Case Study Flashcards
(165 cards)
1
Q
What is a Challenge case?
A
Where an interested party can propose an alternative valuation for their rateable value following a Check decision notice
2
Q
What do you mean by tone?
A
General range of comparable evidence setting the price per square metre for similar properties in the locality.
3
Q
What is the CCA process?
A
Check – Ratepayer confirms or edits details about their property. VO has 12 months to process.
Challenge – Once Check decision notice issued, ratepayer has 4 months to challenge the valuation. VO has 18 months to resolve the Challenge.
Appeal – If the challenge result is unsatisfactory, they can take the case to tribunal (up to £300). Appeal must be made within 4 months of Challenge Decision Notice.
4
Q
What is an interested party?
A
Owner, occupier or a person with a ‘qualifying connection’ to the owner or occupier
5
Q
What is the 2023 Rating List?
A
The Rating List sets out all rateable values for non-domestic properties in England and Wales. It is used by local authorities to help determine business rates. As per NDR Act 2023, revals are now every 3 years with the current list being 2023.
6
Q
Did you deal with the Check?
A
No, but I am aware that at Check, it was confirmed that no physical changes to this property had taken place and all current property details were correct.
7
Q
What is rateable value and where is the definition found?
A
Schedule 6 of the Local Government Finance Act 1988 states:
“it is an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year on year”
Assumptions;
1) the tenancy begins on the day the determination is made
2) hereditament is in a reasonable state of repair
3) the tenant undertakes to pay all usual tenant’s rates and taxes to bear the cost of repairs necessary to maintain the hereditament
8
Q
What is the AVD?
A
Antecedent valuation date is the day we take non-physical factors of value, economy and law.
9
Q
Why do we have an AVD and not use the effective date?
A
To give the VO time to update and produce the Rating Lists
10
Q
What do you mean by fair?
A
It is subjective as what we consider to be fair may not be what the ratepayer considers fair. My interpretation of fair is providing an accurate valuation of a hereditament based on comparable evidence, which could be reasonably expected for that property.
11
Q
What was the valuation of the subject before the Check?
A
£152,000
12
Q
Why did you carry out a conflict of interest check?
A
A conflict of interest is something that may affect you or your firm from acting impartially and in the best interests of your client. Can cast doubt on your integrity and/or damage reputation.
Every RICS member must identify and manage COI in accordance with the professional statement 1st edition 2017
13
Q
How did you ensure there was no conflict?
A
Checks are undertaken prior to any work, read through the instruction and record on case control document including competence to complete work. If conflicts are identified then the matter is escalated with line manager.
14
Q
Why would an agent be required?
A
Unrepped ratepayers might be unaware of the CCA process and feel more comfortable with an agent representative
15
Q
What are the grounds to a Challenge?
A
Contained within the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regs 2009 as amended:
- RV was incorrect on the date the list was compiled
- RV was incorrect due to MCC
- RV was incorrect by reason of an amendment by the VO
- RV was incorrect due to amendment to P&M
- hereditament should be in the list and isn’t
- hereditament shouldn’t be in the list and is
- if shown as domestic and shouldn’t be
- if shown as non-domestic and shouldn’t be
16
Q
Why is it important to inspect if there is no dispute?
A
To ensure we carry out our due diligence and that our survey details are accurate and up-to-date. The system is not fool-proof although there may be improvements to this with the yearly self-declarations.
17
Q
What is the date of schedule?
A
Reg 14 NDR (Alteration of List and Appeals) Regs 2009 as amended
If alteration made to correct an accuracy (not the error of the TP) and this increases the RV, this shall have effect from the day on which the alteration is made.
18
Q
What items of Plant and Machinery are rateable?
A
Any P+M which is significant to the functioning of the business subject to the P&M Regs 2000
19
Q
What are the 4 classes of P&M?
A
Class 1 = Power
Class 2 = Service
Class 3 = Movement
Class 4 = Named Structures
20
Q
What classes did the P&M at the subject fit under?
A
Compressors under Class 1
CCTV under Class 2
Gantries under Class 4
21
Q
How did you value the P&M?
