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

Section 1110: universities and university colleges

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

1. Market appraisal

Since 2010, universities have experienced a reduction in public funding and there remain uncertainties around access to public finances into the future. The introduction of higher tuition fees (in England) in 2010 fundamentally altered the income streams to Universities and increased the competition for students, although overall university income is increasing and institutions are now on a firm financial footing. Universities are increasingly looking at partnerships to attract investment such as science parks or to put a hotel on the campus.

The university estate is central to operational effectiveness and plays a critical role in ensuring that a university is able to meet the many demands placed on it. But, as the higher education sector adapts to the new and more competitive environment, the role and purpose of the estate as a potential competitive advantage has also increased. For example, studies suggest that a third of students have rejected an institution based on the facilities they observed, and 80% of students say that the quality of the estate influenced their decision on where to study.

A BBC News feature in May 2014reported that the Russell Group of universities has a £9bn building programme in the pipeline and analysed 69 capital projects at the group’s 24 member institutions looking at building plans for the four years to March 2017. Projects range from new student accommodation to medical research facilities, science labs, office space and facilities to help start-up businesses and universities work better together. They include Sheffield University’s £81m engineering building, expected to open in 2016. At Manchester University a new engineering campus and redeveloped business school are part of a £1bn plan for the next 10 years. In London, Imperial College is building a new campus at White City, part of it on the site of former BBC offices.

Other examples are the University of Cambridge’s plans to spend £1bn on “the largest single capital development project in its 800-year history” on farmland to the north-west of the city. Birmingham University is also building a £55m sports centre for students, staff and the wider community, which will include the city’s first 50m (165ft) swimming pool, a state-of-the-art library and a cultural centre. Cardiff University has an Innovation and Entrepreneurship Campus scheduled for 2017 at a cost of £300mandSwansea University’s new Science Research campus was developed in partnership with blue chip companies such as Tata Steel and Rolls Royce at a cost of £450m and due to open Sept 2015.

2. Changes from last practice note

Where there is adequate rental evidence, the University will be valued on a rentals basis, otherwise it will be assessed by reference to the contractors basis.

There are a number of changes to the approach to valuation most notably at stages 1 and 2. These are detailed below.

  • The costs to be applied at Stage 1 relate to the modern substitute and do not vary with the age of the actual building. These costs will be derived directly from the Cost Guide.
  • Adjustments to take account of the deficiencies of the actual hereditament in terms of physical, functional and technological obsolescence are made at Stage 2.
  • The costs relating to temporary buildings and out buildings (other than sports buildings) do not incorporate age and obsolescence allowances which are now referred to separately.
  • The costs relating to external works and fees are now given separately from the building costs

3. Ratepayer discussions

This Practice Note is the subject of ongoing discussions between the Valuation Office Agency and Universities UK. It has been drawn up with reference to current statute law and relevant case law.

4. Valuation method

Remote sites and Oxford and Cambridge Universities are referred to in Appendices 6 and 7 respectively. Oxford and Cambridge colleges are dealt with in a separate practice note.

The following basis is also to be used for Police Training Colleges with accommodation and facilities comparable to a university.

4.1. Building costs

The costs shown in Appendix 1 are for ease of reference. In all cases where a Cost Guide code is shown, that must be input into the NBS template, not the costs shown here. Where the Cost Guide code shows options, the costs shown in this Practice Note should be used to aid selection.

Should the Cost Guide show differing costs to those shown in a current version of this Practice Note, please refer to the CCT.

Remote sites and Oxford and Cambridge Universities are referred to in Appendices 6 and 7 respectively.

4.2. Multi-storey allowances

An allowance of 7.5% overall should be made to the whole of individual pre-2005 buildings, of 4 or more floors where there are no lifts or they are inadequate. In the absence of evidence to the contrary, it will be assumed that pre-1980 buildings have inadequate or no lifts, but those completed between 1980 and 2005 have adequate lifts. Buildings completed in 2005 and afterwards will have adequate lifts to comply with the Disability Discrimination Act and relevant Building Regulations. Each principal building should be considered separately and 2 lifts are considered adequate.

