as to what was assumed by the authority in setting the completion notice date. In the absence of strong evidence to the contrary such as the ‘norm’ on a particular estate, it would seem prudent to assume the most basic finish which could be revised once the building is actually complete.

15.4 Altering the List

The VO must alter the list in accordance with the completion notice as soon as practical after the ‘relevant day’ and regardless of whether any completion notice appeal remains outstanding. It may subsequently be necessary to make a further alteration to the list for that hereditament to amend the effective date when the completion notice dispute has been resolved.

Problems can arise as to what description to use for an empty property. A decision should be made based on the facts taking into account how the property is marketed, the predominant use of existing occupied units, planning situation etc. In British Railways Board v Hopkins (1981 LT RA 328) the Tribunal supported the VO’s right to make judgements as to a property’s future use.

15.5 Material Day and Effective Day for List Alteration

There are provisions in the Material Day Regulations and the Alteration of the List and Appeals Regulations to cover valuations following the serving of completion notices. [See Rat Man S.2 Pt. 4 Rateable Value – The Basis of Valuation] .

The material day for such a valuation will be the day proposed in the notice as the completion day or the day agreed or determined by the VT as the completion day. [Reg 3(5) SI 1992/556 – as amended].

The effective date for such a valuation will be the day specified in the notice or determined by agreement, or tribunal decision pursuant to an appeal. In the unlikely event the completion date determined under appeal is later than the effective date in the list the assessment should be deleted.

If the alteration to the list does not occur until after occupation, the alteration should still be made in respect of the completion notice and the effective date determined, unless the date of occupation is earlier when, presumably, it was actually complete. Conversely if actual completion occurs before the date on the completion notice the deemed completion date no longer applies and the effective date will be the actual date of completion [s.46A(2)(b) LGFA 1988].

Billing authorities can serve a completion notice in respect of a completed building. However, if the VO is aware that a building is complete the VO should alter the list accordingly regardless of whether a completion notice has been served. The VO should take extra care when inspecting premises where there may be a dispute as to whether a building is actually complete or not and should keep a full record of the inspection together with photographic evidence if possible.

If the VO is in any doubt as to whether a building is complete, then it would be prudent for the VO to ask the BA to consider serving a completion notice.

15.6 Conclusion

The LGFA 1988 provides a mechanism for ascertaining the day on which a vacant new building is deemed to be complete and can therefore be entered into the list.

The billing authority has powers to serve completion notices on owners of new buildings.

The matter is primarily the BA’s responsibility but VO should be prepared to liaise with the BA.

It will be for the VO to determine the unit of assessment in relation to what appears to be the most likely pattern of future occupation.

A building should be deemed ready for occupation for the purpose for which it was intended - it will be assumed to be ready for, or capable of, occupation for the use for which it is intended.

The VO should take extra care when inspecting new property where the date of completion may be in dispute

Appendix 1: Case law relating to validity of completion notices

Prudential Assurance Company Limited v Valuation Officer [2011] R.A. 490 - k/a The Heights

This case was the first in which the issue of the validity of the completion notice (CN) was accepted as being capable of consideration by the VTE in valuation proceedings. It was heard by Professor Zellick QC, president of the VTE, with counsel representing both parties. A proposal had been made by Prudential to delete the assessment on basis that the CN behind the entry was invalid.

The VO argued that the Tribunal could not consider validity as the facts behind the completion notice’s service were not known to him as he was not responsible for service and there was a separate appeals route for completion notices. The President found that the tribunal did have jurisdiction on the basis that if the completion notice was not valid then the entry in the list could not be made, so it was an essential question. The completion notice appeal procedure was limited to the question of completion date only and not wider matters and, if necessary, the billing authority (BA) could be added as a party to the VTE proceedings so that evidence of service could be provided.

Having found the original completion notice was not valid because it had been served on the wrong person, the VTE then went on to consider a later agreement on the completion day made between the BA and the ratepayer (Prudential) following which the property was entered in the rating list. The Prudential argued that as there was no valid CN to begin with there can be no agreement as envisaged by the statute. The VTE did not agree. “No violence is done to the statutory framework or procedures; no detriment is caused to the appellant. It thus defeats a somewhat unattractive argument by which a corporate body professionally advised at the time seeks to resile from an agreement freely entered into simply because it later discovered that a technical failure offered it a possible escape route.”

Friends Life Co Ltd v Alexander (VO) and Huntingdonshire DC [2012] R.A. 263.

A VTE decision by Professor Zellick with counsel acting for both parties. A completion notice (CN) was served in April 2007 but the proposal to delete was not made until 22 March 2012 requesting a deletion wef 1 April 2010. The reason for the delay was that it had only recently been established that there was a remedy by way of proposal and appeal to the valuation tribunal – see The Heights case in 2011.

