Ascertainment of the rateable value of a non-domestic hereditament requires that each individual hereditament should be individually assessed and the application of a hypothesis. If the property is in rateable occupation at all, the rateable value is taken to be an amount equal to “the rent at which it is estimated the hereditament might reasonably be let from year to year” on the three assumptions set out in paragraph 2 of Schedule 6 to the Local Government Finance Act 1988.
While the yearly letting is hypothetical, the open market in which it is assumed to take place is real, depending on the interplay of supply and demand. The hypothetical lessee embodies whatever was actually the demand for a property at the relevant time. It is a retrospective exercise in probabilities, wholly derived from the real world. If at that time nobody was prepared to occupy that property, it was impossible to say that there was any actual demand. In Telereal Trillium v Kevin Hewitt (VO) (2017) EWCA 26 the Court of Appeal held that a VO was not required for the purposes of the hypothesis to assume that there was a demand for the property where the evidence indicated that nobody was prepared to pay a positive price for occupying it.