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

Section 1120: sites of automatic machines

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

1. Co-ordination

This is Generalist class. Co-ordination responsibilities are set out in Rating Manual section 6 part 1.

Special Category code 018G should be used. The relevant suffix letter will be computer generated automatically. Sections 8-17 cover particular issues relating to sites of Automatic Teller Machines (ATMs)

2. Description

This section covers the sites of Automatic Vending/Weighing/Teller/Parcel Exchange Machines. It is the site of the machine rather than the machine itself which is rateable. Automatic machines of all types should be treated as non-rateable since they are not named in the Schedule to SI 2000 No. 540 The Valuation for Rating ( Plant and Machinery ) ( England ) Regulations 2000 as amended and SI 2000 No. 1097 ( W.75 ) The Valuation for Rating ( Plant and Machinery ) ( Wales ) Regulations 2000 as amended.

The description code CX should be used with the specific description ‘Site of Automatic Vending/Weighing/Teller/Photographic/Parcel (use appropriate wording) Machine ‘.The suffix ‘And Premises’ should be added where the hereditament includes other contiguous supporting accommodation.

3. Identification of the hereditament - general

The case of Woolway (VO) v Mazars 2015 RA 373 should be applied, the hereditament can be identified by the actual site of the machine or any housing surrounding it.

4. Rateable occupation - general

The case of John Laing & Son v Kingswood Assessment Committee (1949) 1 KB All ER 224 set out the four ingredients of rateable occupation being

1.Actual occupation

  1. Exclusive occupation for the particular purpose of the possessor

  2. Beneficial occupation

  3. Not too transient

These tests must be applied to the sites of automatic machines. Generally, actual and beneficial occupation should be relatively easy to determine however exclusive occupation and transience may require more detailed information to be obtained from the occupier.

5. Ceasing to exist

A hereditament will remain in the rating list until it ceases to be ‘property which is or may become liable to a rate’. Practically, this means a hereditament will continue to exist until it is evidenced at the material day that:

  • it is subsumed into a different hereditament, i.e. a merger

  • it becomes a different hereditament, e.g. a split

  • it is destroyed, for example by demolition or external factors, fire, flood etc.

In the case of the site of an automatic machine, the removal of the machine does not necessarily mean that the assessment should be deleted from the rating list.

The machine may have been removed but the site it occupied may remain for example a hole in the wall, protective bollards or foundations.

The removal of the machine may be an issue of valuation rather than a question of it ceasing to exist. It should be remembered that one operator might take a site over from another and this will necessitate the removal and replacement of a machine, the site may therefore be vacant for the interim period between operators.

The valuation of vacant machine sites should be subject to the same considerations, such as valuing at the antecedent valuation date and taking into account the impact of any Material Change of Circumstance in the locality, as would be applied in the case of any other class of property.

6. Survey requirements - general

  • Location of site e.g. Supermarket, Petrol station, Shopping Centre, Leisure Park, University, Railway/Bus Station, Factory Village, Hospital, Retail Park

  • Type of machine and what service has been provided

  • Name and address of operator and operator’s reference for each machine (where displayed)

  • Where part of another property the name of the host.

  • General Description of the site and machine e.g. Stand-alone site, Internal site

  • Associated Rateable Plant and Machinery e.g. CCTV

  • Dimensions (GIA) of any associated accommodation

  • Details of Site construction, foundations and settings, record should be made of the means of attachment of the machine to such features.

  • Services provided to the site e.g. phone line, electricity, alarm system, water, drainage

  • Public / Customer access to the site is this 24 hours or is it restricted details of any restrictions

  • Responsibility for maintenance and stocking of the machine, if this is carried out by contractors who instructs the contractors

  • Survey details are to be saved in the EDRM property folder and named according to the standard naming conventions

7. Method of valuation - general

For all sites of automatic machines, other than ATMs, a copy of the licence/rental agreement should be requested. This must be placed in the EDRM property file and named according to the standard naming convention. The principle method of valuation is by reference to rents and licence payments, although where substantial expenditure has been made on the provision of foundations and settings, or other structures, regard should be had to that cost where not reflected in the site rent. Where costs are an issue reference should be made to the Rating Cost Guide.