This allowance is intended to reflect the operational difficulties of housing a university in a multi-storey building, in particular the problems of students moving between different storeys. Where the lower floors of a building are larger than the upper floors, the caseworker will need to make a judgement as to the extent to which the extended parts of the lower floors should also benefit from the multi-storey allowance. This will depend on the use of the extension in the context of the use of the building. Where the use in the extension is related to the use in the building then it will be appropriate to apply the allowance to the extended part.

4.3. Flat roof allowances

Allowances attributable to the presence of a flat roof have been amended to accord with current advice as to both the durability of modern coverings and market perception. Buildings with a flat roof are to receive an end allowance as follows:

a) £80m2 applied to the footprint of the flat roof for buildings constructed up to and including 2004.

b) £60m2 applied to the footprint of the flat roof for buildings constructed after 2004.

Where a building has varying roof types a reasonable apportionment should be made to arrive at the allowance.

What is flat as opposed to a pitched roof will generally be self-evident. In instances where an allowance is sought for pitched roofing caseworkers should seek advice from the National Specialist Unit before proceeding.

4.4. Location factors

All costs will be adjusted for location in accordance with the R2017 Cost Guide.

4.5. Allowance for age and obsolescence

Age and obsolescence allowances should be applied in accordance with the appropriate scale in the Rating Manual Section 4 - Part 3 and may be appropriate for some sports features. Obsolescence allowances may also be appropriate for Category 5 buildings.

4.6. External works

External works will be added according to Appendix 2

4.7.Professional fees

Professional fees will be added to the unit building costs at the percentages shown in the Cost Guide

4.8. Contract size allowance

The aggregate of locationally adjusted building costs and external costs are subject to contract size allowance and will be determined by the cost of the entire hereditament including that of domestic and exempt areas. The allowance is determined by the Effective Replacement Cost[ERC]adjusted by location factor and exclusive of external works addition and of professional fees.

The Cost Guide should be referred to for more information on the application of contract size allowances.

4.9. Land value

Land within the hereditament is to be valued in two categories.

a. Developed land consisting of the footprint of all buildings, associated landscaped areas, roadways, car parks and hardstandings, paths, hard sports surfaces and open air swimming pools. It will normally consist of the whole site of the college, less playing fields.

The value of this category of land will be taken as a percentage of total aggregate adjusted replacement cost. The percentages are set out in Appendix 3

b. Undevelopedland will consist of the area of playing fields together with any associated landscaping, but excluding the footprint of any associated buildings and specialised sports surfaces e.g. all-weather surfaces, tennis courts and open-air pools. Areas which are of no practical use (e.g. shelter belts and steeply sloping banks) should be ignored.

Advice on undeveloped land value is provided in Appendix 3

4.10. Stage 5 end allowances

Any advantages or disadvantages which might affect the value of the occupation of the hereditament as a whole should be reflected at this stage. An adjustment under this heading should not duplicate adjustments made elsewhere, e.g. in arriving at the developed site value by adopting a percentage of the adjusted ERC, recognition has already been made in broad terms of any disadvantage caused by the land being encumbered by older buildings which may be larger than their modern equivalent.

Allowances may be made for exceptional dispersal and poor layout etc. Consideration must be given to the inherent qualities of this property class. It is common for educational institutions to comprise buildings which are physically separate and only in those exceptional cases where this characteristic leads to actual identification of operational disadvantage/expense should any end allowance be considered. In considering these points the presence or effects of any domestic buildings should not be discounted.

The maximum allowance must not exceed 15% for a combination of the worst features, excluding any flat roof allowance.

4.11. Decapitalisation

The adjusted cost, net of allowances, and including land value, is to be decapitalised at the lower prescribed rate.

4.12. Holiday/conference letting within a category a hereditament

The valuation approach outlined above should be computed in accordance with Appendix 5

Appendix 1

Unit Costs, Cost Guide Reference and Building Use Classification

See Appendix 6 for particular guidance for Oxford and Cambridge universities.

