Creameries
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
This guidance applies to Creameries. This class of property is concerned with the processing of cream and/or milk into other dairy products, as such there may be some overlapping with dairy’s and other food processing hereditaments.
| List description | Creamery and premises |
|---|---|
| Primary description code | IX |
| Scat code | 079 |
| Scat suffix | S |
The valuation of this class of property is the responsibility of the Industrial, Commercial and Crown team within the National Valuation Unit (NVU).
The Combined Industrial Class Co-ordination Team (CCT) has overall responsibility for the co-ordination of this class.
The team are responsible for the approach to and accuracy and consistency of valuations. The team will deliver practice notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists.
Caseworkers have a responsibility to:
- follow the advice given at all times
- not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team
- seek advice from the co-ordination team before starting any new work
There is no specific legal framework for this class.
Creameries should be measured and valued to Gross Internal Area (GIA) having regard to the definitions contained in the VOA Code of Measuring Practice for Rating Purposes.
Rating surveys should be captured on the Rating Support Application (RSA). Plant and Machinery should be recorded on the Non-Bulk Server (NBS) and plans and surveys should be stored in the appropriate folder within the Electronic Document Records Management (EDRM) system.
Rental and rental comparison approaches should be used. The class co-ordination teams are available to assist with rental analysis if required.
- Rating Support Application
- Class co-ordination team
- Non-bulk server
1. Overview
1.1. The VOA standard of measurement for factories, workshops and warehouses is Gross Internal Area (GIA). An explanation of measurement to GIA can be found in the VOA Code of Measuring Practice for Rating.
1.2. The Code of Measuring Practice e-learning provides useful information on measuring industrials and can be found on the NDR Learning Homepage.
1.3. Industrial properties come in all shapes and sizes, from small workshops to huge manufacturing sites. There are many hazards to consider so you must follow the site rules and use your personal protective equipment.
2. External features
2.1. The Site
A pen picture should be provided of the locality that notes the following:
- Location
- Situation
- Advantages
- Disadvantages
2.2. An example might be:
“The property is situated on an established industrial estate with good access via an existing made-up road also serving other parts of the estate. There are good main road and rail links nearby but parking on site is limited.”
3. Access, loading and unloading facilities
3.1. Ease of access to and within the property should be noted. The height and width of all access doors must be recorded, together with details of construction and the method of operation (e.g. metal roller shutter, electrically operated). The presence of dock levellers should be noted.
3.2. The position of all access doors must be shown on the plan and any problems with access that may affect loading and unloading or general access recorded.
3.3. The height and width of access doors is important not only to the daily operations at the property but also with regard to plant and machinery.
4. Car Parking
4.1. Note the number of allocated car spaces or calculate the approximate size of the overall parking area together with details of the surface finish.
5. Ancillary Storage Land
5.1. Any ancillary storage land should be measured separately and the surface finish noted. Any land suitable for storage, which is unused, should also be recorded. Ask the occupier if the land is used exclusively by them or is shared. If shared make a note of the area and details of the other occupiers.
5.2. It is important to be aware that there are many different approaches to the way in which ancillary land is valued. It is important to be aware of which approach applies to each area. If in doubt please ask your technical advisor.
5.3. Where there are temporary buildings, cabins and/or storage containers (SCN) etc. located on land, then the area of this land must not be deducted. The value of the temporary buildings and/or storage containers and the like, must be added in addition to the land value. Depending on the circumstances, this can be done in the valuation either by a suitable line entry or by using other additions. Other additions is the preferred approach.
6. Age
6.1. It is important to correctly identify the age of any property when carrying out an inspection. The occupier should be able to give you information on the age of the property. If you are unable to obtain this information take photographs to allow identification. The Industrial Age Recognition Guide is a useful tool to help identify the age of your industrial property.
7. Internal features
7.1. Ancillary Accommodation
You should note any ancillary accommodation that may be available e.g. office space, toilets, washrooms, canteens etc.
7.2. Measuring to GIA, ancillary accommodation within the same building may not need to be separately measured if it is of similar quality and value as the main space. Only note the facilities and finish.
7.3. Office space within solid walls or on mezzanine/1st floors, or areas of differing quality will need to be measured.
8. Heights
8.1. The height of an industrial property can have a significant effect upon the value. Eaves height is often used in industrial scales to determine value.
8.2. To record a height note it on the plan at the point it was measured and circle it to distinguish it from the linear measurements.
8.3. The following diagrams show three different types of height in traditional and modern industrial units. The Inspection Checklist only requires you to note the eaves height, which should be measured internally. If the clear height is significantly lower than the eaves height, this might affect the value of the property so should also be recorded.
