Case Study

Question 1

What is a proposal to alter the rating list?

Answer 1

A proposal is submitted by the ratepayer, or their representative when they believe their business rates are incorrect. The proposal is submitted within the Check Challenge Appeal Process.

Question 2

Can you explain the CCA procedure?

Answer 2

The ratepayer, or their representative begins by submitting a check proposal, which deals with the factual matters regarding the property, such as size, split or mergers, or demolished. If the proposal is regarding valuation matters or the check team have disagreed with the changes, the ratepayer or their representative can submit a challenge proposal which deals with more complex, valuation specific issues such as the main space rate, material change in circumstances or area disputes for example. Should the ratepayer, or their representative disagree with the VOA’s decision, they can then appeal the decision before the Valuation Tribunal.

Question 3

Can you explain the key dates and deadlines for the CCA process?

Answer 3

The ratepayer, or representative can make a proposal against the 2017 rating list at any point, beginning with the check stage. They can progress to challenge within 4 months of the VOA’s check decision or 16 months for MCC proposals, or where the VOA has not made a decision within 12 months. They can progress to the appeal stage within 4 months of the challenge decision or where the VOA has not responded to the challenge within 18 months

Question 4

What is the rateable value definition, and where would you find this?

Answer 4

The definition can be found in the Local Government Finance Act 1988, schedule 6, paragraph 2.
‘The rateable value of a non-domestic hereditament, none of which consists of domestic property and none of which is exempt from local non-domestic rating, shall be taken to be an amount equal to the rent at which is estimated the hereditament might reasonably be expected to let from year to year on 3 assumptions.’

Question 5

What are the 3 assumptions for the definition of rateable value?

Answer 5

a) The first assumption is that the tenancy begins on the day by reference to which the determination is to be made.
b) The second assumption is that immediately before the tenancy begins the hereditament is in a state of reasonable repair but excluding from this assumption any repairs which a reasonable landlord would consider uneconomic.
c) The third assumption is that the tenant undertakes to pay all usual tenants rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any_ necessary to maintain the hereditament in a state to command the rent mentioned above.

Question 6

What is the main legislation in relation to the CCA process?

Answer 6

The main legislation is the Local Government Finance Act 1988 and The Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 and its amendments.

Question 7

What case law is relevant to your case study?

Answer 7

Lotus and Delta v Culverwell (VO) & Leicester City Council (1976 RA 141).

Question 8

How did you check for conflicts of interest?

Answer 8

I checked the property address and the ratepayer to ensure that I had no professional or personal dealings.

Question 9

Can you give me an example of a conflict of interest?

Answer 9

A conflict of interest could be carrying out valuation or providing valuation advice for both the seller and buyer of the same property, as my advice would be conflicting due to each parties interest.

Question 10

What guidance would you refer to for conflicts of interest?

Answer 10

I would refer to the RICS Conflicts of Interest professional statement, 1st edition, March 2017.

Question 11

What legislation relates to the validity of CCA proposals?

Answer 11

The legislation which sets out a valid proposal is in the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009, specifically in Part 2.

Question 12

Can you give me an example of a possible grounds of proposal?

Answer 12

Where the rateable value shown in the list is inaccurate by reason of a material change in circumstances which occurred on or after the list was compiled.
Where the rateable value shown in the list is inaccurate on the day the list was compiled.

Question 13

Can you give me an example of a valid proposal?

Answer 13

Where the proposer is the occupier and ratepayer, or their representatives or have a valid interest in the property.
Should be made on one of the grounds of proposal as set out in Regulation 4.
Should contain the basic details, such as name and address of proposer, the relevant authority, proposed rateable value and supporting evidence.

Question 14

How did you determine the age of the property?

Answer 14

Having valued and inspected other properties in the locality, in addition to the construction the property I estimated the property was constructed in the 70s or 80s. I was able to narrow down the age by reviewing our records of the property and original inspection notes.

Question 15

What is a stretcher bond construction?

Answer 15

Stretcher bond is where each of the bricks are of equal size and equal pattern, used more commonly after the 70s, where cavity wall construction became more common rather than solid wall.

Question 16

What is a cavity wall construction?

Answer 16

A cavity wall construction comprises of 2 brick walls with space between for insulating material.

Question 17

How did you know it was a slate tile roof trim?

Answer 17

Though I did not inspect the roof up close as it was not necessary, I could make a good estimate that it was slate tile due to the colour and appearance, I double checked with an experience colleague.