Unit Costs (Non-Sports)

Advanced Science Post Grad/Research Science/Tiered Auditoria Teaching Science Other Principal Buildings
£4,922 £2,909 £2,523 £2,284

 

Unit Costs (Sports)

Wet Sports Facilities Dry Sports Facilities
Standard Pool £2,089 50m Pools £2,432 STE020   With Changing Facilities £1,470 Without Changing £1,252 Tennis Halls £674 STN020
Workshops & Stores Temporary & Portable Buildings (less 12 ½ % if unheated) Greenhouses (other than Research) & Simple Hutted Buildings
£799 UNIV05 £722 UNIV06 £218 UNIV07

Building Use Classification

1a) Advanced Science

Highly specialised scientific laboratory used for post graduate research including a high proportion of one or more of the following attributes :-

  • containment level 3 or above

  • clean Rooms

  • substantial foundations with or without isolation from the main structure to ensure vibration free operation of scientific machinery.

It is anticipated that this category will not apply to buildings constructed (or substantially rebuilt)before 2003.Examples within University departments may include nanotechnology, epidemiology, medical research involving animals or pathogens, etc.

1b) Post Graduate/Research Science

Those buildings containing, but not exclusively, research facilities which do not reach the high specification of Advanced Science, used by both post graduates and under graduates. Tiered lecture theatres and conference halls, drama blocks comprising tiered auditorium.

1c)Teaching Science

Broadly those buildings employed for the following academic uses:

pre-clinical and clinical medicine, dentistry, veterinary science, anatomy & physiology, pharmacology, pharmacy, other related medical studies, biochemistry, other biological studies, agriculture & forestry, chemistry, physics, other physical sciences, general engineering, chemical engineering, civil engineering, electrical & electronic engineering, mechanical, aero & production engineering, mineral engineering, metallurgy & materials, other technologies

2) Other Principal Buildings

All buildings which do not fall into other categories.

3) Temporary and Portable Buildings

Broadly those buildings generally intended to have a relatively short life, (although they may have outlived original expectations), and of inferior construction compared to standard building construction.

Where a temporary building is built to a standard superior to that which is normal for that type, consideration should be given to allocating it to group (2).

4) Greenhouses and Simple Hutted Structures

Those greenhouses used purely in connection with raising plants for ornamental purposes, without climate control, and used neither for research nor public admission. Hutted structures within this category will be of the simplest type, used as stores and/or garages, and with no heating.

5) Workshops

These will be more substantial structures than in group (4), typically with light steel frame, 100mm brickwork infill to 1.0m height, profile 6 corrugated sheet cladding above. Translucent sheet glazing. Electric power, water toilets. Central heating. Such buildings are likely to have been built after 1975. Older workshops may be constructed from different materials.

6) Sports Buildings

These fall into five main categories

(i) wet facilities consisting of pools and surrounds, with associated plant rooms and changing

(ii) wet facilities consisting of 50m pools and surrounds, with associated plant rooms and changing

(iii) dry facilities consisting of halls with changing and associated plant rooms

(iv) dry facilities without changing

(v) tennis halls

7) Minor buildings

Small buildings such as meter houses, sheds and stores with individual Gross Internal Areas[GIA]s of less than 26sq m should not be costed, as they are reflected within the addition for external works.

Appendix 2

External Works Addition

Classification Description Percentage Addition
Restricted Site Town centre or island site, typically with 90% or greater building ratio, no more than a small yard or garden area, and either no car parking or a very limited number of spaces 2
As above, but typically with an 80-90% building ratio, limited parking, external lighting and landscaping and some boundary fencing 2.5
Intermediate Site Site typically 50-75% building ratio, some landscaping around buildings, secure boundary fencing, adequate parking and external lighting   5  
As above, but typically with 25 – 50% building ratio, landscaping around buildings, secure boundary fencing, external lighting, adequate car parking which falls short of full requirements 7.5
Extensive Site Site typically with about 25% building ratio, landscaping around buildings, secure boundary fencing, external lighting and adequate parking for all staff and visitors 12.5

Notes

  1. The plot ratio is the building GIA expressed as a percentage of the total site area (including building footprint).

  2. An appropriate percentage addition should be chosen from the above ranges to reflect the extent of external works within the hereditament using plot ratio as an indicative guide only.