A
Using the contractor’s method of valuation. Using VOA’s internal cost guide, I was able to calculate the estimated replacement cost of the P&M. As the gantries and CCTV were modern, no adjustment for obsolescence was required, however the compressors had a 2% adjustment for age. Adjustments for location factor and the size of contract also applied in order to calculate the adjusted replacement cost. A decap rate was then applied to calculate the value of the P&M.
22
Q
What is a location factor?
A
The location factor is based on analysis of actual build costs. It reflects the difference in build costs throughout the country.
23
Q
What decap rate did you apply?
A
4.4%.
2.6% is only applied for education, health and ministry of defence.
24
Q
Are CCTV cameras rateable?
A
Yes if more than 4 - any less does not constitute a “system”
25
What types of settlement are there within a Challenge?
Well-founded, agreed, withdrawn, disagreed
26
What is an allowance?
Where a % reduction is applied to reflect a particular unique disadvantage to that property which is not reflected in the rent.
27
What are common defects for properties of this type?
Buckling and corrosion. Asbestos.
28
What are common construction and foundation types for this kind of property?
Steel portal frame for industrial properties and typically either pad foundations or piled
29
What is a stepped rent?
A rent which increases or decreases at defined periods over the lease.
30
Why do you adjust rents?
In order for the rent to conform to the definition of RV as per Sch.6 LGFA 1988
31
What did you adjust for Comp 1?
6 month rent free period. As it was a lease renewal, I considered the full 6 months as incentive. If it was a new letting, I would have ignored 3 months for fit-out as per normal market practice.
32
How did you adjust for a rent free period?
I calculated the value of the rent receivable to the next rent review date where the rent is likely to change using the YP and PV tables.
I then amortised this over the period over the five years of the lease, dividing it by the YP to reach an annual rental figure.
33
How did you adjust for Comp 2?
Landlord responsible for buildings insurance so adjusted downwards by 3.5%
34
How did you adjust for Comp 3?
Shared liability for internal and external repairs so 2.5% downwards adjustment for both.
Stepped rent basis.
35
How did you adjust the subject rent?
Stepped rent basis.
- The adjustment centred around the straight-line method assuming time value of cash flow using a yield/ amortisation rate.
- This adjustment was made by firstly calculating the present value of the stepped rents (using a multiple of the yield/ amortisation rate and the PV of £1), to arrive at the equivalent annual rent over the chosen period of years.
- I chose to amortise the adjusted rent over the first 5-years of the lease, due to there being a tenant-only break option at the end of the 5th year. This means that there is no security of tenure and thus rental income beyond this point
36
What makes a Challenge valid?
Reg 6 of the NDR Alteration of Lists and Appeals Regs 2009 as amended details the grounds for a valid proposal.
37
How did you prepare for the inspection?
- Consider the purpose of the inspection
- Carry out a risk assessment
- Access
- Competence check
- Adequate PII
38
What types of asbestos are there? Full names? Tell me a bit about them.
White – Chrysotile
Most used form of asbestos. It can be found in the roofs, ceilings, walls and floors of homes and businesses.
Manufacturers also used for insulation for pipes, ducts and appliances. Banned in 1999.
Brown – Amosite
Used in cement sheets and pipe insulation. It can also be found in insulating board and ceiling tiles. Banned in 1985.
Blue – Crocidolite
Most dangerous due to extremely small fibres
Used to insulate steam engines. It was also used in some spray-on coatings, ceiling tiles, pipe insulation, plastics and cement products. Banned in 1985.
39
How should the occupier manage the asbestos?
