Rating Manual section 4: valuation methods

Part 3: practice note 1 - 2017L revaluation - the contractor's basis - age and obsolescence allowances

The Valuation Office Agency's (VOA) technical manual for the rating of business (non-domestic) property.

If guidance is given on age and obsolescence allowances in a R2017 Practice Note for a particular class of property it should be followed.

In all other cases the guidance given here should be followed.

Allowances(allowances scales)

Allowances should be considered in accordance with the guidance given in the Rating Manual – Volume 4 Section 7, in the sections dealing with particular classes of hereditament and Volume 4 Section 3 Plant and Machinery

The Rating Cost Guide figures do not take account of any disability, which may affect the actual hereditament or item being valued. The Generic Contractor’s Basis spread sheet held on the Non Bulk Server has a remarks column in which the reason why any allowance is made for a disability should be clearly recorded.

The general allowance scales for civils/plant and tanks are intended to apply to large industrial hereditaments which possess a high number of similar items.

The scales refer to the actual age of the specific item. A notional age can be adopted where the item has undergone significant improvement or refurbishment.

The scales do not provide for physical obsolescence alone. They also reflect the expected degree of functional and technical obsolescence for an asset of that age.

Any extraordinary functional or technical obsolescence may result in an additional allowance being considered. Examples include superfluity for modern purposes or where new technology evidences that the actual asset is relatively inefficient. Where an additional allowance is made the reasons for it must be stated in the valuation notes.

An element of risk of failure and the requirement of the tenant to replace the item at the end of its useful life is incorporated in the allowances.

It should not be automatically assumed that because a property is old it merits an allowance. In certain circumstances, age may be a positive asset as, with, for example, prestige buildings such as town halls, art galleries, or universities; or may simply not have an effect. Age in itself is not a disability but rather what often flows from age.

Many of the disabilities suffered by buildings are however age-related. It is possible to take account of these in guidance scales for certain classes to minimise the subjective judgement necessary when using the substituted building approach to cost-related valuations. The practice notes for particular classes will highlight where this approach is appropriate.

The scales are intended to provide a degree of uniformity of allowance. They should be regarded as the maximum allowances to be given.

The scales should only be used as guidance in accordance with the principles outlined in the Rating Manual.

Allowances in excess of 50% for buildings or P & M should only be adopted in exceptional circumstances. It is unlikely that many very old buildings exist which have not undergone some form of modernisation or refurbishment. Where a building or piece of plant has obviously not undergone refurbishment or modernisation at some stage it is permissible to give allowances up to a maximum of 65% as indicated in the scales (below).

Allowances may be up to 50% higher from those shown in the scales for structures of a temporary nature, which have continued to be used well beyond their intended life span.

It should not be assumed automatically that because an item of plant or machinery is old it merits an allowance. If an asset is well maintained the amount of use may well not affect the item or its value. However, with age the risk of breakdown is likely to increase and functional and technological obsolescence factors are likely to become prevalent. These factors must be borne in mind when selecting an appropriate obsolescence allowance.

The scales of allowances therefore take into account the average use of items over a period of time, bearing in mind the physical, functional and technical obsolescence that may occur during the stated period.

Where judgement through actual knowledge of the item is inconsistent with the allowance scales the item should be valued accordingly recording the reasons for the divergence from the scale.

Notes on the valuation sheet should show clearly against each item the reason for any allowances given where these depart from the scales. A record of these reasons should be made on the Generic Contractor’s Spread sheet

YEAR PLANT CIVILS TANKS BUILDINGS
2017 0.00 0.00 0.00 0.00
2016 0.00 0.00 0.00 0.50
2015 0.00 0.00 0.00 1.00
2014 0.00 0.00 0.00 1.50
2013 0.00 0.00 0.00 2.00
2012 0.00 0.00 0.00 2.50
2011 0.00 0.00 0.00 3.00
2010 0.00 0.00 0.00 3.50
2009 0.00 0.00 0.00 4.00
2008 0.00 0.00 0.00 4.50
2007 0.00 0.00 0.00 5.00
2006 2.00 0.50 1.00 6.00
2005 4.00 1.00 2.00 7.00
2004 6.00 1.50 3.00 8.00
2003 8.00 2.00 4.00 9.00
2002 10.00 2.50 5.00 10.00
2001 12.00 3.00 6.50 11.00
2000 14.00 3.50 8.00 12.00
1999 16.00 4.00 9.50 13.00
1998 18.00 4.50 11.00 14.00
1997 20.00 5.00 12.50 15.00
1996 22.50 5.50 14.00 16.00
1995 25.00 6.00 15.50 17.00
1994 27.50 6.50 17.00 18.00
1993 30.00 7.00 18.50 19.00
1992 32.50 7.50 20.00 20.00
1991 35.00 8.00 21.00 21.00
1990 37.50 8.50 22.00 22.00
1989 40.00 9.00 23.00 23.00
1988 42.50 9.50 24.00 24.00
1987 45.00 10.00 25.00 25.00
1986 45.50 10.50 26.00 26.00
1985 46.00 11.00 27.00 27.00
1984 46.50 11.50 28.00 28.00
1983 47.00 12.00 29.00 29.00
1982 47.50 12.50 30.00 30.00
1981 48.00 13.00 31.50 31.00
1980 48.50 13.50 33.00 32.00
1979 49.00 14.00 34.50 33.00
1978 49.50 14.50 36.00 34.00
1977 50.00 15.00 37.50 35.00
1976 50.50 15.00 40.00 36.00
1975 51.00 15.00 40.00 37.00
1974 51.50 15.00 40.00 38.00
1973 52.00 15.00 40.00 39.00
1972 52.50 15.00 40.00 40.00
1971 53.00 15.00 40.00 41.00
1970 53.50 15.00 40.00 42.00
1969 54.00 15.00 40.00 43.00
1968 54.50 15.00 40.00 44.00
1967 55.00 15.00 40.00 45.00
1966 55.50 15.00 40.00 46.00
1965 56.00 15.00 40.00 47.00
1964 56.50 15.00 40.00 48.00
1963 57.00 15.00 40.00 49.00
1962 57.50 15.00 40.00 50.00
1961 58.00 15.00 40.00 51.00
1960 58.50 15.00 40.00 52.00
1959 59.00 15.00 40.00 53.00
1958 59.50 15.00 40.00 54.00
1957 60.00 15.00 40.00 55.00
1956 60.50 15.00 40.00 56.00
1955 61.00 15.00 40.00 57.00
1954 61.50 15.00 40.00 58.00
1953 62.00 15.00 40.00 59.00
1952 62.50 15.00 40.00 60.00
1951 63.00 15.00 40.00 61.00
1950 63.50 15.00 40.00 62.00
1949 64.00 15.00 40.00 63.00
1948 64.50 15.00 40.00 64.00
1947 65.00 15.00 40.00 65.00
1946 65.00 15.00 40.00 65.00
1945 65.00 15.00 40.00 65.00
1944 65.00 15.00 40.00 65.00
1943 65.00 15.00 40.00 65.00
1942 65.00 15.00 40.00 65.00
1941 65.00 15.00 40.00 65.00
1940 65.00 15.00 40.00 65.00
1939 65.00 15.00 40.00 65.00