Rating Manual section 6 part 3: valuation of all property classes

Section 1035: public telephone and interactive kiosks (including AA / RAC kiosks)

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

This class encompasses public telephone kiosks (including those of motoring organisations) and Interactive Kiosks.

The majority of public telephone kiosks in the UK are operated by British Telecom (BT).

BT and Kingston Communications (Hull) Plc. Public Access Telephone Kiosks are included within their individual Central List entries. Therefore any BT or Kingston Telephone Kiosks that are occupied with a telecommunications cable are not to be individually assessed.

Interactive kiosks have a TV screen often with touch controls and are linked by telephone lines to customers who offer goods and services or to internet providers or web sites offering local information and ticket booking facilities.

Where a site is jointly occupied as an ATM and Public Telephone Kiosk then full details of the site including photographs must be referred to National Specialist Unit via NSU Mail box before any list alteration or entry takes place.

2. List Description and Special Category Code

All the above types of separately assessed site should be categorised as follows:

Type Description Code Description SCAT Suffix
Public Telephone Kiosk   MT2   Public Telephone Kiosk (s)   228   G
Motoring Organisation Kiosk
Interactive Kiosk   MT2     Interactive Telephone Kiosk (s)   141   G    
Internet Kiosk

3.  Responsible Teams

Business Units are responsible for this class of hereditament; including individual list entries, revisions for Material Changes of Circumstances and appeal settlements. All Business Units, through their Mast Coordinators (UMC) and the Telecoms Team (TT) within the National Specialists’ Unit are responsible for ensuring effective co-ordination takes place.

4. Co-Ordination

The Mast Class Co-ordination Team has overall responsibility for the co-ordination of this class. The team are responsible for the approach including accuracy and consistency of rating Public Telephone Kiosks and Interactive Kiosks. 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.

5.1 Telephone Kiosks are a rateable occupation of land under the Local Government Finance Act 1988 Section 64 (4) (a).

British Telecommunication’s (Public Telephone) Kiosks are referred to in Central Rating List (England) Regulation 2005 No 551 section 8 (as amended) The Central Valuation Officer deals with Central List Telecommunications Hereditaments see Rating Manual – Section 2 - Part 2 Practice Note 2, paragraph 3.5

Kingston Communication is one of those rateable occupiers which are designated as having an artificial hereditament. Kingston Communications are a named company under the Non Domestic Rating (Communications and Light Railways) (England) Regulations 2005 No 549. Kiosks are specifically mentioned in section 3 (1) and are therefore included in their main assessment.

5.2 Emergency motorway phone sites are assumed to be part of the public highway occupation, struck with sterility and therefore should not be assessed

5.3 Public Telephone Kiosks operators require a Public Telephone Operators licence. Should BT or Kingston Communications wish to remove a kiosk due to their universal service provider obligations they need the permission of Ofcom to do so.

5.4 Planning permission is not required under General Permitted Development rights but operators are required to notify Local Authorities when a kiosk is installed. Kiosks in conservation areas do need planning permission and generally conform to specific design requirements.

6. Survey Requirements

The type of survey requirements differ depending on the type of site being considered.

6.1 Kiosks that are occupied independently from a telephone cable network are often found in pairs or groups of four and where they are contiguous to each other they will form one unit of assessment. However, several kiosks on one street, which are not contiguous, should be individually assessed.

6.2 Some payphones have been installed within separate compartments in bus shelters and these kiosk compartments should be treated as occupied for a different purpose from the bus shelter and assessed separately, where applicable.

6.3 It is considered that a phone mounted to a simple pole or simply fixed to a wall with no hood can be considered as deminimis

6.4 Existing kiosks should be left in the rating list as long as the rateable parts, such as the hood or kiosk, remain. The fact the non-rateable phone may have been vandalised or removed is insufficient to warrant a deletion as, vacant and to let, it is assumed the hypothetical tenant brings in the non-rateable assets.

7. Survey Capture

For the 2017 rating list, both Scat codes 141 and 228 are to be data captured and the valuations prepared as with other “bulk class” hereditaments in RSA.