Control of Asbestos Regulations 2012
Identification - Identify and assess the ACMs that are present within your building, recording details such as their location, type and condition –
depending on the level and extent of survey that you’ve had carried out, you may have already fulfilled this obligation;
Priority Risk Assessment - Assess the risk of exposure to ACMs for the building occupants (i.e. your employees) and visitors (i.e. contractors);
Prepare and Implement a Management Plan - Prepare a written plan that outlines how you intend to manage the risk from the ACMs present on
your site. This should clearly outline your strategy for ensuring that no-one can come to any harm from asbestos on your premises;
Provide Information to Others - The report highlighting the location and condition of all ACMs present within the building (i.e. the survey we carried out
for you) should be made available to all persons who are likely to disturb them (i.e. estates services, maintenance engineers, external contractors etc),
as well as to the emergency services;
Periodic Review - The information upon which the management plan is based (i.e. the survey), should be updated as ACMs are removed, treated, or
their condition alters. As a minimum, this should be carried out annually by a competent person, and the management plan should be updated
accordingly.
40
What other types of asbestos are there?
- anthophyllite
- actinolite
- tremolite
41
What causes the level of danger to change in asbestos?
The size of the fibres and the friability
42
What are the 6 steps to a risk assessment?
1) Identify the hazard
2) Decide who might be harmed and how
3) Evaluate the risks and decide on precautions
4) Record findings and implement them
5) Review assessment and update if necessary
6) Advise those affected of the outcome of the risk assessment
43
What value significant factors do you look for in an industrial inspection?
- Size of warehouse
- Span of warehouse
- Eaves height/ clear height
- Floor loading capacity
- Access to the warehouse – vehicular, forklift truck etc.
- Storage ability – e.g. external yard space.
- Construction – full brick or half brick walls?
- Office content
44
What is PPE and what's the purpose of it?
Personal Protective Equipment
Minimises exposure to hazards that cause serious workplace injuries and illnesses.
45
What is your organisation's lone working policy?
Always complete your Outlook Calendar to indicate you are away from the office. Ensure line manager knows your location and when you're likely to be back.
You must ensure your personal safety device is fully charged and you take it out with you on every inspection.
46
Why do we have a lone working policy?
Suzy Lamplu - estate agent who went missing in 1986.
47
What were the agent's comparables?
Agent comp 1 - New letting. Stepped rent. June 2021. 10 year term. 3 months’ rent free granted at lease commencement. The agent has allowed 1 month for fit out and took 2 months as incentive and analysed the stepped rent over the 10 year term at a 7% yield, devaluing to £25/m2. I ignored the 3 month rent free as this has been considered as usual practice for fit-out. The rent has been analysed to a yield of 8.5% devaluing to £36.94/m2.
Agent comp 2 - 2 leases on one property. Lease renewals from December 2019 with 2 year rent-free period. Taking the entire rent-free period as incentive, agent devalued it to £24.50/m2. Our records noted one lease renewal from 2021 with no mention of a rent-free period.
I devalued it to £36.35/m2. There are no details of a rent-free period on this FOR, although there is a brief note to state that this comprises two leases. I requested copies of the leases to re-analyse accurately, but noted that due to the complex nature of these transactions it doesn’t appear to be a clean rent and therefore I would be cautious and apply limited weighting on this evidence.
Agent comp 3 - 12 year term from April 2018. Agent devalued to £23.50/m2. 3 years pre-AVD. Rent was agreed on an RPI basis (and therefore not open market). FRI. I analysed rent to £23.41/m2.
48
What is the hierarchy of evidence?
- New lettings
- Lease renewals
- Rent reviews
RICS Comparable Evidence in Real Estate Valuation - 3 categories
Cat A - direct evidence
Cat B - general market data
Cat C - other sources
49
What is transitional relief?
It is relief applied to reduce the impact of changes to the RV between rating lists and can be applied up and down2
NDR Act 2023 - removed downwards phasing
50
Did you issue a TR cert?
Yes - Reg 18 as the RV shown in the list as of 01 Apr 2023 was incorrect and cannot be changed. Certified RV of £203,000 as of 01/04/2023. Reg 19 to certify value of £158,000 as of 31 March 2023.
51
The subject rent is post-AVD. Is this still useful?
Only 3 months post-AVD.
Specialeyes v Felgate - post-AVD rents show trend and used as last resort
52
Why did you use the YP?
This reflects the time value of money whereas the straight line method doesn't.
53
What Rules of Conduct did you demonstrate when dealing with this case?