There may be cases where a large number of sites for machines are included in one rental agreement. The global sum payable may not provide a reliable indication of the individual value of any particular site within the rental agreement if a simple numerical apportionment is used.

8. Sites ff Automatic teller machines (ATM)

The advice set out under sections 9 to 17 is particular to sites of ATMs.

9. Site Of ATM - Identification of the Hereditament

Typically there are three types of ATM sites:

  • Hole in the Wall - where the screen protrudes through the wall of a building so that customers do not have to enter the host building to use the machine.

  • Internal Built-in sites ATM is built into or attached to the structure of the interior of the host building such as in shopping malls or hospitals for example.

  • Free Standing Machines ATM which remains in position by its own weight. These can be external or internal. An example is the pod type of ATMs often found at petrol filling stations, and roadside restaurants

See Appendix 1 for examples of different types of machine

The first consideration, when a potential hereditament has been identified, is to identify the occupier. This might be the operator or the occupier of the host hereditament. The tests of rateable occupation are set out in John Laing & Son v Kingswood Assessment Committee (1949) 1 KB All ER 224 (Section 4) and should be applied to decide whether there is a separate hereditament comprising a site of an ATM needing a separate entry in the rating list.

As with all automatic machines it is only the site of the machine and any associated accommodation which is rateable and not the machine itself see (Section 3).

10. Site of ATM - rateable occupation

The four ingredients of rateable occupation as set out in John Laing & Son v Kingswood Assessment Committee (1949) 1 KB All ER 224must be present if the site of an ATM is to be treated as a separate hereditament.

A number of factors will determine whether an ATM operator is in rateable occupation of a particular site these include,

  • how the machine is fixed,

  • where it is located,

  • the agreement under which the site is occupied

  • the corporate and contractual relationship between the operator and the occupier of the host site

11. Rateable Occupation of Sites of Hole in the Wall ATMs (Other than those located at bank branches)

The following deals with the various aspects of rateable occupation for Hole in the Wall ATMs:

11a. Actual occupation

This should be self evident (except in the case of vacant sites). Occupation is likely to be with the ATM operator rather than the host property.

11b. Beneficial occupation

As the operator is able to service its customers and derive an income from the operation of the ATM it is likely there will be beneficial occupation of a site.

11c. Exclusive occupation

Exclusive possession will depend upon the facts of each case. Where multiple persons may be in actual and beneficial occupation it will be necessary to determine who is in paramount control of the site and the leading authority is Westminster City Council v Southern Railway Co, The Railway Assessment Authority and W H Smith & Son Ltd (1936) AC511 24 R&IT 278

11d. Not too transient occupation

Owing to the fact that a hole is specifically created for the ATM the occupation is unlikely to be considered too transient.

12. Rateable occupation of internal built in ATM sites

Section 11 applies equally to this type of site.

The fact that an ATM is accessed by members of the public walking through a host property does not prevent the site of the ATM being a separate assessment. The site is occupied exclusively for the purpose of siting an ATM. The authority of Westminster City Council v Southern Railway Co, The Railway Assessment Authority and W H Smith & Son Ltd (1936) AC511 24 R&IT 278 means the fact that the host controls the access of the public to the ATM does prevent the operator being in paramount control of the site.

13. Rateable occupation of sites of free standing ATM machines

Section 11 applies to this type of ATM. Free standing machines are likely to be accessed over the host property but this does not prevent the operator being in paramount control. These sites are often external and are therefore usually delineated and protected by bollards and are unlikely to be moved.

14. Identification of the occupier

It is particularly important to identify the occupiers of the ATM site and the host property correctly. In deciding whether an ATM site is separately occupied by the host store, the ‘corporate veil’ must not be pierced. For example it may be correct to assess the site of the ATM and the host separately because they are occupied by two separate legal entities even though they are in the same group of companies with similar names. For further advice on the corporate veil see RM section 6 part 11 Occupation by Contiguous Companies, and the effect of the “Corporate Veil”

15. ATMs within bank branches

These can be hole in the wall, built into the structure inside the premises or free standing within the premises. As the occupier of the ATMs will be the same as the bank branch there is continuity of occupation and a single assessment will be appropriate.