Diagrams of three different types of height in traditional and modern industrial units.
The following diagrams are added for clarity and show the points of measurement for internal eaves height and clear height. It is worth noting that some letting brochures will only state clear height (measured to the underside of the eaves haunch).
Diagrams of the points of measurement for internal eaves height and clear height.
8.4. Definitions of heights can be found in the VOA Code of measuring practice: definitions for rating purposes. Those for internal eaves and clear height are reproduced below.
8.5. Internal eaves height: the height between the floor surface and the underside of the roof covering, supporting purlins or underlining (whichever is the lower) at the eaves on the internal wall face.
8.6. Clear height: the height between the floor surface and the lowest part of the roof trusses, ceiling beams, roof beams or haunches at the eaves.
8.7. The RICS code of measuring practice has similar definitions with an explanatory diagram which is shown below for reference.
Explanatory diagram for RICS code of measuring practice.
8.8. There may be a number of buildings on the site all with different internal eaves heights in which case separate survey units may be needed to record differing heights.
9. Floor
9.1. Differences in the loading capacity of floors should be recorded. Limitations on the load carrying capacity of the floors (particularly 1st floors and mezzanine storage platforms) should be noted, where available, as this may restrict the full use of the floor.
10. Mezzanine
10.1. A Mezzanine is a “Supported First Floor” (SFF) a floor or series of floors installed independently inside part of the of the main building.
10.2. The construction details, method of access and the clear height above and below the SFF should be recorded, the area below is usually shown as a separate item and deducted from the overall GIA of the ground floor.
10.3. Where possible you should record the load carrying capacity of the Mezzanine floor. This can usually be found on a plate attached to the steel support framework.
11. Bay widths and stanchion grids
11.1. A note should be made of any item, which restricts clear floor space. Columns, piers, pillars, stanchions etc are all included within the GIA and there is no need to take individual measurements of these features. The number, their approximate positions and sizes should be shown on the plan. Where pillars or stanchions form a grid within an area the grid widths should be shown.
12. Lighting
12.1. The provision of natural and artificial lighting must be recorded. For example ‘’Clear Perspex roof panels and suspended strip lights’’.
13. Plant and machinery
13.1. Industrial property, particularly workshops and large factories, are the bulk property where the majority of Plant & Machinery can be found.
1. Market appraisal
1.1. Department for Environment Farming and Rural Affairs (DEFRA) is the government body responsible for regulating the dairy farming industry.
1.2. DEFRA produce data sets detailing milk availability, milk uses, production and pricing.
1.3. Official statistics show UK average milk prices (farm-gate price) at the antecedent valuation date (AVD) in April 2021 was 29.41 pence per litre. This compares to 24.69 pence per litre in April 2015.
1.4. The price of milk is an important factor in driving milk and cheese industry revenues. Other factors include the bargaining power of downstream retailers (supermarkets), consumer health trends and the value of sterling.
1.5. Britain’s dairy industry, renowned for its quality, is well placed to grasp the opportunities that the increasing demand for milk and dairy products provides.
1.6. The impact of the COVID pandemic on industrial property values was marked by considerable variation between sectors. Demand for dairy products remained strong during the pandemic. Media reports indicate that loss of demand from food service outlets that were forced to close was offset by an increase in demand from supermarkets and other large retail outlets. Farmgate milk prices recovered towards the end of 2020 and broadly remain at pre-pandemic levels in 2021.
1.7. Current market conditions driving industry consolidation have resulted in increased capital investment. Many occupiers have upgraded or expanded existing facilities as they continue to seek economies of scale and increased efficiencies.
1.8. Market evidence for creameries that reflect bespoke fit out for dairy production will be extremely rare. It is typical for occupiers to design and build bespoke facilities or take shell units and fit them out to their particular requirements.
2. Changes from the last practice note
There have been no changes since the last practice note.
3. Ratepayer discussions
There have been no discussions with ratepayers.
4. Valuation Scheme
4.1. The basis of valuation is by rental comparison. Rental evidence is limited, but it does indicate an uplift in value for specialised fit out over and above that of equivalent industrial premises.
4.2. Values will generally be drawn from the local industrial tone with appropriate adjustments to reflect the inherent characteristics of creameries. These will include clean production areas, chilled and cold storage areas and specialist high bay areas.
4.3. The tone will be adjusted to reflect the individual characteristics of each property in respect of common issues effecting industrials such as age, modernity and layout.
4.4. All creameries must have a common sub location code linked to an address matrix. The sub location code to use is 3CRM. The valuation scale is V1FGIA1 used for industrial property measured to GIA.