All of them
Rule 1 - Acted honestly and with integrity carrying out my due diligence and ensuring no conflict arose
Rule 2 - Undertaking a competence check to ensure I had the necessary skills to carry out the valuation
Rule 3 - Carried out a good quality and diligent service by undertaking an inspection to ensure our records were up-to-date and accurate.
Rule 4 - Throughout discussions with the agent as well as meeting the occupier on site I treated them with respect
Rule 5 - I took responsibility for our previous errors with regards to the mixed age errors and acted accordingly to rectify these errors, thereby promoting trust in the profession
54
How did you ascertain the age of the building?
Internal records but also carried out my own due diligence and corroborated our records by checking the planning portal and having discussions with the occupier and agent.
55
Did you notice any defects on site?
Other than having an awareness of the presence of asbestos and general wear and tear, the property was structurally sound and in a reasonable state of repair so no other defects were apparent.
56
What defects would be common in this type of property?
Buckling, blocked gutters, roof leaks, cut edge corrosion, cladding issues and cracking to the brickwork.
57
Was there any other P&M?
Heating and lighting
58
Did you value the heating and lighting?
No - already accounted for within the price per m2 as per market evidence
59
What regulations govern P&M?
The Valuation for Rating (plant and machinery) (England) Regulations 2000
60
Are you familiar with the locality and were you competent?
Yes I regularly keep abreast of market knowledge and my approach to cases is meticulous as I make informed decisions which is backed up by comparable evidence.
61
What grounds was this Challenge issued on?
Compiled list error
62
When did you get allocated this case?
29th November 2024
63
Why did it take so long for you to be allocated this case?
The VO does have a large case load but the statutory deadlines were adhered to.
64
What was the effective date?
The original proposal contended the RV as at an effective date of 1st April 2023 however my proposed valuation had an effective date of 14 February 2025.
65
Why did you see it fit to inspect the property?
The property was last inspected in 2005 and noting one of the key issues related to an allowance for layout, I carried out my due diligence and wanted to ensure I could establish the facts.
65
What is the difference between the material day and the effective date?
The material day is the day in which all physical factors are taken into consideration whereas the effective date is the date of the alteration to the rating list
66
How did you carry out your inspection?
I firstly considered my personal safety, then inspected the locality, then the property externally and lastly the property internally.
67
What did you measure the subject to?
Gross Internal Area
68
What is the Gross Internal Area?
The area of a building measured to the internal face of the perimeter wall at each floor level
69
What measurement standard do you use for rating?
The VOA's Code of Measuring Practice which is based on the RICS Code of Measuring Practice
70
How does the VOA's Code of Measuring Practice differ from the RICS Code of Measuring Practice?
VOA - Gross External Area and Gross Internal Area exclude areas under 1.5m
71
What did you include and exclude in your measurement?
Include:
- areas occupied by the internal walls
- columns
- WCs
- plant room
Exclude:
- canopies
- open vehicle parking areas
- open fire escapes
72
What is FRI?
Full Repairing and Insuring Lease
Tenant is responsible for all repairs and insurance
73
How useful are stepped rents?
Treated with caution - a lot of adjustments are required and you need to ensure you have the full details of the lease.
74
When did the lease commence?
24th June 2021
75
How did you adjust the subject rent?
I calculated the equivalent of each step and amortised it over the first 5 years of the lease by dividing the adjusted rent by the YP for 5 years @ 8.5%
76
Why did you only analyse the subject rent to the first 5 years?
Tenant-only break at the 5th year so there is no certainty of rent after this date
77
Was there a penalty for the tenant breaking?
No - 6 months' notice
78
Were any further inducements given?
No
79
What other inducements are you aware of?
Rent free periods and capital contributions
80
What is the importance of the yield in your rent adjustment?
This is used to determine the YP single rate multiplier
81
Where did the evidence for 8.5% come from?
Yield evidence of comparable factory premises in the locality
82
What was the yield for the other bulk classes?
8% for shops and offices
8.5% for factories and warehouses
83
What type of yield was it?
Market yield (all risks)
84
What is the ARY?