16. Survey requirements - ATMs

Caseworkers and referencers should note the following details during inspection:

  • Location of site e.g. Supermarket, Petrol station, Shopping Centre, Leisure Park, University, Railway/Bus Station, Factory Village, Hospitals, Retail Park

  • Number of machines on the site.

  • Pay to use or free to use, if pay to use the charge paid should be noted

  • Any other services available such as mobile phone top up

  • Name and address of operator and operator’s reference (where displayed)

  • Where part of another property the name of the host

  • General Description of the site and machine for example: Hole in wall, Stand-alone site, Internal site

  • Associated Rateable Plant and Machinery for example: CCTV

  • Dimensions (GIA) of any associated accommodation.

  • Details of site construction, foundations and settings, record should be made of the means of attachment of the machine to such features

  • Services provided to the site e.g. phone line, electricity, alarm system, water, drainage

  • Public / Customer access to the site is this 24 hours or is it restricted details of any restrictions

  • Responsibility for maintenance and stocking of the machine, if this is carried out by contractors who instructs the contractors

  • A photograph should be taken of the ATM

  • Survey details are to be saved in the EDRM property folder and named according to standard naming conventions

17. Method of valuation - ATMs

See Practice Notes for Valuation Schemes for 2005 2010 and 2017 Rating Lists

18. Survey requirements - ATMs

Caseworkers and referencers should note the following details during inspection: Location of site e.g. Supermarket, Petrol station, Shopping Centre, Leisure Park, University, Railway/Bus Station, Factory Village, Hospitals, Retail Park •Number of machines on the site.

  • Pay to use or free to use, if pay to use the charge paid should be noted

  • Any other services available such as mobile phone top up

  • Name and address of operator and operator’s reference (where displayed)

  • Where part of another property the name of the host

  • General Description of the site and machine for example: Hole in wall, Stand-alone site, Internal site

  • Associated Rateable Plant and Machinery for example: CCTV

  • Dimensions (GIA) of any associated accommodation.

  • Details of site construction, foundations and settings, record should be made of the means of attachment of the machine to such features.

  • Services provided to the site e.g. phone line, electricity, alarm system, water, drainage

  • Public / Customer access to the site is this 24 hours or is it restricted details of any restrictions

  • Responsibility for maintenance and stocking of the machine, if this is carried out by contractors who instructs the contractors

  • A photograph should be taken of the ATM (this will help change in occupiers at the very least)

  • Survey details are to be saved in the EDRM property folder and named according to standard naming conventions

19. Method of valuation - ATMs

For 2010 a scheme of valuation has been agreed with representatives of Inter - Bank Rating Forum [IBRF], the LINK ATM Scheme and the Association for Cash Machine Operators. The agreed scheme is set out in Practice Note 2.

For 2005 a scheme of valuation was agreed with the Inter - Bank Rating Forum [IBRF] and Association for Payment Clearing Services [APACS]. The agreed scheme is set out in Practice Note 1.

20. Sites of electronic delivery lockers

21. Background

Electronic Delivery Lockers are typically situated within covered shopping malls, supermarket car parks, bus/ railway stations and on petrol filling station forecourts. The main operators are Amazon, In Post and By Box, however other companies are now expanding into this developing market. These sites house lockers used by the general public to collect parcels ordered online and are accessed by inputting a security code which is provided to the customer by text or email.

Historically the motor trade utilised similar lockers for the distribution of parts. These sites are now becoming more commercially viable with many operators expanding into the retail sector.

22. Growth Since AVD

This class has rapidly expanded due to the gaining popularity of internet shopping offering more convenient delivery options. Indicative values as contained within Practice Note 3, do not reflect the market growth since the Antecedent Valuation Date of 01-April-2008.

23. Identifying the hereditament

It is important to be aware it is the actual site which is being assessed, not the structure which houses the lockers. The actual banks of lockers fall to be non rateable chattels as they are not listed within the current plant and machinery regulations (see paragraph 3 above for full details).