4.5. Care must be taken to align values with those produced by size based matrices in use by Regional Valuation Units, so as to avoid, as far as possible, illogical steps in value at the margins.
4.6. All valuations of creameries should be individually reviewed to ensure consistency and quality.
4.7. Additions for car parking are reflected unless the local tone from which the unit rate is derived makes an addition for car spaces.
4.8. Land (as an ancillary to an industrial hereditament)
The Valuation Support Application (VSA) standards definition requires that all land within a hereditament is identified and appropriately captured. This will ensure that no “notional” allowances or deductions are made from the gross area of land actually used for and identified as open storage. It should be captured as an “other addition” using the relevant Other Allowance (OA) code
4.9. Eaves Height
The effect on value of an eaves height greater or less than ‘normal’ is essentially a local market interpretation issue. The following matrix is intended to aid thinking and not to constitute a definitive guide.
| Nature of Space | Standard height | Height greater than standard | Height less than standard |
|---|---|---|---|
| Typical ‘modern’ Standard say 1980+ | Range of about 4.0m to 6m | Plus 10% pro-rata* in range 6 to 10m (2.5% per metre and 1% per metre thereafter | Less 10% pro-rata* in range 3.5/4.0 to 2.5m – below 2.5m by individual adjustment |
| Typical older style (up to typical modern) | About 3.5 to 4m | Consider nature of individual buildings but probably +10% at 10m. | Similar to above |
| Old space/ Multi-storey | No specific standard | No addition | No general reduction |
*Where an adjustment is required, the adjustment code HRM+/- should be applied to line entries or survey units as appropriate.
It is recommended that the adjustments for height in all creameries should be checked in a reconciliation exercise. This is to ensure that the intended result is achieved by the method of adjustment adopted and embedded in the survey data.
4.10. Specialised buildings
Some sites will have a Spray Drier or Evaporator tower. These are very tall buildings to accommodate the specialised plant items and or process. The following adjustments to the main space rate have been agreed with ratepayer representatives in previous lists to reflect the particular attributes. It is recommended these adjustments are followed for this list.
- headroom 16.5m – 19.5m – factor for 2.00
- headroom 20.0m – 24.5m – factor for 2.50
- headroom 25.0m – 30.0m – factor for 2.75 to 3.00
4.11. Fire prevention (sprinklers)
A value addition should continue to be applied by recording “A” or “M” as appropriate in beacon characteristics a line entry or survey unit adjustment code FPT+ is also required. The factor applied is 1.05. Where tanks and pumps are present in support of the system, these must be valued as plant and machinery in accordance with the VOA Cost Guide.
If cost evidence for a specific installation is put in evidence this may be used as a better indication of value, once it has been adjusted and decapitalised at the statutory decapitalisation rate.
4.12. Heating
In the absence of contrary information, creameries should be assumed to be unheated and valued accordingly. It is likely that heating will be a tenant’s addition unless scrutiny of the individual facts reveals otherwise.
4.13. Air conditioning
Where this is present in ancillary office areas, a line adjustment of AIR+ should be recorded in the valuation. This will value add 10% to the line value.
If air handling systems serve production areas then they may be used in connection with a manufacturing operation or trade process and qualify for exception within class 2 of the Valuation for Rating Plant and Machinery Regulations 2000.
In cases of doubt please discuss with your Technical Advisor or National Valuation Unit Industrial Commercial and Crown team.
4.14. Plant and machinery (P&M)
Items likely to be found include high voltage electrical supply, standby power, supports and bases for machinery, walkways, bunds and tanks. These should be captured and valued in accordance with the Plant and Machinery sections of the Rating Manual and the R2023 Cost Guide.
The 2023 prescribed rate of decapitalisation should be applied where appropriate.
4.15. Food processing, chilled and cold areas
Areas benefitting from ‘white wall’ food processing production fit out must be captured using accommodation use class coded as FPA (food). A factor of 1.15 should be used.
Areas used as Chill stores should be captured using accommodation use class code CHL (Chill). A factor of 1.15 should be used.
Areas used as Cold stores should be captured using accommodation use class code CLD (Cold). A factor of 1.30 should be used.
Also refer to Rating Manual : Cold Stores.
4.16. Cases of doubt should be referred to National Valuation Unit Industrial Commercial and Crown team.
Market appraisal
There have been no transactions on which to base an evidenced view of the market. Majority of sites are freehold and where rented can be subject to significant variations due to wider financial and business specific issues.
Changes from the last practice note
No practice note (PN) was produced for the 2010 Revaluation.