Reflects all the risks and rewards of a property (growth implicit)
85
How do you calculate the ARY?
annual rental value / capital value
86
Where does the YP come from?
Our internal system's default position is that it analyses quarterly in advance
Rose's Tables
87
Did you do a Parry's valuation?
Yes - slight variation to YP, the figures were still in line with each other
88
Did you apply any end allowances to the valuation?
No
89
How would you reflect an end allowance in the adjustment if there was one?
I would calculate the equivalent income 'steps' and amortise it over the 5 years by dividing the rent by the YP for 5 years @ 8.5% and then I would add on the end allowance at the end to reach the adjusted rent.
90
Why would you add an end allowance on at the end of your adjustment?
We value as we devalue
When determining the RV the end adjustment needs to be put back on to reflect the open market value.
In essence this means that as the VOA have given −5% end allowance for poor layout when determining the RV, the end adjustment in the rental analysis will add 5% back on
91
How does the definition of RV differ from the definition of market rent?
Definition of RV is based on the hypothetical tenancy in which tenancy begins on date RV assessed; whilst for definition for MR (as per VPS 4) the tenancy begins on the valuation date.
92
What is the case law for the hierarchy of evidence?
Lotus and Delta v Culverwell and Leicester City Council (1976)
93
Talk me through Lotus and Delta?
FACTS - Shop and premises. Prime shopping street in Central Leicester. Display frontage combined with a side entrance on Market place which was a flourishing commercial market. Was let as a shell for 21 years on full repairing terms. Tenant spent £22,000 on works, of which £13,000 was relevant expenditure related to the rateable hereditament. The Appellant believed the Zone A was £175/sqm from analysis of other shops on the street. The rent paid was higher than others as they were keen to move in and not lose out. The VO used a higher Zone A (shop lifting and pilfering further down depressing rents)
HELD - Assessment to be reduced
6 propositions established regarding hierarchy and weighting of evidence as a result of the case.
94
What are the 6 propositions in Lotus and Delta?
1) Subject rent is the starting point
2) Consider how much the subject rent conforms to the definition of RV
3) Comparable rental evidence of similar properties
4) Comparable assessments of similar properties
5) Opinion of value
6) In absence of comparable evidence, go back to the subject rent.
95
Why would you place high weighting on post-AVD evidence?
When considering the basket of evidence, the post-AVD evidence sits within a range and establishes rental trends
96
Is there case law for post-AVD evidence?
Specialeyes v Felgate
97
What is locality?
As per K Shoe Shops v Hardy 1983: ‘Locality’ taken to mean area within sufficient evidence to produce a reasonably expected rent and outside which the rent might be different.
98
Is there any recent case law for locality?
Barclays Bank Plc and Poundland Ltd v Moore (VO) [2024] – VTE rejected the VO’s contention that the locality of four retail units for the purposes of Sch 6 para 2(7) LGFA 1988 was a reasonable walking distance from each retail unit because many people travelled by car or public transport.
Tribunal held that a recently constructed and extended shopping centre 12-20 miles away was in the locality of each of the four subject retail units.
VT put forward general guidance that when deciding whether or not a physical change falls within the locality, the following matters will need to be considered:
The nature of retail hereditament, since not all hereditaments will be affected to the same extent.
If the shop is within a town centre, what is its catchment area and from where is regular clientele drawn?
Does the out-of-town retail park serve the same catchment area and does it directly compete for the same customers?
Is the retail park within a reasonable travelling distance either by car or public transport from the appeal property?
99
Why did you include evidence of another age and size to your property?
To showcase a range of evidence
100
Did you consider quantum?
I referred to the rental evidence and as was evident the transaction dates, nature of the transactions and different sizes of the comparable evidence all varied. As such, it was difficult to discern the definitive presence of quantum.
101
What is quantum?
Quantum is predicated on the application of the theory of economies of scale, and that rental values for property drop with size (allowance for buying in bulk in effect).
102
Any case law regarding quantum?
