Case Study

Question 1

What is the Material day of your challenge? Case study

Answer 1

1st of April 2023

Question 2

what did you consider at material day?

Question 3

what is the AVD?

Answer 3

the antecedent valuation date 1st april 2023

Question 4

how is AVD determined and who determines it?

Answer 4

determined by statute

Question 5

what were the code of grounds submitted for the challenge?

Answer 5

compiled list challenge

Question 6

why were they requesting the removal of air con?

Answer 6

the agent stated the air conditioning wasnt at the property, however after inspecting it was apparent that it was present and it wasnt part of the process and therefore was rateable

Question 7

why is air conditioning rateable?

Answer 7

Named under p and m regs 2000

Question 8

where so you get the price from for the cost of P and M?

Answer 8

the valuation office uses the Cost guide and they gather this data from analysis of form of returns for the costings

Question 9

are there any regulations surrounding air conditioning?

Answer 9

Plant and Machinery Regulations 2000

Question 10

is there any circumstances where air con is not rateable?

Answer 10

Iceland V Berry case

determined that in Icelands case it is a tool of the trade and therefore not rateable.

Question 11

what are the 4 Classes of P and M?

Answer 11

1. Power
2. service
3. movement
4. structure

Question 12

why was the shop not zoned?

Answer 12

because it is a retail warehouse and these are measured to GIA.

Question 13

you mention Lotus and Delta can you explain this case?

Question 14

what value would you apply to a mezzanine? and where has this come from?

Question 15

talk me through the analysis of the subject rent

Question 16

why did you value to 5 years rather than 10 years if it has an upwards only clause?

Answer 16

there was a break clause at 5 years this means that the rent is not guaranteed over 10 years.

Question 17

was there a break clause?

Answer 17

yes

Question 18

how did you deal with the stepped rent?

Question 19

why did you adjust for 3 months fit out?

Answer 19

there was a rent free period and our form of return indicated there was some level of fit out and there fore this was disregarded and ignored within my adjustment

Question 20

what is the definition of rateable value?

Question 21

talk me through the weighting of your comparables

Question 22

are there any RICS documents when weighting evidence?

Question 23

did you issue a transition certificate?

Answer 23

We issue transitional certificates for increases or decreases to the 2023 list.

Question 24

Under what class are security cameras? And what rate was applied to them?

Answer 24

Service. The security cameras had an Estimated replacement cost of £1,438 which was recapitalised to £63 for the annual equivalent.

Question 25

How did you determine that the air condiditoning covered the full sales area?

Question 26

Regarding the subject rent, you mentioned you disregarded 3 months for fit out, can you explain why? and why did you do 3 months fit and 6 months rent free for comp 1

Answer 26

We have to value the property Rebus, as it stands which is currently fitted out. We also assume that the landlord puts the property into a state to command the rent i.e fitted out. The landlord therefore wouldn’t allow a rent free period to allow for fitting out if it was the landlord who had fitted out the unit. Hence we ignore that period.

Question 27

How did you arrive at £30 for the mezzanine?

Answer 27

Derived from market comparables of similar units with and without mezzanines and the difference in rental values at the start of each rating list

Question 28

Why did you adopt 3 months for fit out on the subject rent?

Answer 28

I adopted 3 months fit out because within the form of return there was a noted fit out period of 3 months

Question 29

how did you know that the air conditioning system was for the whole sales area?

Answer 29

typically tenant added ducted air conditioning systems are fitted and specified for the purpose of air conditioning the full retail space. if it was a cassette system each cassette would typically cover 85m2.

Question 30

Why did you adopt 8% for the yield on your case study?

Answer 30

Derived from market evidence for the location and property type and risk

Question 31

What is you statutory duty under section 41 of LGFA 1988?

Answer 31

To maintain and compile a fair and accurate RL

Question 32

How did you undertake a COI?

Answer 32

Checked for own interest conflict If conflict was present I would of advised my LM and the case would have been reallocated

Question 33

Why are COI not logged formally?

Answer 33

Statutory function therefore not formally logged however under my duty as a responsible valuer I always undertake a COI

Question 34

What was the ground of the challenge?

Answer 34

01 - compiled list inaccuracy

Question 35

What does compiled list mean?