Question 18

What is Grade A specification?

Answer 18

Grade A specification is a quality of office space that meets the latest office technology and design, it is guided by the British Council for Offices: Guide to Specification 2019.

Question 19

How did you know the property was Grade A specification?

Answer 19

The property has been recently refurbished in 2012, to a high standard which was clear through marketing brochures and images. Upon inspection I noted various Grade A specification factors, such as a great deal of natural light, large double heighted reception, raised flooring with floor boxes, suspended ceilings, 3 large passenger lifts, with shower and cycle parking facilities.

Question 20

What is the current office market like in Covent Garden/Soho?

Answer 20

According to Market Reports for the West End for Q2 2022, the prime rent was £122.50 per sq. ft and a 3.25% prime yield, these were mainly applicable to the core of the west end, which is Mayfair and St James.
The subject property locality of Soho and Covent garden had prime rents of £92.50 per sq. ft and £80.00 per sq. ft respectively, with similar prime yields of 3.25%

Question 21

Types of Occupiers? Take up? Commentary?

Answer 21

The Soho and Covent Garden market is primarily occupied by Technology companies, but there is a significant uptake in the past few quarters of other sectors, particularly finance sectors moving to Soho away from the higher rents of Mayfair and St James.

Question 22

Why do we measure to the Code of Measuring and not IPMS Offices?

Answer 22

We measure to the Code of Measuring Practice for rating purposes, as it is for a statutory purpose and would be uneconomical for us to remeasure every rateable property to IPMS.

Question 23

What is the latest documentation in relation to measurement of your case study?

Answer 23

The Code of Measuring Practice, guidance note. 6th Ed. May 2015.

Question 24

What basis did you measure the property?

Answer 24

I measured the property to Net Internal Area.

Question 25

What is Net Internal Area?

Answer 25

Net Internal Area is the usable area within a building measured to the internal face of the perimeter walls at each floor level.

Question 26

How does NIA differ from GIA and GEA?

Answer 26

NIA excludes spaces occupied by columns, structural walls, service accommodation and corridors. Whereas GIA includes these but only to the internal face of the perimeter walls. GEA includes everything inside the property, from the external face of the wall.

Question 27

What was the purpose of your inspection?

Answer 27

The purpose of my inspection was to measure the property for the area dispute, review the specification and location, in addition to the location of the comparables as well as review how the lift lobby space is used.

Question 28

What guidance notes did you adhere to for the inspection?

Answer 28

I had regard to the RICS Surveying Safely, Guidance Note, 2nd Ed. Nov 2018. As well as the COVID-19: Guide to surveying non-domestic properties, Version 2.

Question 29

What did you note about the construction?

Answer 29

I noted the construction style, the bonding, the type of roof and roof tiles as well as the access and general level of footfall in the area.

Question 30

What defects did you note?

Answer 30

I did not note any defects either internally or externally on this occasion.

Question 31

What factors did you inspect of the comparables to determine is comparability?

Answer 31

I had regard to the location of the comparables, in respect of the subject property as well as the general build quality and access, and what I could see internally, such as reception space, the size of the windows, whether they were single or double glazed.

Question 32

What scale did you use for the plan?

Answer 32

I used a scale of 1:200.

Question 33

Why did you use this scale for your plan?

Answer 33

I used this scale as the floor plate was fairly large, but I wanted to be as detailed as possible, especially with regard to the columns and smaller spaces as the area of the space was in dispute.

Question 34

Why did you draw the plan manually, and not online?

Answer 34

I drew the plan manually, due to personal preference – I find it easier to do than the online applications.

Question 35

What is the meaning of a Main Space Rate?

Answer 35

A main space rate if a figure per sqm, which we use to calculate the rateable value of a property.

Question 36

How did we apply the main space rate to the property?

Answer 36

We take the main space rate and multiply it by the area of the property to determine the overall rateable value.

Question 37

How do we determine the main space rate?

Answer 37

We determine the main space rate through market evidence at the antecedent valuation date, this can either be from the subject property itself or others in the locality in order to create a general tone for the locality, rather than an individual basis.

Question 38

Where does it state that the onus is on the appellant?

Answer 38

Section 4(f) of Regulation 10 in the Non-Domestic Rating (Alteration of Lists and Appeals) (England) (Amendment) Regulations 2017.