Case of Trevail (VO) v C and A Modes Ltd [1967], established a three-stage test for quantum:
No presumption in favour of Quantum;
Only comparatively slender evidence is required to establish that the market still allows for quantum in any location;
Once this is done, positive evidence is required in order to displace the assumption of a quantum
103
From your summary valuation I see that you ‘rounded’ down the resultant RV. Why was this the case?
The VOA round valuations to demonstrate that the figure sought in any valuation is an estimate of likely letting value. Adopting an unrounded figure as a rateable value would give a misleading impression of accuracy.
104
Why did you not consider a 5% allowance relevant?
My inspection confirmed the property wasn't compartmentalised or fragmented. I reviewed appropriate property and rental evidence in the locality of similar properties with the same uninterrupted space to see if there were any market discounts which there weren't.
105
How did you reflect car parking?
It was already reflected in the price per m2 as per market evidence
106
What routes of appeal are there after VT?
Upper Tribunal
Court of Appeal
Supreme Court
107
Was the property insulated? And how could you tell?
No - can tell by the skylights
108
Why are different ages valued differently?
Some was built in 1960s and some in 1990s so there is likely to be a difference in the longevity and conditions and the facilities offered
109
What are relativities?
Different parts of a property will have different relative values depending on their floor level and type of accommodation.
We apportion the value of part of a property when analysing the rent
110
Who was the dutyholder?
Occupier as the lease was on an FRI basis
111
What class of P&M would the monorail come under?
Class 3
112
Why would you not disregard all post-AVD evidence?
Garton v Hunter - all evidence is admissible, but it's for the court to decide how much weighting the evidence gets
113
Did you consider issuing a penalty due to incorrect factual details?
Reg 9A NDR (Alteration of List and Appeals)
The VO may impose a financial penalty on that person if:
(a) the person provides the VO with information in, or in connection with, the proposal which is false in a material particular; and
(b )the person does so knowingly, recklessly or carelessly.
I considered it but as the areas were correct, it was more of a valuation issue so I did not consider it appropriate to issue a penalty.
114
What are the penalty fees if you were to issue a penalty?
£200 for a smaller proposer for each piece of incorrect info
£500 for anyone else
115
What are the fines for breaching asbestos regulations?
A duty holder that does not have an asbestos management plan in place could be fined up to £20,000 or imprisoned up to six months.
A serious breach of the regulations could result in an unlimited fine and/or a two-year prison sentence.
116
What was the market doing in 2021?
Back end of Covid - Industrial market was flourishing. Demand for distribution space for both large and smaller units. Low vacancy rates. Savills note the end of 2020 saw record-breaking take-up levels. Lull in 2018 and 2019 but take up and supply have both soared since 2015
117
What PPE did you wear on site?
Hard hat, hi-vis, steel-toe capped boots, mask and goggles.
118
How did you ensure your hard hat was in date?
Expiry noted on the inside of the hat.
119
Can transitional certificates be appealed?
Yes under the Regulation 21 of the Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2016 (now 2022)
120
Why was a survey unit allowance applied to the 1960s part?
1960s part is not as valuable as the 1990s part - condition/longevity. The impact on value is not on the newer build.
121
Why did you not include evidence of the 1990s tone?
Although due diligence carried out to ensure the 1990s tone was correct, it was not contended by the agent and not pertinent to this case so not included within the case study.
122
You say you would have preferred to jointly inspect the property, how would you change this for future cases?
Arranged an inspection with more notice to allow the agent to make appropriate arrangements to attend, however in order to provide a prompt and efficient service, I proceeded with the agent's agreement.
123
How is a lease renewal different to a new letting?
Consider the incentive for both. With a lease renewal the landlord already has a tenant in situ, saves void periods and hassle of re-marketing so may negotiate a lower value.
124
Comp 2 and Comp 3 are for terms of 10 and 12-years respectively. Were there any rent review intervals?
No
125
How did you know it had a cement roof? Isn't that heavy?
Our internal records noted the construction and the asbestos report provided confirmed it was a cement roof.
Can withstand extreme weather conditions and require less maintenance than other roofing materials. It is heavy but just requires a strong portal frame.