For clarification all the relevant details for data capture are shown in the Appendix 1 , but the main details are:

1.Location Codes: 2.Construction Type KSK1, KSK2 or KSK3 ote these correspond to the sublocation type

  • KSK1 – Full self enclosed box; known as a Full Box for the valuation scheme.
  • KSK2 – A partially enclosed or open kiosk which is either sheltered under a hood or open
  • KSK3 – Interactive/Internet Kiosk (Scat 141) generally of standard design

8. Valuation Approach

A simplified method of valuation is considered appropriate, adopting a percentage of receipts and market information.

9. Valuation Support

All Scat code 141 and 228 valuations must be carried out within Rating Support Application.

Practice Note 2017 - Section 1035 : Public Telephone and Interactive Kiosks (including AA/RAC Kiosks)

1. Market Appraisal

No open market rental evidence exists.

2.Changes From the Last Practice Note

It is understood that these installations are no longer being rolled out due to the wide availability and use of hand held personal communication devices (phones /tablets and laptops).

3. Ratepayer Discussions

No discussions with the industry

4. Valuation Scheme

There are two main categories:

A. Public Telephones (Public Telephones and limited access Kiosks ) SCAT 228.

These may be a full self enclosed box; known as a Full Box and for the valuation scheme identified as being a KSK1

Or A partially enclosed or open kiosk which is either sheltered under a hood or open. For the valuation scheme these are identified as being a KSK2

B. Interactive/Internet Kiosks SCAT 141 are generally of a standard design and for the valuation scheme these are identified as being KSK3

4.1 Valuation for Types KSK1 and KSK2 (Public Telephones)

For the 2017 rating list it is proposed there is no change to the two valuation bands:

Gross Annual Receipts per Kiosk As at the AVD RV per Kiosk
a) Up to £2,500 £100
   
b) Over £2,500 £200

The default RV for any new payphone kiosk or any where receipts information is not available is £100 RV/kiosk, subject to checking if any in the locality are valued at £200 RV. If receipts information subsequently comes to light on existing kiosks to suggest the RV should be £200 RV then the assessment should be reviewed.

4.1.2 Valuation for Types KSK1 and KSK2 (Limited Access Kiosks) for example those used by motoring organisations

This group do not operate as public telephones and have a limited access to the breakdown service provider only. The increasing ownership of mobile phones has also reduced the supply of this type of installation. There are two types of installation

  • Older kiosk type phone sites to be valued at £100.
  • Phone installed inside a small pole at the side of the road -considered de minimus.

4.2 Valuation for Types KSK3 (Interactive Kiosk)

No new evidence has come to light; therefore an RV of £200 should be adopted for a single Interactive Kiosk – KSK3.

4.3 Multiple Kiosks&

For groups of contiguous Kiosks (more than one co-located on private / public land) the average takings of all the kiosks should be calculated when determining the appropriate RV for the group.

Example 1

Two back-to-back Kiosks located on the High Street, kiosk 1 achieves £1700 pa with Kiosk 2 achieving £2,800.

Kiosk 1 Gross Receipts – 2008 £1700

Kiosk 2 Gross Receipts – 2008 £2800

Total for the pair £4500

Average Gross Receipts as at AVD: £2250

From Scale; £100 per kiosk – therefore 2 kiosks Total RV - £200

Practice Note 1: R2010 Public Telephone (inc. AA/RAC Kiosks) and Interactive Kiosks

1. Co-ordination Arrangements

This is a Group National Scheme Class. Responsibility for implementing the scheme as set out within this Practice Note lies with the Group, as does responsibility for ensuring effective co-ordination.

For further information see Rating Manual - Section 6 - Part 1

The Primary Description Code is MT2.

For Public Telephone and AA/RAC Telephone Kiosks the R2010 Special Category Code is 228. As a Group Class the appropriate suffix letter is G.

The Standard Description is - Public Telephone Kiosk(s)

For Interactive and Internet Kiosks the R2010 Special Category Code is 141.

As a Group Class the appropriate suffix letter is G.

The Standard Description is Interactive Telephone Kiosk(s).

All VO Notices should be sent to the kiosk operator’s registered address as shown on the attached Appendix A <> of this practice note.

In the event of any complex issues arising or for advice on issuing rent returns, the case should be referred via the Group Technical Advisor to the CEO (Rating) telecoms team using “Mast Advice”, headed - Kiosks.

