Apportionment by Rateable Value

Our client’s service charge was being unfairly apportioned by rateable value. We reduced our client’s service charge liability by £500k.

Description

Our client occupied a number of units in a building of approximately 100, 000 sq ft.

Issues

The client was concerned about the way their service charges were apportioned using rateable value. The client’s lease made it clear that although the rateable value had to be reassessed every five years, it could be revalued on a more regular basis.

Process

Property Solutions’ analysis determined that there was a disproportionate penalty in respect of the apportionment of cost to the client of approximately 10%, based on a comparison with floor areas.
We were able to establish rateable values applying at different times over a period which showed a substantially smaller apportionment relating to the client’s space. Hence, if the rateable value was reassessed on a more regular basis the client’s liability would be much lower.
The landlord’s contention was that it was not possible to continually adjust apportionment on such a regular basis. However, the lease did provide for other methods of apportionment which were fair and reasonable.

Results

A negotiated settlement was reached, prior to litigation, with a reduction in the client’s liability of over £500k.