126
In your case study you have a google maps image, did you get permission?
You do not need permission to use Google Maps images provided you note where you sourced the image from and you're distributing 5,000 or less copies.
127
Describe to me the typical construction features associated with a 1955 – 1964 industrial building?
- Substantial buildings were still being built of brick, often with corrugated asbestos roofs supported on a trussed metal frame (as described above).
- In some cases, usually before 1960, 'north lights' were deployed to flood the factory floor with natural light. Roofs with north lights were constructed with the whole of one pitch (usually shorter than the other) being glazed. The glazing was typically in metal frames, which as they decayed became a source of weakness in this type of construction.
- During the 1960s industrial building was revolutionised by the arrival of the concrete portal frame. This enabled wider spans to be erected and removed the requirement for cross beams and in many buildings the need for columns. Clear working heights were thus enhanced and factory floors less restricted. Many industrials were still being built with brick infill around the concrete frame.
- Brick/block to 2m with corrugated asbestos sheeting
128
What are the key takeaways from the RICS PS Asbestos?
- Details of common asbestos containing materials
- How to commission survey
- Suggested contents of asbestos management plan
- Property life cycle and asbestos management – demolition/ redevelopment, disposal, lease end, occupational
- Risk assessment – for buildings pre 2000 – ask if known before inspection
129
What must a Challenge proposal include?
- Name
- Address
- Contact details
- Grounds of proposal
- Evidence
- Alteration sought
- Effective date
130
What makes an Appeal invalid?
If Appeal does not include VO decision, copy of proposal/evidence discussed at Challenge
- Fee for VTE
- If out of time for appeal
131
Why is a 8.5% rate used?
This yield is essentially the market rate expected for industrials in the 2023 Rating List and is used to determine the Years’ Purchase single rate multiplier
132
Did you produce an alternative valuation using the Parry’s YP single rate multiplier?
Yes, I did. This resulted in a slight variation to the YP multiplier and as a result the amortisation rate used to determine the Equivalent Annual Rent.
Rental analysis in line with the original analysis.
133
Are transitional certificates mandatory?
The VO have a statutory duty and abide by The Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2022
134
What is the base rate?
The price per m2 set for similar properties in the locality
135
Would the agent be liable to penalties?
No the ratepayer would - the ratepayer must confirm the factual details at Check
136
Does the VOA always follow its rounding rules?
At VT and UT they don't follow the rounding rules
137
Why was there a gap between your inspection and the challenge being submitted?
The case had originally been with another caseworker and was then passed to myself. The case was still dealt with within the 18 month statutory deadline so there was no detriment due to this gap in time.
138
Was the P&M included in the main rent or considered tenant's improvements in your analysis?
Tenant's improvements
139
Do you know the area of the subject in sqft?
47,678 sqft
Just shy of 48,000 sqft
140
What relativities were applied and where did they come from?
1.0 = workshop, office
0.95 = storage and poorer office
1.1 = staff room
0.15 = canopy
141
Did your inspection highlight any discrepancies with the current survey data held? If so, how did you identify these?
Yes, as mentioned the ages of the properties had been incorrectly valued. I also noted the line adjustments for quality were not appropriate as the entire workshop was of the same average quality and individual line adjustments were not appropriate. I also noted the P&M had changed since our last inspection.
142
What grounds was the proposal made under?
01 - Compiled list error
143
Are there any consequences of providing incorrect information?
Yes, penalties can apply if the ratepayer provided it knowingly, recklessly or carelessly, but I did not consider that this was the case in this Challenge.
144
What was your approach to valuing the lean to section of the property?
I applied a lower relativity (0.15) in line with similar aged lean to's on comparable industrial units. It is of a poorer quality and should be attributed a lower value than the main workshop space.
145
Does the property being located close to the M6 toll have an impact on the valuation?
Having access to transport links such as the motorway does add value to industrials, however I compared the values with similarly located industrial units in order to compare like with like and form my opinion of value.
Access to motorways provides efficient transportation of goods and materials, impacting operational costs and competitiveness, as well as providing transportation links for employees, materials and goods etc.