Question 39

What are the considerations for comparable evidence, in Lotus and Delta v Culverwell?

Answer 39

There are 6 considerations devolved from the Lotus & Delta v Culverwell case, these are:
(i) Where the hereditament which is the subject of consideration is actually let that rent should be taken as a starting point

(ii) The more closely the circumstances under which the rent is agreed as to time, subject matter and conditions related to the statutory requirements contained in the definition of rateable value the more weight should be attached to it.

(iii) Where rents of similar properties are available they, too, are properly to be looked at through the eye of the Valuer in order to confirm or otherwise the level of value indicated by the actual rent of the subject hereditament

(iv) Assessments of other comparable properties are also relevant. When a rating list is prepared these assessments are to be taken as indicating comparative values as estimated by the valuation officer. In subsequent proceedings on that list therefore they can properly be referred to as giving some indication of that opinion.

(v) In the light of all the evidence an opinion can then be formed of the value of the appeal hereditament, the weight to be attributed to the different types of evidence depending on the one hand the nature of the actual rent and, on the other hand, on the degree of comparability found in other properties.

(vi) In those cases where there are no rents available of comparable properties a review of other assessments may be helpful but in such circumstances it would clearly be more difficult to reject the evidence of the actual rent’

Question 40

What is the antecedent valuation date?

Answer 40

The antecedent valuation date is the date in which we consider the value of all rateable assessments for the 2017 rating list, this date is the 1st April 2015.

Question 41

What is the impact of a sublease on reliability?

Answer 41

It is unclear why the property was subleased, or the restriction or details in the superior lease which may restrict rental figures – for example the rent was decided at the start of the original lease and can only be raised at rent review, not when it was subleased.

Question 42

Why did you disregard the subject evidence?

Answer 42

It was furthest from the antecedent valuation date, there were conflicting figures regarding the rent payable and the superior lease details were unknown.

Question 43

Why did you rely upon evidence not close to AVD?

Answer 43

I relied upon this evidence due to the lack of closer evidence within the subject building, had I only had 1 or 2 rental transactions further from AVD I would not have relied upon this and would have widened by scope however because I had 4 rental transactions, with 3 more reliable ones I was able to establish an indication of value, in conjunction with my valuer knowledge of the office market in this locality as well as in conjunction with the settled appeal of a neighbouring unit.

Question 44

Why did you not widen the scope to get AVD evidence?

Answer 44

In hindsight I would have liked to widen the scope, however I was satisfied with the indication of value through comparable evidence within the subject building and the neighbouring settled proposal for a higher main space rate of a lesser quality assessment.

Question 45

Why did you rely upon evidence larger than the subject?

Answer 45

I applied least weight to this comparable due to its size and the turnover rent, though it did fit in within the ranges of values and sat closest to AVD – I included to present the full evidence available within the subject property.

Question 46

How did you adjust the comparables?

Answer 46

For comparables which did not have any rent-free period I adjusted by dividing the total rent by the area.

Question 47

How do you reflect the rent-free period?

Answer 47

For those with a rent-free period I adjusted for the rent-free period by applying zero rent for the rent-free period and then deferred the full rent payable by that term. I applied a 7% yield based on market evidence at the time, in the locality.

Question 48

Did you reflect for fit-out period?

Answer 48

Depending on the size of the property I deducted 3 or 6 months for the fit-out period, as market evidence supports this for offices in the locality.

Question 49

What amortisation rate did you use and why?

Answer 49

I applied a 7% yield based on market evidence at the time, in the locality.

Question 50

What is a turnover rent?

Answer 50

The turnover rent, in the case of the last comparable is where the market rent is topped up by 4% of the annual turnover.

Question 51

Did you adjust the rent to the break clause, or full lease length?

Answer 51

I adjusted to the end of the lease or 10 years, whichever comes first as none of the comparables had a break clause or rent review detailed.

Question 52

Did you reflect the 8% fit out costs?

Answer 52

TBC

Question 53

Why did you reflect 8% for the fit-out costs?

Answer 53

TBC

Question 54

How did the main space rate reflect market at AVD?

Answer 54

According to Knight Frank and Savills Q2 2015 office reports, second hand office space and average grade A spec rents in the Soho office district range from £70/sq. ft - £80/sq. ft (£753/m2 - £861/m2).

Question 55

What does VPS 2 relate to?