24. Rateability

The usual rules governing rateability apply, in that if a site is considered of sufficient permanence and definable then it will be rateable. Guidance on the identification of the hereditament and rateable occupation are contained within paragraphs 3 and 4 above.

Sites located physically inside other premises such as convenience stores might not fulfil the requirement of having separate paramount control, so may not be separately rateable.

25. Cycle docking stations

26. Co-ordination

This advice is in respect of Cycle Docking Stations. The class has a primary description code MX and a Special Category Code 999, with a suffix G.

27. State of the industry

Cycle sharing schemes are a facility in which bicycles are made available for hire to individuals normally on a short term basis. The main purpose is transportation: bike sharing allows people to depart from point “A” and arrive at point “B” free from the worries and costs associated with ownership.

Cycle sharing has expanded substantially worldwide over recent years. As of April 2013 there were around 535 cycle sharing programmes around the world, made of an estimated fleet of 517,000 bicycles. In May 2011 there were around 375 schemes comprising 236,000 bikes.

Transport for London (TFL) scheme

In the UK the most notable scheme currently in existence and entered into the rating lists is the Barclays Cycle Hire Scheme (BCH); also known as ‘Boris Bikes’. As of March 2012 there were some 8,000 cycles and 570 docking stations in the scheme, which had been used for over 19 million journeys.

28. Identification

Cycle Docking Stations can vary in their nature from a simple rack placed along the public highway as with the ‘Boris Bikes’ in London, to fold up bikes located within lockers at railway stations.

Often subject to an initial membership fee followed by a rental fee per use, users can rent a bike for a period of time e.g. hourly or daily and both retrieve and return the bike to a scheme docking station.

29. Rateability

The VOA previously agreed with Transport for London the rateability of the BCH Docking Stations across London. Actual and exclusive and not too transient occupation was determined along with beneficial occupation. The benefit to Transport for London being a service to improve the health of Londoners as opposed to profit making.

Docking stations are considered to be a hereditament falling under the concept of ‘lands’ in accordance with LGFA s64(4)(a).

As chattels the bicycles cannot be ‘lands’ and therefore do not form part of the hereditament. It is noted that chattels may be ‘rated’ with land where they are enjoyed together with land and enhance the value of the land by enjoying a degree of permanence. A bicycle is very clearly a chattel which moves about from one docking point to another. Therefore it is the site of the docking station itself that is rateable together with any improvements to the land such as the metal post in the ground and foundation.

It is considered that a hypothetical tenant would be willing to pay a rent to operate a cycle hire scheme on such a site whether it be to generate profit or, as with the TFL scheme, to provide a service benefitting local people.

A number of towns and cities throughout the UK have introduced similar schemes. However many of these are operated in partnership between cycle share scheme operators and partners including hospitals, universities and railway companies, often on the site of the partner. Careful consideration is therefore required when determining who is in paramount control and also the actual boundaries of the site.

30. Types of cycle docking stations

Cycle Docking Stations generally fall into 3 categories:

  • Docking station located on a public highway/pavement exclusively run by a particular occupier. This may be a private individual/company or a local authority.

  • Docking station located inside or outside say a railway station, university or hospital etc, exclusively run by a particular occupier. This may be a private individual/company, local authority or rail company etc.

  • Docking station located within a railway station or operated by a rail company on operational land. Bikes may be paid for through the station ticket office and bikes can only be returned to docking stations at specified railway stations within the railway company’s region.

It is considered that in the first case rateable occupation is satisfied and entry into the rating list is appropriate.

In the second case much will depend on identification of the rateable occupier and where the docking station is located. For instance the rateable occupier may be a railway company who has the scheme managed by a partner. If the docking station is located outside of the railway station buildings but on operational land belonging to the railway, it is highly likely the docking station should be treated as within the cumulo railway hereditament and not separately rateable.

In the third case once facts have been determined it is expected that no assessment would be required as rateable occupation would fall with the rail company and as stated above, any assessment would fall to be reflected in the cumulo assessment.