146
As the subject rent was in line with your final base rate, how much weight did you apply to this rent?
As it was a connected party rent, very limited weighting was applied. However, the remaining basket of evidence supported a figure of £30/m2.
147
Why did you analyse to the 5th year and not the full 10 year term?
No security of income after that date as the tenant could end the lease.
148
If the property was inspected in 2020 rather than 2005, would you have taken the same approach?
Yes, 5 years would still be a significant amount of time for the subject to have changed.
149
Why did you measure to the RICS Code of Measuring Practice and not the VOA's?
There were no areas under 1.5m headroom and that's the only difference between GIA under RICS and VOA COMP.
150
What do the hatched lines signify on your plan?
Different ages
151
If the property is open plan, how did you identify where to measure to for the different aged areas?
The construction and roof were different (cement roofing and cement sheeting on the older part) so it was clear where the older part of the property joined the newer part.
152
Did you have any evidence to remove the line adjustments?
I considered that the line adjustments were not appropriate for individual areas of the workshop as it was all open plan and of the same quality, however I reviewed comparables of a similar quality to assess whether they had been given allowances which they had not.
153
Is there any caselaw regarding the removal of adjustments/allowances?
Barnard and Barnard v Walker
154
What market evidence did you use to adopt your yield of 8.5%?
Comparable sales evidence of industrials in the locality using sources such as CoStar.
155
I note your analysis of the subject rent is based on the ITMS of the property, however your table of rents analyses are based on the total area. Does this change not skew your results?
All of the comparable rents were analysed on an ITMS basis, however the table of comparables shows the total area for comparability purposes. ITMS includes the relativities applied to each property, whereas the total area is used to compare like-with-like in terms of similar sized units.
156
Do you think there was an element of reverse quantum based on your evidence?
Due to the transaction dates and nature of the transactions themselves with differing lease terms etc. it was difficult to discern the presence of quantum in this case.
157
With new lettings being at the top of the hierarchy of evidence, why did you place less weight on Comparable 3?
Generally new lettings are seen as the best evidence, but as Comp 3 was a larger property, older and on a stepped rent basis, it required numerous adjustments which therefore limits its weighting. Although lease renewals are not as 'good' as new lettings, the other comparables were more like-for-like when comparing to the subject and considering the evidence as a whole, more weighting was applied to those comparables.
158
Did you make any adjustments for the differing terms as all of your comparables have differing lengths?
It is extremely rare to find comparables which are exactly like for like in terms of transaction details, however when analysing the rent, we amortise over the period of the lease to calculate the £/m2 which allows me to draw comparisons with the subject.
159
You agreed £30/m2 with the agent however I note in your valuation the main part of the hereditament is valued at £50/m2. Why?
Different values have been attributed to the different aged parts of the property in line with appropriate comparable evidence.
160
Where is the evidence in your documentation to support such an uplift?
I carried out my due diligence and sourced comparables in order to determine that £50/m2 for the 1990s part was appropriate, however it was not in contention within this Challenge and therefore was not pertinent to this case study.
161
Do you think there was such a difference in rental values for age in this locality? Your table of evidence suggests not with the oldest property achieving the highest rent and agreed as a new letting.
The evidence sourced for both the 1960s and 1990s part of the property suggested respective tones of £30/m2 and £50/m2 were appropriate. As mentioned, the agent did not contend the value of the 1990s part.
162
Looking at your plan, there seems to be a discrepancy in your areas. Why is this?
The measurements in the plan within my case study submission are correct, however the labelling recording the areas of each part of the property are incorrect. This has been amended and reflected correctly within this presentation.
163
You noted asbestos on your inspection, how did this impact your inspection approach?
I requested a copy of the asbestos register and identified that the asbestos was undisturbed and encapsulated but I ensured I took appropriate PPE with me on site.
164
The agent appeared to agree with your reasoning throughout the case. Why were you therefore unable to secure an agreement?
Although they didn't specify the exact reasoning, I would expect that due to the large increase in RV, it keeps the option open to appeal if necessary.