Appendix 3

Developed and Undeveloped Land Value

Region Developed Land % of adjusted ERC Undeveloped Land per ha
South East 15 £60,000
East Midlands 4.75 £75,000
East 15.75 £50,000
North East 4.5 £75,000
North West 10 £50,000
South West 10.75 £75,000
West Midlands 8.25 £75,000
Yorkshire & Humberside 4.75 £75,000
Central London North 55 £325,000
Central London South 29.5 £300,000
Greater London NW 13.5 £500,000
Greater London SW 33.75 £300,000
Greater London NE 20 £375,000
Greater London SE 25.75 £250,000
Cardiff 18 £40,000
Rest of South Wales 9 £35,000
Mid & North Wales 6.75 £30,000

Appendix 4

1. Hereditaments wholly or mainly used for holiday and/or conference letting

1.1 When such property is used in whole or part for the provision of holiday or conference accommodation for short periods (or a succession of short periods) to persons not associated with the Higher Educational Institution [HEI], it must be valued, where property so used is non-domestic. When such accommodation has to be valued for such use it should be in accordance with the paragraphs below.

1.2 Where the holiday/conference use/short course use is of self-catering accommodation which is available for letting for periods totalling less than 140 days in the preceding year, it will be regarded as domestic property (s. 66 (2B) LGFA 1988). In all other circumstances property used for these purposes should be valued on the following basis:

a) Where there are more than 500 bednights the following relevant prices per bednight should be applied to the total number of bednights.

Accommodation England Price Per Bednight Wales Price Per Bednight
Non En-Suite Accommodation £2.68 £2.40
En-Suite Accommodation £3.11 £2.78

b) Appropriate allowances should be made for multi-storeys (see para 4.2 above).

c) Where the living accommodation remains in assessment for the whole year, whether as a separate hereditament or as part of a larger hereditament (whether or not a composite), no further adjustment is needed and the result of steps (a) and (b) produces the appropriate RV. However, where the herditament containing the livingaccommodation falls to be entered in the Rating List only for the duration of the holiday/conference/short course use, the following formula:

Number of bednights notified ————————————— x 365 Number of days used

should be applied to the relevant bednight prices, in order to produce the appropriate RV to be entered only for the duration of the holiday/conference/short course use.

1.3 For the purpose of this appendix short courses should be regarded as courses taking place within vacations or for durations not exceeding 100 days for persons who have main residences elsewhere.

Appendix 5

Remote sites

The same valuation approach should be used for sites remote from the main campus. Advice on the valuation of university occupations within hospitals is found in the NHS Hospitals Practice Note and the Rating Manual.

Appendix 6

Oxford and Cambridge universities

1. Introduction

1.1 The provisions of other parts of the Practice Note apply to the Universities of Oxford and Cambridge subject to the adaptations in this appendix. Oxford and Cambridge colleges are dealt with in a separate practice note.

Table 1 - Unit costs and building use classification

Advanced Science, Post Graduate/Research Science, Teaching Science and Tiered Auditoria - see above

Museums & Ceremonial Buildings Other Principal Accommodation
Principal Accommodation Secondary & Functional Accommodation Below Ground Storage Standard Basic
(2a) (2b) (2c) (4a) (4b)
£6,041 £2,906 £1,747 £2,906 £2,284

Notes

  1. Museums & Ceremonial Buildings (i.e. buildings used in connection with University ceremonies and/or of particular historical or architectural importance to the University)

a. Principal Accommodation available to the public and/or members of the University.

b. Secondary galleries and functional accommodation primarily available for use by members of the department.

c. Below Ground Storage

2) Other Principal Accommodation (as defined in Appendix 1, but excluding those libraries which fall into the Museums and Ceremonial Category above)

a. Standard – this rate should be applied to the standard accommodation of this type in Oxford & Cambridge Universities.

b. Basic – where the accommodation is manifestly similar in construction to that of other Universities covered in the main memorandum then this rate should be used.