It was held that a CN served on a developer had not been served in accordance with legislation which required it to be served on the owner, defined as the person entitled to possession, because:

(i) although the developer had been the freehold owner at an earlier date, at the date of service of the completion notice freehold title had been transferred to the appellants - the BA relied on old information and should have checked the situation with the Land Registry;

(ii) the development agreement showed that the developer was merely a licensee – they were not agents for the owner and could not accept service, and anyway the legislation requires service on the owner;

(iii) the Valuation Tribunal did not have a discretion to withhold the remedy sought by the appellants (to dismiss the appeal) and even if it did, nothing in the facts of the case would have led the Valuation Tribunal to deny the ratepayer the remedy available to it in law; and

(iv) although the appellants had paid the rates for some time with knowledge of the facts regarding the service of the notice, they had also maintained throughout that the notice had not been served on the correct person, and it may be that they were not well advised as to their entitlement to judicial review. None of this constituted a waiver of their rights to challenge the notice when they were able to do so.

The VTE accepted that a challenge must be timely, and an excessive delay will create an irrebuttable presumption that the notice is valid, for the same reason that judicial review proceedings must normally be instigated promptly. However, it was not until the Prudential case issued on 21 June 2011 and published in the RVR in October 2011 that the ability to challenge CNs on a rating appeal became widely known. The appellant commenced action soon after in November. The VTE did not regard the delay here as excessive or unreasonable though in future appellants will have to act swiftly after discovering the existence of a notice. [N.B. This conclusion was subsequently challenged and overturned in the Delph case – see below.]

The CN was held to be invalid and the VTE ordered the entry in the 2010 list to be removed. The entry in the 2005 list remained however as there was no outstanding proposal, the list having closed by March 2012.

English Cities Fund (General Partners) Ltd and Standard Life Assurance Ltd v Grace (VO) and Liverpool CC [2013] R.A. 215.

Another case heard in the VTE before Professor Zellick with counsel acting for both sides. It involved two purpose-built office buildings in Liverpool. In respect of one building it was common ground that the notice did not contain the name of the correct owner. In respect of both buildings multiple notices were served in respect of each floor of the building, rather than one for the whole building.

It was held that the completion notices served on a company which was not the owner were invalid even though rates had been paid.

On the second point the BA’s officer had admitted when giving evidence that he had adopted the “multiple notice” route to circumvent the three-month time limit in the Act. In other words, he accepted that each building as a whole was incapable of completion within three months, whereas three months was realistic if assessed on a floor-by-floor basis. The VTE held that the completion notices relating to the individual floors were unlawful and therefore invalid because the billing authority accepted that each building as a whole was incapable of completion within three months and the use of multiple notices was adopted by the billing authority to circumvent the time limit. This led inevitably and inescapably to the conclusion that the authority abused its discretion and issued notices to defeat the object and purpose of the legislation to the grave detriment of the owners.

Tull Properties Ltd v South Gloucestershire Council [2014] RA 180 – k/a Beluga House

This case covers two issues:

What is meant by a ‘new building’ and secondly, following judicial review of the President’s VT decision [see Reeves below] the extent of the jurisdiction of the VT in relation to appeals against Completion Notices.

This was an appeal against a completion notice made under Sch.4A Para (4)(1).

As a preliminary matter the VTE looked at validity of the completion notice in the context of the works that had been undertaken to a building ‘Beluga House’ and the President determined these had not created a ‘new building’ but the repair and alteration of an existing one. He decided the completion notice to be invalid and ordered that the hereditament should be deleted from the list.

Following the Non-Domestic Rates Act 2023, the definition of ‘new building’ is now broader and the facts of the case would fall under S.46A (6)(b)(ii) and so would allow a completion notice to be served.

However, the case remains of interest, the VO applied for judicial review of the VTE’s decision [See Reeves (VO) v. VTE (and others) [2015] EWHC 973 (Admin)] contending that the VTE had no power to order the deletion of the hereditament, Beluga House, from the rating list. After reviewing the legislation in some detail the High Court agreed, when an appeal against a completion notice is made, the only question which the Valuation Tribunal is asked by Sch.4A to answer is: what is the completion date? They pointed out that the completion notice code simply provides a deeming provision for the completion date of new buildings and it does not alter the continuing duty of the valuation officer under section 41(1) of the 1988 Act to maintain an accurate list based on the information that comes to his attention.

Metis Apartments Ltd v Grace (VO) and Sheffield CC [2014] R.A. 222.

In this VTE case Prof Zellick QC decided that where the company named on completion notices was not the owner and the notices were not received, the notices were of no effect, and nothing said or done by the owner (e.g. paying the rates, agreeing the rateable value, contesting liability orders in a magistrates court and referring to the premises as completed and temporarily occupied for storage in evidence in those proceedings) brought that conclusion into question. The completion notices were therefore no consequence or effect and the entries in the 2010 rating list must be deleted. However, the VTE held it had no power to order deletion of the closed 2005 list entries under reg 38(10).