31. Extent of the hereditament

It is envisaged that in most circumstances the hereditament will consist of a rack of bike stations similar to those shown at the end of this note. It is considered that in terms of contiguity, the set of racks located on the land forms the hereditament. Where different sets of racks are separately located away from each other then each set will form its own hereditament.

32. Action required:

Sites not in Rating and Existing Sites

Where a docking station has not been entered into the rating list, a VOR should be raised and an inspection made to record the details shown in 7 below. Where a docking station is already in the rating list, a check should be made to ensure that the valuation approach is consistent with the instructions in this section.

Referencing

It is recommended that inspections of any such sites are made with photographs taken and the number of posts or lockers counted. Any obvious areas also part of the demise should also be noted including any reference to the operator of the docking station. This may be located on a separate stand alone post.

Valuation approach

Following the approach to valuation adopted for current assessments in London and elsewhere in the UK, it is recommended that a price per post/locker is applied to each cycle docking station in situ. The table below shows assessments currently entered into the 2010 rating list:

Location £ per post adopted
London (TFL) £8
Reading £8
Newcastle £8

Practice Note 1: 2017: Sites of Automatic Teller Machines (ATMs): Revaluation 2017 {:#PN1}

1. Market appraisal

1.1 The number of ATM machines has increased over the last 7 years but the move away from Pay to Use to Free to Use has continued.

Number of machines in UK

2008: 63,900

2015: ( June) 69,900

Number of Cash Withdrawals (Millions) in UK

2008: Free to Use 2,765 Pay to Use 101

2014: Free to Use 2,769 Pay to Use 62

This includes all cash withdrawals by customers at their own banks or building societies. Over 97% of cash withdrawals at UK ATMs by UK cardholders are free of charge. (Source LINK website)

1.2 The above statistics are against a back ground of Contactless payments becoming more popular – there were 319 million such transactions in 2014 compared with 100 million in 2013. In 2014 there were 58 million contactless cards in circulation and the average transaction as at December 2014 was valued at £8.26. (Source the UKCARDS Association)

1.3 The estates run by the Independent ATM Deployers (IADs) have increased in size with some banks reducing their estate of remote ATMs. An example of this is the Co-op Bank Plc has removed its ATMs from Co-operative retail premises during 2014 to 2015 and sites are now occupied by Cardtronics (trading as Cashzone).

2. Changes from last practice note

2.1 Transaction numbers from Pay to Use Sites should be multiplied by 3 to calculate the fair maintainable transaction numbers for the site.

3. Ratepayer discussions

No formal discussions have been held with individual occupiers and there is no agreed scheme. However, consultation has taken place with LINK.

4. Valuation scheme

4.1 There is no agreed valuation scheme. The scheme which is being adopted is based upon the level of sustainable cash withdrawal transactions. The scheme reflects the fact that the majority of remote ATM sites are held on licences or leases the terms of which are not uniform and vary significantly between operators.

4.2 The level of sustainable transactions is evidenced by actual cash withdrawal transaction numbers for years ending 31 March 2014 and 31 March 2015. Transaction numbers are an economic factor as at the Antecedent Valuation Date and those from years ending March 2014 and March 2015 should form the basis of the assessment throughout the 2017 rating List, unless there is evidence of a valid MCC.

4.3 An MCC may physically affect the site of the existing ATM or be physically manifest in the locality - however a change of operator at a site is not considered an MCC. It should be noted that only when a site ceases to exist should it be removed from the Rating List - see RM section 1120 para 6. It is possible for a site to be vacant whilst there is a change of operators – this does not constitute grounds for deletion.

4.4 Where a fee is charged by the machine operator for a cash transaction (Pay to Use) the actual transaction numbers should be multiplied by 3 to arrive at the number of sustainable transactions.

4.5 If the site of an ATM becomes operative after AVD then volumes of transactions evidenced for the later period may require some adjustment to represent the economic circumstances as they existed at the Antecedent Valuation Date, being 1 April 2015 but reflecting the physical circumstances at the material day.

4.6 The valuation bands are replicated from the 2010 agreed scheme. They are drawn sufficiently wide to accommodate the majority of Material Changes of Circumstances (MCCs) and consequential fluctuations in transactions. There is therefore an expectation that most MCCs which occur through the life of the 2017 list will not result in a change of rateable value.