Answer 55

Inspections, Investigations and Records of the RICS Global Standards, Jan 2022.

Question 56

Why was it important that the superior lease be obtained?

Answer 56

It was important in case of any restrictive clauses, particularly regarding the rent. I have had dealings previously where the rent was agreed previously and cannot be changed until rent review, therefore at the start of the sublease the rent could have reflected an earlier market rent.

Question 57

How did I know the office market in the locality was growing at the valuation date?

Answer 57

I knew this by reviewing office market reports in that locality, around the AVD, specifically Q1 & Q2 of 2015.

Question 58

What was the effective date for this case?

Answer 58

The effective date for this case was the 23rd May 2018, as the appellant believed the rateable value was incorrect due to alteration Regulation 4(2) NDR 2009.

Question 59

What was the material date for this case?

Answer 59

The material date for this case as the 23rd May 2018 as this was the date I consider the state and condition of the property

Question 60

Were there any ethical implications when undertaking this case?

Answer 60

None.

Question 61

Was this a red book valuation?

Answer 61

This was not a red book valuation as this was a statutory valuation, which is not governed by the red book.

Question 62

What guidance did you follow when undertaking the valuation?

Answer 62

I had regards to the VOA Rating Manual.

Question 63

What guidance would the rating agent follow?

Answer 63

RICS Rating Consultancy, Code of Practice, 4th edition, March 2017.

Question 64

Is the client still called the Ministry of Housing, Communities and Local Government?

Answer 64

Department for Levelling Up, Housing & Communities

Question 65

What construction methods were used

Answer 65

The property is of masonry construction with a concrete foundation and core, with supporting columns throughout – the walls are of cavity construction, with stretcher bonding as well as a flat roof with a slate tile trim.

Question 66

What are the common issues with properties of this age/construction?

Answer 66

Cavity Wall/Brickwork – Wall-ties rust or corrode, dripping mortar can bridge cavity wall, causing moisture to the inner layer, insufficient cavity width and insultation, Cracking of bricks.
Flat Roof – Blistering of the roof material, water ingress, cracking of harder roof coverings, sun-damage.
Concrete structure – Cracking, Crazing, Blistering, Delamination, Effloresce, Scaling

Question 67

Do you know what plug and play offices are?

Answer 67

Offices that are fully kitted out with furniture, services and appliances, allowing the tenant to literally plug in their computers and work.

Question 68

Can you explain the difference between notional and permanent lift lobby space?

Answer 68

Notional lift lobbies are spaces that are not restricted in their use as a lift lobby, if under the control of a tenant they can use the space however they like – this does not restrict the use of the actual lifts but the immediate area around it. Permanent lift lobbies are likely under the control of the building, not occupied by any tenant therefore cannot be used as freely – used as circulation space for all tenants.

Question 69

Shouldn’t the floor area issue have been sorted at the Check Stage?

Answer 69

It was decided at the check stage that we had sufficient evidence to determine that the current floor area is correct – however the appellant continued to disagree. In order to carry out due diligence, as well as to satisfy the other issues – I took the inspection opportunity to measure the property myself.

Question 70

What did you bring for safety whilst on inspection, what policy would you have followed?

Answer 70

Whilst I was on this inspection with a colleague, I am aware of the lone working policy set out by the VOA, as well as relevant sections of the RICS Surveying Safely guidance – such as bringing my sky guard device, my work and personal phones, updating manager of my whereabouts

Question 71

What is the difference between refurbishment and renovation?

Answer 71

Refurbishment is the updating or repairing of the space and elements as well as remaining with the current use whereas renovation can be changing of the use, with relevant structural changes to reflect the use.

Question 72

Why did you state there was no intention to improve in regard to Comparable B?

Answer 72

I was aware that at the AVD, this comparable had applied for the demolition of the building, this would later be approved in 2016. Considering the 1st assumption of rateable value, the tenancy begins at the day the determination is to be made – at this date, there was already planning application for demolition, therefore no intention to improve the quality it is already in.

Question 73

What is the main case law for considering rents that are post-AVD?

Answer 73

The case law regarding post-AVD rents is the Special eyes v Felgate 1994.

Question 74

Case law for weighting rental evidence?

Answer 74

Lotus and Delta v Culverwell & Leicester City Council 1976

Question 75

What would you have done had the tone need to be increased?

Answer 75

I would have carried out an impact analysis to understand how the other properties in the locality would be affected.