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APC Valuation > Case Study > Flashcards

Case Study Flashcards

1
Q

You say you completed a conflict of interest check before taking instruction, how did you do this?

A

I ensured I had no connection to the property, interested party or the representative.

I also

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2
Q

What is the definition of Rateable Value and where is it found?

A

The estimated amount a wholly non-domestic property, free of any domestic element might reasonably let for year to year on three assumptions:

  1. The tenancy begins on the day by reference to which the determination is made
  2. The property is in a reasonable state of repair.
  3. The tenant pays all usual tenants rates and taxes and bears the costs of repairs and insurance

Found at Schedule 6 paragraph 2 of the LGFA 1988.

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3
Q

What is the guidance set out in Lotus & Delta v Culverwell?

A

Sets out 6 propositions for the weighting of evidence in rating.

  1. The subject rent shall be taken as the starting point.
  2. Closer the rent is to the definition of RV the more weight to be attached.
  3. The rents on other comparable assessments are to be considered.
  4. In the absence of rental evidence, comparable assessment values can be considered.
  5. The basket of evidence is to be considered and attached weight.
  6. Where there is no reliable evidence the subject rent shall be taken as the most reliable to attribute an RV.
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4
Q

Why did it take so long between the initial stage in November 2021 and your review of the case?

A

Due to the process. The first stage is to check the factual details of the property. The case then goes to Challenge which didn’t get allocated to me until May.

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5
Q

Is it usual to take 2 months from inspection to completion of case?

A

It varies. In this case there was some back and forth and negotiations so prolonged the case slightly.

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6
Q

What stakeholders were party to the case?

A
  • VOA
  • Local billing authority
  • DLUHC
  • Ratepayer
  • Ratepayers representative
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7
Q

Consent has not been given to disclose details, however, you state the property is in Coventry city centre. Do you think the property could be inferred?

A

I have taken steps to redact any identifiable details in the pictures.

There are also numerous restaurants in the city centre so would be difficult to infer the property.

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8
Q

How does glazed frontages increase the tenant profile?

A

In my opinion the glazed frontages made the units more attractive to customers in the area.

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9
Q

When attributing fit out did you adjust for tenant specific improvements?

A

No, I didn’t adjust for tenants improvements, I considered the rental evidence in the area as the main driver for value.

However, I would not add for tenant specific improvements. Only those improvements which added value to a prospective tenant.

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10
Q

What are the stages of the CCA process?

A

Stage 1: Check - The IP must confirm the factual details of the property or any changes that have occurred.

Stage 2: Challenge - Where the valuation of the property is considered and any outstanding matters from Check.

Stage 3: Appeal - If the IP disagrees with the decision they can appeal to the Valuation Tribunal where an independent panel will review the evidence and decide the RV.

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11
Q

Was there any other option other than to inspect?

A

Yes, I could have accepted the agents plans and confirm if the property was on the first floor from agents in the area and google maps.

However, I felt an inspection was necessary to confirm the details as there was such a discrepancy. Also, as part of my due diligence.

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12
Q

What value significant features did you find on inspection?

A
  • Locality
  • Property position being very central and in the middle of the majority of the footfall
  • Age
  • Construction
  • State of repair
  • Quality
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13
Q

What are the differences for NIA between RICS COMP and VOA COMP?

A
  • Public toilets are included in VOA
  • Toilets in excess of normal staff requirements.
  • Areas rendered substantially unusable by by virtue of having a dimension between opposite faces of less than 0.25m (Excluded from RICS COMP).
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14
Q

Why did the agent suggest an amortisation period of 8 years?

A

They argued this was the reasonable fit-out life of a restaurant.

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15
Q

How did the agent arrive at £107.24/m2 for the subject rent?

A

A detailed valuation was not provided but they amortised the rent, capital contribution and fit-out over 8 years.

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16
Q

Why did you need to request further information form building surveyors?

A

As I felt it was outside my area of competence and they would be better suited to attribute the amount of rateable fit-out.

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17
Q

Why did you need the lease and breakdown of fit-out costings?

A

To confirm the basis of the lease, capital contribution and what rateable fit-out was included.

This would assist me in valuing the property.

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18
Q

Why could the document of fit-out costings not be analysed?

A

The document provided did not show anything specific. The items within were not always easy to decipher what they related to.

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19
Q

Why did you use Acenden & De Fundifo v Bunyan?

A

Because this case related to fit-out and the amount of fit-out to be attributed to the RV.

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20
Q

Acenden concerned an office this is a restaurant do you think you can use this to compare?

A

There are differences between offices and restaurants but it is the only case law available to assist when it comes to attributing fit-out costings.

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21
Q

What did the Acenden case decide?

A

The VT decision laid down the percentage of fit-out costings that should be attributed to the RV. They found:

Ascot House - The VT attributed 21% of fit-out costings to the rent.

Hollywood house - The VT attributed 100% of fit-out costings to the rent as the appellant did not provide a breakdown of costings and decided the burden of proof is on the appellant.

22
Q

Was this an upper tribunal decision?

A

No, this was the VT decision. The upper tribunal case had not been done by this point.

The UT case only concerned Ascot House and decided 47% of fit-out costings should be attributed to the rental value.

However, the final decision relied upon fitted rents from the wider locality rather than fit-out costings.

23
Q

Why did you amortise the rent over the 20-year term?

A

As there were no break clauses and I do not think a prudent landlord would give such a capital contribution and only have the tenant in to the 5th year as they would see no return.