Ratepayer discussions
There have been no discussions with ratepayers
Valuation scheme
The rental comparison method should be adopted with each property to be individually valued having regard to local industrial / large industrial tones with appropriate adjustments to reflect inherent characteristics – FPA, CHL, CLD etc. Similar underlying issues to other industrials / large industrials such as age, modernity, layout etc.
All creameries must have a common sub location code linked to an address matrix.
The sub location code to use is 3CRM.
It is appreciated that this has certain implications
Care must be taken to align values with those produced by size based matrices in use by Units, so as to avoid, as far as possible, illogical steps in value at the margins.
All valuations of creameries should be individually reviewed to ensure consistency and quality.
Car parking
Car parking should be “inclusive” and the reflected table should form part of all access paths.
It is accepted that in certain circumstances it may be appropriate to deduct for ‘lack of adequate parking provision’ and there may be some cases where an addition could be appropriate - but these will be exceptions.
Land (as an ancillary to an Industrial hereditament)
The VSA standards definition requires that all land within a hereditament is identified and appropriately captured.
This will ensure that:
No “notional” allowances or deductions are made from the gross area of land actually used for and identified as open storage
It should be captured as an “other addition” using the relevant OA code.
Valuation scale
VVFGIA1 should be used in all cases.
Eaves height
The effect on value of an eaves height greater or less than ‘normal’ is essentially a local Market Interpretation issue.
It is recommended however that the adjustments for height in all creameries should be checked in a reconciliation exercise to ensure that the intended result is achieved by the method of adjustment adopted and embedded in the survey data. The following matrix is intended to aid thinking and not to constitute a definitive guide.
| Nature of Space | Standard height | Height greater than standard | Height less than standard |
|---|---|---|---|
| Typical ‘modern’ Standard say 1980+ | Range of about 4.0m to 6m | Plus 10% pro-rata* in range 6 to 10m (2.5% per meter and 1% per metre thereafter | Less 10% pro-rata* in range 3.5/4.0 to 2.5m – below 2.5m by individual adjustment |
| Typical older style (up to typical modern) | About 3.5 to 4m | Consider nature of individual buildings but probably +10% at 10m. | similar to above |
| Old space/ Multi-storey | No specific standard | No addition | No general reduction |
*Where an adjustment is required, the adjustment code HRM+/- should be applied to line entries or survey units as appropriate
Specialised buildings:
Some sites will have Spray Drier / Evaporator tower / buildings which are very tall buildings to accommodate the specialised plant items and or process. The following adjustments have been agreed to reflect the particular attributes:-
- Headroom 16.5m – 19.5m – factor for 2.00
- Headroom 20.0m – 24.5m – factor for 2.50
- Headroom 25.0m – 30.0m – factor for 2.75 to 3.00
Fire Prevention (Sprinklers)
A value addition should continue to be applied by recording “A” or “M” as appropriate in Beacon characteristics A line entry or survey unit adjustment code FPT+ is also required. The factor applied is 1.05. Where tanks and pumps are present in support of the system, these must be valued as plant and machinery in accordance with the VO Cost Guide.
If cost evidence for a specific installation is put in evidence, this may be used as a better indication of value, once it has been adjusted and decapitalised at the statutory decapitalisation rate.
Heating
All Creameries should be assumed to be “unheated” and priced accordingly. It is likely that heating will be a tenant’s addition, unless scrutiny of the individual facts reveals otherwise.
Air Conditioning
Where this is present in ancillary office areas, a line adjustment of AIR+ should be recorded in the valuation. This will value add 10% to the line value.
If air handling systems serve production areas then they may be used in connection with a manufacturing operation or trade process and qualify for exception within class 2 of the Plant and Machinery Regulations. In cases of doubt refer to NSU Industrial and Crown Team.
Plant and Machinery (P&M)
The common items likely to be found include high voltage electrical supply, standby power, supports and bases for machinery, walkways, bunds and tanks. These should be captured and valued in accordance with the Plant and Machinery sections of the Rating Manual, using the P&M section of the Non-bulk server and the ARC then transferred to RSA.
The Statutory Decapitalisation rate must be used.
Food Processing, Chilled and Cold areas
Areas benefitting from ‘white wall’ food processing production fit out must be captured using accommodation use class coded as FPA (food). A factor of 1.15 should be used.
Areas used as Chill stores should be captured using accommodation use class code CHL (Chill). A factor of 1.15 should be used.
Areas used as Cold stores should be captured using accommodation use class code CLD (Cold). A factor of 1.30 should be used.
Cases of doubt should be referred to NSU Industrial and Crown team for advice.