Answer 35

The rateable value that a property is given at the start of a new rating list

Question 36

Who is the client in this case?

Answer 36

MCHLG

Question 37

You say the property was built in 2017, how were you able to confirm this?

Answer 37

Checked with occ and internal records

Question 38

What is the statutory timeframe for clearing a challenge case?

Answer 38

18 months

Question 39

What happens if 18 months passes without the case being cleared?

Answer 39

The IP has automatic appeal rights

Question 40

Talk me through the steps you took in your due diligence prior to the inspection?

Answer 40

Desk based check - looking at the location, any risks, contacting the IP to arrange and under take a risk asst, planning a route

Question 41

How did you value the partial air con within the property?

Answer 41

A/C DOROTHY PERKINS V CASEY 1994 1. Consider if air con is included in rents 2. Consider evidence against comparable assessments to understand uplift 3. If no market evidence, do cost approach – decap 4.4% 4. If unreliable, adopt £7 backstop £4/sqm it is a backstop figure that acts as an addition for a system that deals effectively with a particular retail space and is a result of many years of rental adjustment and analysis.

Question 42

How did you value the CCTV?

Answer 42

Utilised cost information from the VOA Rating Cost Guide which calculates the annual equivalent using the decapitalisation rate (4.4%) £365 per camera

Question 43

What regs support P&M and what class is CCTV under?

Answer 43

Class 2 (service plant) of P&M Regs 2000

Question 44

Is CCTV always rateable?

Answer 44

If there are four or more camera which make a system

Question 45

Talk me through how you analysed the subject rent?

Answer 45

Stepped rent x over x years at % yield Next step needs to be deferred then final total rent applied at correct YP and divided by area to produce £/m2

Question 46

What is your opinion on stepped rents, how useful are these are they In forming your opinion of value?

Answer 46

Care must be taken when looking at stepped rents - it is important not to mistake a pre agreed steps as an open market agreement at a date in time. Care must be taken to understand when the original lease terms were agreed.

Question 47

How would you value the CCTV?

Answer 47

VOA cost guide from building surveyors provides ERC to buy and install at AVD adjusting for age and obsolescence to produce ARC. This would then be adopted and 4.4% de-cap applied to convert into annual equivalent figure.

Question 48

How did you adjust for the stepped rent?

Answer 48

I deducted 3 months for fit so I did 0-21 months at £45,421 at 8% yield at the correct YP and then months 22-60 up until the break clause £121,125 at 8% yield and correct YP this totalled a rent of £382,375 which was then divided by a YP of 4.19 from parrys table which was YP for 5 years at 8% the then equivalent constant rent was £91,259 And divided by the area is £120.60pms

Question 49

Where does the yield come from?

Answer 49

8% and the Yield is obtained from market evidence prior to the list going live for each class of property

Question 50

How did you adjust and analyse the comparable 1 rent?

Answer 50

I ignored 3 months for fit and then deemed 6 months as incentive. I therefore adopted £0 for 6 months or deferred it and £140,294 for the remaining 4 and a half years

Question 51

Why didn’t you apply a TRC?

Answer 51

Because it was a valuation issue that only affected the 2023 list and therefore transitional certificate want necessary

Question 52

Why didn’t you issue a penalty on the case?

Answer 52

At the time of this challenge case, penalties had been suspended due to internal policy so none was issued

Question 53

When would you issue a penalty?

Answer 53

Information falsely submitted which would alter the outcome of the challenge or produce an inaccurate RV

Question 54

Are you aware of any other fit out cases than Mandau shoo smith?

Answer 54

Bunyan v acenden Cat B office worth more than Cat A and fit out should be included in the RV The occupiers installed over £3million worth of fit out and therefore increased business rate

Question 55

robert dyas v moore

Answer 55

fit out period and tone of the list not placing much weight on unchallenged assessments. case by case basis

Question 56

bunyan v acenden 2023

Answer 56

Bunyan v acenden 2023 Cat B office worth more than Cat A and fit out should be included in the RV The occupiers installed over £3million worth of fit out and therefore increased business rate

Question 57

Mandeau shoosmith

Answer 57

fit out costing and asking for evidence of the cost breakdown. 2024