2. History

Traditionally the scheme of value of these categories has been determined having given due consideration to the level of receipts. This reflects the market practice of rents on private kiosk sites being determined on a percentage of gross receipts. For the purposes of the scheme set out below, receipts have again been the primary consideration although the cost of installing a typical kiosk has also been considered.

3. Operators

There are currently four major operators, who are:

a. Spectrum Interactive; b. Info Phones; c. BT; and d. Kingston Communications (KC).

This list is not exhaustive and details of any new kiosk operator should be sent to the Telecoms Team at CEO via the “Mast Advice” inbox.

It should be noted that kiosks operated by BT are included in the BT Central List assessment s in England and in Wales and kiosks operated by Kingston Communications (Hull) Ltd are included in their main fixed line network assessment in Hull. The BT and KC kiosks should not therefore be separately assessed from their main network assessments.

4. Background Information

There are two main categories: a. Public Telephones (Inc AA/RAC installations) SCAT 228

Whilst the number of public and managed payphones in the UK increased by almost 25% between 1993 and 1998, the more recent trend has seen a reduction in the number of kiosks, which is due to the continued expansion in the ownership of mobile phone handsets and a fall in revenues. Current statistics from Ofcom show, approximately, 70 million mobile handsets in the UK, which represents more than one per person.

In 2001 BT was given the go-ahead to commence the removal of unprofitable Telephone Kiosks. At present there are only 67,000 Telephone Kiosks in operation in the UK of which BT operates 64,500.

It is believed that Payphone operators usually negotiate rents with private landlords based on a percentage of gross receipts and install the kiosks at their own expense. These agreements often cover a number of sites run by the same landlord, motorway service station operators being a good example. However, the VO has not received any new details of any such private site agreements when considering the 2010 valuation scheme. a. Interactive/Internet Kiosks SCAT 141

These kiosks can offer freephone and local information services, with the operator’s income derived from a fee paid by advertisers or from Internet access charges and advertising. There has been a trend to convert some payphone kiosks to Internet/Interactive kiosks, most notably at main line railway stations.

Most of the kiosk sites are occupied on a rent free basis as they are installed on the public highway under the Electronic Communications Code powers (Section 106, Communications Act 2003). In these circumstances there is a presumption against issuing forms of return (FORs) for telephone kiosk sites.

Where local offices identify any “new” kiosks, located on private land, then rental details can be requested, with FORs sent to the operator clearly identifying the location and telephone number of the kiosk.

5. Survey Requirements – RSA Inputs

For the 2010 rating list, both Scat codes 141 and 228 are to be data captured and the valuations prepared as with other “bulk class” hereditaments in RSA.

For clarification all the relevant details for data capture are shown in the scale template on the P drive, but the main details are:

  1. Location Codes: a. KSK1 – Full Box b. KSK2 – Hood/Stalk; and c. KSK3 – Interactive Kiosk
  2. Use Code for all three types of kiosk is TEL
  3. code a. 228 – for a) or b) in 1 above; b. 141 – c) above

6. Valuation Considerations

Kiosks operated by BT are excluded from this scheme as they are included in the central rating list telecoms network valuations on an overall Receipts and Expenditure basis. Guidance is shown is the appropriate section of the Rating Manual - Section 2 - Part 2, Practice Note 1 2010.

Similarly, kiosks operated by Kingston Communications in Hull are also excluded from this scheme, as they are valued on an overall Receipts and Expenditure basis and included with the Kingston (Hull) telecom network assessment, shown in the appropriate local rating list.

The increased ownership of mobile phones has had a direct impact on the revenues from payphones, which have continued to decline since 2003.

In contrast the cost of installation has increased with the average cost of installation in 2008 now £4,350.

Both these factors have been considered in preparing the scheme outlined below.

With declining revenues operators have looked for alternative ways to maintain or increase the profitability of their sites. They have done this by entering into agreements with banks and advertising companies and as a result some sites are now co located with an ATM or Advertising Right and these are covered in section 9, Modern Developments, below.

7. Valuation Guidance

a. KSK1 and KSK2

It was previously assumed that as a general rule, a single kiosk would need to take a minimum of £2,500 in annual receipts to be profitable. However, as receipts have continued to decline consideration has been given to the cost of removing an unprofitable kiosk as well as the cost of maintaining and collecting the coins from each kiosk.