Derwent Holdings Ltd v. Whitehead (VO) & Preston City Council, Appeal No. 234522321829/538N10, 20 January 2015.

Amongst other things the billing authority’s power to withdraw a notice were considered by the President of the VTE in this case. Whilst not definitively deciding the point the VTE did not accept the appellants argument that there was an unlimited power to withdraw beyond that expressly provided for in para 1(3), schedule 4A, LGFA 1988. They said that any general power to withdraw a completion notice must be read in the context of the relevant statutory provisions and in their judgement once the completion day has been reached the process was at an end and the billing authority has no continuing jurisdiction. In the subsequent case of Provincial Real Estate Burton Ltd v Virk (VO) and East Staffordshire Borough Council [2015] the President confirmed that his decision in Derwent Holdings “acknowledges that a completion notice may be withdrawn, other than by issuing a new notice or by written agreement, up until the completion day, even without a new notice or agreement.”

Provincial Real Estate Burton Ltd v Virk (VO) and East Staffordshire Borough Council [2015] VTE Appeal Number: 341019474725/538N10

There were two issues in this appeal to the VTE: firstly, was the completion notice valid and secondly, if not, could the appellant challenge it in these proceedings? The BA had issued a completion notice in January 2010 which was correctly addressed and served. The original owners made no complaint or appeal and paid rates. Two years later the new owners made a proposal challenging the validity of the notice and asking for the entry in the list to be deleted.

On the first issue the appellants argued that the completion notice was either ambiguous or unlawful as there was a minor discrepancy over dates in the notice. The VTE did not agree. The notice was valid. This made the second point unnecessary but nonetheless the VTE held a challenge by way of a proposal must be brought as soon as possible but not over two years as in this case. They held it was contrary to the interests of justice and the public interest to allow the appellants to mount this challenge and the appeal was dismissed. It is suggested that the views of the VTE on the second issue were wrong in the light of the subsequent decision in Delph Property Group Ltd v Alexander (VO) and Leicester City Council [2019] RA 233.

Delph Property Group Ltd v Alexander (VO) and Leicester City Council [2019] RA 233.

This case was heard by the President of the VTE with all 3 parties (R/P, BA and VO) represented by counsel. There were essentially two issues in these appeals:

Preliminary issue – what was the correct approach for a challenge to an assessment brought into the list following service of a completion notice [CN] where the appellant was of the opinion that no valid CN had been served. Did the VTE have the right to hear such an appeal by means of a proposal?

Substantive issue – whether CNs were capable of being served in this case on an existing building. This involved a consideration of the meaning of new building in s46A and particularly what a “… buildings produced by structural alterations to an existing building …” meant.

The property at 99 Burleys Way, Leicester (previously known as Thames Tower and now known as The Horizon) was originally constructed in the 1970s as an office building with a large floor plate on the ground to second floors above which there was a smaller central tower forming the third to sixteenth floors of the building. In late 2006 the then owners began a scheme of redevelopment. The offices on the ground, first and second floors were refurbished to a “shell and core” finish and marketed from 2010. The billing authority, Leicester City Council, served CNs with a completion date of February 2009 on each of the three office floors. There was no appeals against the CNs, nor against the consequent entries in the 2005 rating list. On 31 March 2015 proposals were received by the VO seeking both the deletion of the three hereditaments and also reductions in RV.
- Preliminary issue
This was essentially a procedural point and heard first. The issue was jurisdictional and whether a challenge to an entry in the rating list through no valid completion notice being served should be by way of judicial review or proposal. The appellant contended that the VTE had jurisdiction to determine appeals against the rating list entries, even if no appeal had been made against the CNs that those entries were consequent upon. The VO contended that as the VO was bound to make a new entry in the rating list as a consequence of the statutory provisions, and it could only be challenged by way of judicial review and not by way of proposal as relied upon by the appellant.

The VTE determined that the correct way in which to challenge whether a ‘valid’ CN was in force was through a proposal seeking removal of the entry in the rating list (effectively under reg. 4(1)(h)). The VTE therefore had jurisdiction to determine these appeals. N.B. It should be noted that the originating proposals in these cases were very specifically made on the grounds that the CN was invalidly served and no structural alterations had taken place and requesting deletion of the entries.