  1. The cost of external works should be added in accordance with the Table in Appendix 2. Professional fees should be added to the unit build cost rates shown in the Table in Appendix 3.

3. Location factor

3.1 No location factor is to be applied to any of the unit costs mentioned in Table 1 of this appendix. Where unit costs have to be applied to buildings/elements which do not fall within any of the categories covered they should be adjusted to a location factor of 1.0.

4. Site values

4.1 In place of Appendix 4 the following capital values shall be ascribed to Developed Land in accordance with Table 2.

Table 2
Site Values Zone Capital Value Per Hectare in Oxford Capital Value Per Hectare in Cambridge
Central £14,320,000 £10,800,000
Intermediate& Edge £2,060,000 £3,076,000

Notes

I. The ‘Central’ zone site value is intended to be applied to University buildings which by virtue of their historic importance and function could not be located away from the central core of the cities. This is primarily intended to apply to the museum and/or ceremonial categories of buildings only.

ii. The overall average age and obsolescence allowance applied to the buildings in paragraph 4.5 above should be applied to the developed land value produced by the above table.

iii. Care should be taken, particularly in the case of intermediate and edge sites to identify only the amount of land actually required for the developed buildings.

iv. It is intended that this approach to valuation of developed land at Oxford & Cambridge Universities should produce site values broadly consistent with those indicated by the percentage of adjusted ERC approach adopted in the main Memorandum for other HEI’s in the two cities concerned.

5. End allowance

5.1 The application of an end allowance should be considered in accordance with the principles set out in paragraph 4.10.

Practice note: 2017 - universities

R2010: Practice note 1

A Memorandum of Agreement reached between the VOA and both Universities UK and GuildHE has replaced the original practice note prepared for this class for the 2010 revaluation.

R2010: Practice note 2

A Memorandum of Agreement reached between the VOA and both Universities UK and GuildHE has replaced the original Practice Note prepared for the Colleges of the Universities of Oxford and Cambridge for the 2010 Revaluation.

Practice note : 2005

Universities and university colleges

A Memorandum of Agreement reached between CEO and both Universities UK and the Standing Conference of principles (SCOP) has replaced the original Practice Note prepared for this class for the 2005 Revaluation.

Rating manual - Section 6 part 3 - Section 1110 : Universities and University Colleges - Valuation Considerations for Oxford and Cambridge Universities

An agreement has been made, supplementing the principal memorandum. See Practice Note 5:1110:2.

Prestige Buildings: It is of course readily apparent that the majority of college buildings at both Oxford and Cambridge are prestige and would certainly be treated as such if situated in other universities. The Agreement does not however permit the prestige building price normally to be applied to college buildings. There is no such restriction in respect of university as opposed to college buildings and the prestige £1000 per square metre should be applied to many such buildings.

In determining which buildings within colleges should be costed at the prestige £1000 per m2, the following process is recommended:-

  1. Apply the tests suggested in Appendix 2(5) of the principal memorandum.

  2. Refine the results of that test by excluding all buildings other than halls, libraries and chapels from the prestige designation.

  3. Refine further by excluding buildings which while prestige in national terms are common place in the context of the older college buildings within the university.

The result will be a small number of “prestige” prestige buildings which can be valued at £1000 per square metre without offending the spirit of the Agreement. It is appreciated that this process involves subjective judgement.

Obsolescence Allowance:

In determining whether the bar at 50% (Practice Note 1 Appendix 4) should be breached it is permitted to consider the structural elements separately from the internal fixtures and services.

EG A mediaeval college building the structure of which has been maintained in good condition will normally qualify for no more than 50% allowance in respect of its structure.

But if internally it suffers from very significant obsolescence, such as inadequate services, poor layout, awkward shape, an allowance of up to 80% on the cost of internal features may be appropriate.

In allocating these allowances it should be assumed that 60% of the cost of a building relates to structural elements and externals and 40% to internal features.

NB The contents of this Appendix have not been the subject of specific agreement with Agents representing Oxford and Cambridge Universities and constituent Colleges.