It is understood that it costs approximately £1,100 to remove a kiosk and make good the site. Therefore an operator who may have already made a return or at least recovered the initial CAPEX investment will be more likely to allow an unprofitable kiosk to remain insitu rather than expend capital for removal.

In the preparation of this scheme, consideration has been given to 3 years gross receipts of approximately 500 sites located nationwide and discussions were undertaken with kiosk operators.

For the 2010 rating list it is proposed to adopt two valuation bands:

Gross Annual Receipts per Kiosk As at the AVD RV per Kiosk Remarks
a) Up to £2,500 £100 Please note distinction between KSK1 and KSK2 – see above – Para 5 (1)
b) Over £2,500 £200

Both Infolines and Spectrum Interactive have provided annual receipt information centrally and the suggested 2010 RV’s, (subject to section 8. below)

The default RV for any new payphone kiosk or any where receipts information is not available is £100 RV/kiosk, subject to checking if any in the locality are valued at £200 RV. If receipts information subsequently comes to light on existing kiosks to suggest the RV should be £200 RV then the assessment should be revised and backdated on the basis of error or default by the ratepayer, providing it can be shown that the receipts information was requested before 1 April 2010.

a. KSK 3 - Interactive Kiosks

No new evidence has come to light; therefore an RV of £200 should be adopted for a single Interactive Kiosk – KSK3.

a. AA/RAC and Limited Access Kiosks – KSK2

This group do not operate as public telephones and have a limited access to the breakdown service provider only. The increasing ownership of mobile phones has also reduced the supply of this type of installation. There are two types of installation;

a. Older kiosk type phone sites to be valued at £100. b. Phone installed inside a small pole at the side of the road -considered de minimus.

8. Unit of Assessment (Multiple Kiosks)

For groups of contiguous Kiosks (more than one co-located on private / public land) the average takings of all the kiosks should be calculated when determining the appropriate RV for the group.

Example 1

Two back-to-back Kiosks located on the High Street, kiosk 1 achieves £1700 pa with Kiosk 2 achieving £2,800.

Kiosk 1 Gross Receipts – 2008 £1700 Kiosk 2 Gross Receipts – 2008 £2800

Total for the pair £4500

Average Gross Receipts as at AVD: £2250

From Scale; £100 per kiosk – therefore 2 kiosks Total RV - £200

Example 2

Three kiosks situated side by side on Kensington High Street, London. Information received shows the following gross receipts as at the AVD:

Kiosk 1 - £4000 pa Kiosk 2 - £2200 pa and Kiosk 3 - £2350 pa

The average annual receipts for the 3 kiosks is £2,850,

Therefore the total RV for the group of 3 kiosks is £200 x 3 = £600.

Any queries on the Unit of Assessment should be sent to Rating Directorate – CEO using Mast Advice – headed; Unit of Assessment Kiosks.

9. Modern Developments

Operators have increasingly redeveloped sites with Kiosks co-located with ATMs, Advertising Rights and even within Bus Shelters. This will normally result in two assessments due to the occupations by two separate ratepayers for two separate purposes, as set out below:

a. Telephone Kiosks with ATM

Where a kiosk and ATM are co-located there are two separate units of assessment, one for the kiosk and one for the ATM.

If the Kiosk is operated by either BT / KC then the kiosk will be assessed with their appropriate network assessment as outline above. For any other kiosk operator, the kiosk should be valued in line with advice provided within section 7 above.

The value of the ATM should be in accordance with Section 6 - Part 3 RM section 1120.

b. Telephone Kiosks and Advertising Rights

BT has been at the forefront of developing new style kiosks, known as Street Talk 6. The new, cutting edge design, have a kiosk on one side and typically an illuminated scrolling six sheet advertisements on the other, although on some sites it has been known to have a double sided six sheet advertising unit.

Again If the Kiosk is operated by either BT / KC then the kiosk will be assessed with their appropriate network assessment as outline above. For any other kiosk operator, the kiosk should be valued in line with advice provided within section 7 above.

The advertising right will form a separate unit of assessment that should be valued in accordance with Section 6 - Part 3 Rating Manual section 20.

10. Emergency Motorway Phones

These are assumed to be part of the public highway occupation and struck with sterility, therefore they should not be assessed.

11. Enquiries

Any queries on the contents of this practice note should be forwarded via Technical Advisors to “Mast Advice” – headed Kiosk.