CASE STUDY

Question 1

How did you analyse the subject rent?

Answer 1

Lease renewal, 3-year term, 3 months RF incentive, IRI terms

1. Headline rent - £22,000
2. Adjusted for incentive
   - 3 months rent free over 3 years
   - Effective term = 2.75 years
3. Calculated net effective rent
4. Adjusted -5% for LL external repairing liability
5. Analysed on ITZA basis

= £296.73/sqm ITZA

Question 2

How did you analyse Comparable 1?

Answer 2

Lease renewal, 5 year term, 2 months RF incentive, IRI terms

1. Headline rent - £8,000
2. Adjusted for incentive
   - 2 months rent free over 5 years
   - Effective term = 4.83 years
3. Calculated net effective rent
4. Adjusted -5% for LL external repairing liability
5. Analysed on ITZA basis

= £442.13/sqm ITZA

Question 3

How did you analyse Comparable 2?

Answer 3

Lease renewal, 10 year term, RR year 5, stepped rent (£9k - £25k), repair costs shared.

1. Analysed the stepped rent profile
   - Discounted each rent step to present value using YP/PV factors
2. Derived equivalent constant rent
3. Adjusted -5% for shared external and internal repairs (-2.5% x2)
4. Analysed on ITZA basis

= £342.35/sqm ITZA

Question 4

How did you analyse Comparable 3?

Answer 4

New letting, 10 year term, break at year 5, 6 months RF, stepped rent (£18k - £40k), IRI terms.

1. Analysed the stepped rent profile
   - Disregarded 3 months RF for fit out
   - Discounted each rent step to present value using YP/PV factors
2. Derived equivalent constant rent
3. Adjusted -5% for LL external repair liability
4. Analysed on ITZA basis

= £534.32/sqm ITZA

Question 5

How did you analyse Comparable 4?

Answer 5

Rent review at year 5 of 10 year lease, IRI terms, no RF.

1. Headline rent - £40,000
2. Adjusted -5% for LL external repair liability
3. Analysed on ITZA basis

= £506.94/sqm

Question 6

How did the market change between the comparables and the subject lease renewal?

Answer 6

Nottingham retail flat

(RESEARCH)

Question 7

What would you expect a prime zone A rent to be in Nottingham?

Answer 7

c. £1,200 per sqm

Question 8

What would you expect retail yields to be in Nottingham?

Answer 8

RESEARCH

Question 9

You mention one of the best comps was immediately opposite the subject. Did you review the zoning method on that property?

Answer 9

Yes, reviewed zoning for all units within arcade.

Comparable 2 zoned diagonally from main frontage.

All units zoned perpendicular to doorway / main frontage.

Question 10

Talk me through the methodology/process for the adjustments you made to the rents to get them on FRI terms.

Answer 10

Subject, Comps 1, 3, 4 all IRI terms:
- Adjusted -5% for LL external repair liability.

Comp 2 shared repair costs:
- Adjusted -2.5% external, -2.5% internal repairing liability (total -5%).

Question 11

How did you analyse stepped rents?

Answer 11

1. Discounted each rent step to present value using YP/PV factors
2. Derived equivalent constant rent
3. Analysed over ITZA

Question 12

You describe comparable 3 as mostly an entrance lobby with the accommodation on the first floor.

Is it appropriate to analyse this on a zone A basis?

Answer 12

May not be appropriate - comp referred to by agent.

I advised senior colleague that arcade be reviewed following settlement of this case.

Question 13

Talk me through how you decided 5% was a reasonable adjustment for the subject property?

Answer 13

Comp A: 7.5% for comparable set of steps - but located just inside entrance (greater accessibility issue)

Comp B: 33% for a substantial set of stairs in the retail area

5% reflected a disadvantage compared to most other units, but less so than comps A and B

Supported by subject rent

Question 14

How did the Zone A values change in the shopping centre after your review?

Answer 14

£575 - £550 (-5%)
£525 - £450 (-15%)
£500 - £400 (-20%)
£450 - £350 (-22%)

Reductions ranged from -5% to -22%

Question 15

What is the assessment history of the subject property?

Answer 15

1st April 2017: compiled RV £25,250

1st April 2023: compiled RV £32,500

November 2023: 2017 RV increased £25,250 to £25,750 wef DOS (area / zoning via DN)

November 2023: 2023 RV amended from £32,500 to £33,000 wef 1st April 2023 (area / zoning from 2017)

May 2024: Check submitted – disagreed as valuation issue

July 2024: Agent challenges RV £33,000

September 2024: CHG £33,000 agreed reduction to £22,250

September 2024: TR Cert Reg 19 issued as RV incorrect at 31-MAR-2023. Revised RV £22,250.

September 2024: DLM updated survey data to what was agreed for 2023 - RV £17,500.

Question 16

What accounted for the difference in the NIA of the subject when you measured?

Answer 16

Possibly a different interpretation of NIA. I measured to RICS COMP and agreed areas with agent, so was confident they were correct.

Question 17

Did you adjust for the 2 month rent free period on Comp 1?

Answer 17

Yes - 2 months rent free over 5 years

Effective term = 4.83 years

Not disregarded for fit out as lease renewal.

Question 18

Why reassess measurement / zoning when this was settled in 2017?

Answer 18

• Settled by DN rather than agreement (only partially measured).
• Didn’t agree with the approach.
• Duty to maintain accurate rating list.
• Took opportunity to review both lists.
• Informed senior surveyor with evidence.

Question 19

How did you ensure the changes you made to the NIA and zoning were appropriate?

Answer 19

Analysed 2017 subject rent using my verified ITZA as a sense check against the revised 2017 RV.

Confirmed RVs using my zoning approach were closer to subject passing rents for 2017 and 2023 lists.

£332.50 x 63.9 = c. £21,250
£332.50 x 73.58 = c. £24,500

Question 20

Why didn’t you look at all rental evidence in your sense check of 2017 RV?

Answer 20

Established tone

Question 21

How would analysis on an overall approach change the RV?

Answer 21

£220/sqm x 104.74sqm ITMS

= £23,000

Question 22

How are other units in FHW zoned?

Answer 22

Some units zoned diagonally.

All zoned perpendicular to the entrance, from the foremost extremity.

Question 23

Why did you adopt this zoning approach?

Answer 23

Common sense approach.

Consistent with approach within the arcade (perpendicular to entrance, from foremost extremity).

Consistent with internal guidance for zoning irregular frontages.

Question 24

How did you apply the RICS Rules of Conduct in this case?

Answer 24

Honesty / integrity - reviewed historic assessment as did not agree with previous approach.

Competence - COI check.

Service - progressed case in timely manner and communicated professionally with agent throughout.

Respect - treated agent / ratepayer with respect. Respected ratepayer’s business operations whilst inspecting.

Responsibility - raised review of FHW with senior colleague to promote fairness across rating list.

Question 25

What does the RICS Code of Measuring Practice say regarding steps vs stairwells in NIA?

Answer 25

NIA includes: Ramps, sloping areas and steps within usable areas. NIA excludes: Stairwells, lift-wells and permanent lift lobbies.

Question 26

What are your thoughts on post-AVD evidence?

Answer 26

Post‑AVD evidence is admissible but must be treated cautiously; its weight depends on proximity to the AVD and whether it reliably reflects market conditions at that date rather than later change.