On the question of timing, the VTE determined on hearing legal argument that once it had decided that the correct procedure was to appeal by way of making a proposal then the only constraints on making such a proposal were those set out in the relevant regulations. The appellant had complied with these, even though the events occurred many years previously. This decision therefore effectively overturns Prof Zellicks view in Friends Life Co Ltd v Alexander (VO) and Huntingdonshire DC [2012] R.A. 263 that a challenge must be timely, and an excessive delay will create an irrebuttable presumption that the notice is valid.
- Substantive issue
As a CN can only be served on a ‘new building’ the question at issue was whether this was a new building in accordance with the definition in the Act and whether CNs should have been served. There are two sub-categories of buildings which are ‘new buildings’ (or part thereof) in accordance with s.46A(1), namely:

a. Buildings which are new in the conventional sense, i.e. ‘brand new’ buildings (the conventional test); and

b. Buildings which are not ‘brand new’ but which qualify as ‘new buildings’ for the purposes of s.46A(1) because they have been so transformed by structural alterations of an existing building.

In the absence of evidence to the contrary it was agreed between the parties that the parts of the building in dispute were not capable of beneficial occupation following practical completion of the works and until they were actually occupied. This meant that if it was found that the CNs should not have been served the rating list entries had to be deleted until the properties were occupied.

The appellant contended that the works carried out to these parts of the property did not create “new buildings” and so were not properties on which CN could be served. The VO did not agree and argued that the whole building had been so altered that it could be described as a “new building” or that the respective parts were so transformed that they should be described as “new buildings”.
- Decision on Second Issue
The VTE found that the building (The Horizon), taken as a whole, could not be described as a new building. The President then went on to consider each of the three individual floors on which CNs had been served. He held that there had not been any structural works to the ground and first floors and that in such circumstances a CN cannot be served and the property had therefore incorrectly been entered in the rating list. The assessments should therefore be deleted. In respect of the second floor, the Tribunal found that there had been significant structural alterations including the removal of an atrium and that it could be described as a “new building” within the meaning of the Act and included in the rating list following a CN. Here the appeal was dismissed and the rating list entry remained.

It should be noted that one of the biggest problems in this case was that all the events took place between 2006 and 2010 and it was very difficult to establish the facts at this date. The decision highlights once again the importance of good factual information about a property being collected and recorded.

The relevance of this decision as regards the meaning of a ‘new building’ has now been greatly reduced by the Non-Domestic Rating Act 2023. This has widened the definition so that converted or refurbished buildings, even where there has been no structural alteration, now qualify as new buildings and can be returned to the list by serving a completion notice as does an extension or creation of a new floor within an existing building.

London Borough of Newham v. RAD Phase 1Type B Property Company No.1 Limited (2020) RA 384

A rare Upper Tribunal decision regarding the power of the VTE in relation to completion notices. Did the VTE have the power to determine a completion date later than 3 months from the date of the notice and did the VTE have power to quash the completion notice if relevant works could not be carried out within the 3 months period?

The VTE had quashed a completion notice on the grounds that the relevant completion works could not have been carried out within the three-month period specified in the completion notice, having regard to the decision of the Lands Tribunal in Spears Brothers v. Rushmoor Borough Council [2006] RA 86. The billing authority had appealed. After considering legal argument the UT upheld the appeal and decided that the VTE had no power to quash a completion notice but could determine, or the parties agree, a completion date that fell three months or more from the date of a billing authorities completion notice.

Hermes Property Unit Trust v. Roberts (VO) and Trafford Council (2022) RA 1

Another Upper Tribunal decision regarding the validity of completion notices and whether they could specify a completion date that precedes the date of service. Whilst the completion notices were dated 3 May 2016 they were not received until 9 May 2016 showing a completion date of 3 May 2016, some 6 days earlier than the date of service. The VTE took the view that although the notices did not comply with the requirements of the statute, there was substantial compliance, and no prejudice to the appellant, and therefore they were valid.

The UT disagreed, and held the notices were invalid, taking the view that Parliament cannot have intended substantial compliance to be good enough as that would result both in uncertainty and in retrospectivity. The UT suggested if 6 days was good enough then ‘what about 10 days? Or a couple of months.’

This case appears to confirm the long-held view that a completion day cannot be earlier than the date of service of the completion notice. [Note: service means the date the notice was received or deemed to have been received. It is not the date the notice was posted or sent.]

Royal London v Bunyan (VO) [2023] R&VR 177

In this VTE case, heard by two senior (legal) members with counsel instructed on both sides, the appellant argued that the Completion Notice [CN] which resulted in the VO entering the properties in the list, was defective and that the assessments should be deleted. There were three grounds of appeal: (i) the completion notice was unclear; (ii) the completion notice had been issued prior to the property reaching the stage of substantial completion; and (iii) the reasoning which led to the setting of the completion date was irrational.

The VO was successful, and the appeals were dismissed. The VTE held under (i) that the CN was not ambiguous, and they were not persuaded that it was invalid under ground (ii). The decision does not provide clear guidance on whether it is a requirement for a property to be substantially complete. Finally, under (iii) the VTE agreed with the VO that effectively the ratepayer was arguing that the date in the CN was incorrect and the correct route for such a challenge was via an appeal under Schedule 4A, para 4.