Part 3: practice note 1 - revaluation 2005 - the contractor's basis - site values
The Valuation Office Agency's (VOA) technical manual for the rating of business (non-domestic) property.
In many cases Reval 2005 Practice Notes will provide guidance on the basis of determination of site value for individual classes, sometimes based on a percentage of building cost basis. Where such specific advice is not available, site value should be determined in accordance with the main part of this Section and Practice Note.
2. Application of discounts to land values
It should be emphasised that “full” alternative use values, should only be used with reference to the advice contained within the main part of this Section and Practice Note. In particular there may be a need to consider the discounting of land values to reflect a non-commercial use of the subject hereditament. The quantum of this discount for non-commercial use will depend on specific circumstances; however it is recommended for valuations undertaken on hereditaments outside the M25 that, where there is no evidence or other basis allowing quantification of this discount, a deduction of about 15% from prevailing use value in the locality would be appropriate. Separate guidance will be issued for within the M25.
For the avoidance of doubt, this discount should not be applied in valuing sites for commercial or industrial hereditaments.
3. Consideration of alternative site value
The choice of whether to adopt residential or industrial or other commercial land values for a particular hereditament will depend not only on the nature of prevailing use within its locality, but also on the availability of land within the wider locality which is suitable for the hypothetical tenant’s requirements, but of a different (and lower value) use. Where this availability exists it may be appropriate to use the lower of the prevailing use value in the locality (discounted by the above percentage) or the (un-discounted) site value for the alternative site.
For example, if a contractors basis hereditament is situated in a residential area, but it is considered that the hypothetical tenant would consider a nearby (lower value) industrial location as meeting its requirements, the lower of the un-discounted alternative (industrial) site value and the appropriate residential site value (discounted on the above basis outside London) may be used.
Where the use type of a particular hereditament may enable otherwise “undevelopable” public open space/green belt land to be “brought forward” for development for that use, special consideration may be necessary.
4. Application of age and obsolescence allowances
Advice contained within the main part of this Section and Practice Note regarding adjustment of land value to reflect age and obsolescence of buildings should be followed.