24
Q

Why did you decide analysis 3 was the most appropriate analysis?

A

As this was in line with case law and when I stood back and looked I felt it fitted in with the rental evidence considering the agreement date.

25
Q

Why was analysing the rent over 8 years not appropriate?

A

I felt there was no basis for this as there weren’t any breaks and the fit-out life would be in excess of 8 years.

26
Q

Did you not convince the agent to move from their figure at all?

A

No, they maintained their position throughout the case. However, in my opinion I believe I provided sufficient evidence to defend the entry.

27
Q

Why did you place little weight on the agents evidence?

A

As they relied on the subject rent and I disagreed with their devaluation approach.

Also, they relied on rents from further from the city centre and a mezzanine floor within one of the assessments in the development.

28
Q

Why did you place little weight on the subject rent after all the analysis you had done?

A

Due to it being agreed over 3 years post-AVD and the amount of adjustment required to bring in line with the definition of RV.

I analysed all the rents in line with lotus and delta and do my due diligence to attribute a value.

29
Q

What was the construction of the property? What was the brickwork?

A

Brick construction with glazed frontages. Part flat brick roof and part pitched metal roof.

The property was cavity wall construction, due to their being two walls with insulation in the middle.

30
Q

All of your evidence is post AVD do you think this is the best approach?
Is there any case law to support post AVD rents?

A

Yes, the best evidence in my opinion was from the subject development and those closest to AVD.

Yes, the case law is specialeyes v Felgate which stated rents closest to AVD are the strongest, then rents pre-AVD and finally post-AVD.

31
Q

Why did you place most weight on comparable 1?

A

Due to it being a corner unit on the first floor very similar to the subject. Also, very little adjustments to bring in line with RV.

32
Q

The evidence is quite diverse and above the adopted rate. Do you feel a higher rate p/m2 could be adopted?

A

I felt the rate adopted was reasonable in line with comparable 1 and with the evidence being post AVD £175/m2 and £250/m2 was reasonable.

33
Q

Why did you apply a rate of 70% to the analysis of evidence for ground floor units?

A

To bring them in line with the subject. The evidence showed first floor units were not as valuable as ground floor units. A 70% adjustment figure had been adopted in the development and for other first floor restaurants across the city.

34
Q

Why are ground floor restaurants more valuable than first?

A

Due to footfall, exposure, and ease of access to the unit making it more attractive to potential customers.

35
Q

Why did you analyse the subject over the 20-year lease and the comparables to the 5th year?

A

As the subject had no indication of break clauses.

Also, none of the comparables had such large capital contributions.

36
Q

Why did you increase the Rateable Value of the hereditament?

A

As this was the correct approach in terms of value due to the increased areas found.

I have a duty to maintain a fair and accurate list under section 41 of the LGFA 1988.

37
Q

What is the RICS hierarchy of rental evidence?

A
  1. New lettings
  2. Lease renewals
  3. Rent-reviews
  4. Expert determination
  5. Sale and leaseback
  6. Inter-company transactions
38
Q

What allows you to share FOR data with the agent?

A

Section 18 of the Commissioner For Revenue and Customs Act 2005.

39
Q

How do you feel you refined you communication and negotiation skills?

A

By adopting different methods to get my point across.

I used telephone and emails to present my evidence. I also put my evidence in weight order to show how I felt the value of the property was reasonable.

40
Q

Why do you feel a joint inspection would be more beneficial than agreeing off-site?

A

As you can verify the measurements there and that way there can be little room for disagreement.

Discussing off-site can lead to inaccuracies.

41
Q

Why do you think the agent didn’t appeal the case?

A

In my opinion it was due to the strong evidence I proposed and the evidence provided by them was not sufficient for a reduction.

42
Q

Would you have changed your approach if the 2023 Acenden decision was available to you?

A

Yes, I would have undertook the one analysis at 47%.

However, I would have still relied on the rental evidence as they did in this case.

43
Q

Why did the UT reject the decapitalisation approach?

A

As it was not an accurate picture of worth to a potential occupier. This is the method of last resort and does not reflect what somebody would pay to occupy the property.

44
Q

What sort of brickwork was at the property?

A

The brickwork was a running bond.

45
Q

What Plant & Machinery was present at the property?

A
  • Air conditioning
  • Lighting
  • Services
46
Q

How did you value the air conditioning at the property?

A

I had to use the back stop value of £7/m2 for rating.

However, I understand there are different approached.

  1. I would use the comparable method to fond rental evidence of air conditioning in the market.
  2. If no rental evidence, ascertain the replacement cost of the air conditioning and then decap that value by the statutory decap rate of 4.4%.
47
Q

How did you value the outside seating area?

A

I had regard to the other assessments in the development and restaurants in the locality for the values attributed to outside seating area and adopted those values.

I had no direct rental evidence to support a rental value.

48
Q

There are some awkward shapes at the property. How did you measure these areas?

A

I used the triangulation method. This is where you stand at right angles and take multiple measurements to ascertain measurements and area.

49
Q

When analysing the subject rent why did you adopt a 6.5% decapitalisation rate?

A

This is in line with the yields in the area. It was also stated this was the decapitalisation rate for adjustment for this type of property in the area.

50
Q

Why does the air conditioning only cover the restaurant area?

A

As the air con only serviced the restaurant area and wasn’t present elsewhere in the hereditament.

51
Q

Why did you round the valuation down to £59,000?

A

In line with VOA rounding policy.

Rateable Value is an estimate so would not be correct to value to the exact pound.

APC Valuation (27 decks)

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