4.7 2017 Valuation Scheme

Band Number of Maintainable Cash Transactions Rateable Value
A 0-2,449 250
B 2,500-4,999 550
C 5,000-9,999 900
D 10,000-14,999 1,300
E 15,000-24,999 2,000
F 25,000-49,999 3750
G 50,000-74,999 5,950
H 75,000-99,999 8,300
I 100,000-149,999 11,250
J 150,000-199,999 14,000
K 200,000-249,999 18,000
L 250,000-299,999 22,000
M 300,000 and over 25,000

Section 1120: Sites of automatic machines: Appendix 1

Sites of Mobile Machines

Examples of Mobile Machines - ATM is located within the host hereditament but the machine is effectively mobile. Generally this will be clear from the size and nature of the machine and nature of the agreement between the operator and the host hereditament.

Sites of mobile machines - 1 Sites of mobile machines - 2

Sites of Hole in the Wall Machines

Examples of Hole in the Wall - where the screen protrudes through the wall of a building so that customers do not have to enter the host building to use the machine.

Sites of hole in the wall machines - 1 Sites of hole in the wall machines - 2 Sites of hole in the wall machines - 3

Sites of Free Standing Machines

Examples of Free Standing Machines - ATM which remains in position by its own weight. These can be external or internal. An example is the pod type of ATMs often found at petrol filling stations, and roadside restaurants.

Sites of Free Standing Machines - 1 Sites of Free Standing Machines - 2 Sites of Free Standing Machines - 3 Sites of Free Standing Machines - 4

Practice Note 2: 2010: Memorandum of agreement relating to the valuation of sites of Automatic Teller Machines (ATMs) in England and Wales

This memorandum provides specific guidance on the method of valuation for rating purposes of remote Automatic Teller Machines (ATMs), which has been accepted by the Chief Executive of the Valuation Office Agency and discussed and agreed with representatives of the Inter - Bank Rating Forum [IBRF], the LINK ATM Scheme and the Association for Cash Machine Operators [ACMO].

This memorandum is recommended to all rating surveyors for guidance.

1. General

1.1 ATMs are commonly located in a wide variety of commercial, business, leisure and other locations, and may be present in many types and combinations of features. This agreement relates only to those ATMs which are remotely sited and capable of separate assessment as they do not form part of a larger hereditament in the same occupation, for example an institution’s hereditament. The more detailed aspects of unit of assessment are not within the scope of this memorandum, they are considered within the Rating manual - Section 6 part 3 - Section 1120 : Sites of Automatic Machines which details the approach to determine rateability and the Rating Manual: section 3 part 1- The Hereditament which provides guidance to assist with correct identification of the hereditament.

1.2 The agreement is applicable to all remotely located rateable ATM sites irrespective of the type of facility or structure housing the ATM. For the avoidance of doubt it does not apply to ATM sites, which are included in their host hereditament and are not separately assessed. Appendix 1 to RM Section 6 part 3 Section 1120: Sites of Automatic Machines provides illustrated guidance to assist in the correct identification of the unit of assessment.

1.3 The machine itself (ATM) should be treated as non-rateable since it is not specified in the Valuation for Rating (Plant and Machinery) Regulations. The foundation or setting may however be rateable within Table A of Class 4 of the Regulations. The site of the ATM, including any hole in the wall through which it projects, is rateable, together with that element of any associated structure, which provides shelter and security for the ATM, and any contiguous premises occupied with it (i.e. a secure room).

1.4 An appraisal by IBRF/LINK of market conditions and issues relevant to the providers is contained at Appendix 1. For the avoidance of doubt it does not form part of this Memorandum of Agreement and is included for information only.

2. The basis of the agreement

2.1 The agreement has been formulated having regard to the fact that the majority of remote ATM sites are held on licence/lease terms which are not uniform and vary significantly between operators. The licence evidence together with consideration of average occupancy costs at and around the antecedent valuation date for the 2010 Rating List, 1 April 2008 has enabled a fair and equitable basis for assessment to be derived. It also recognises how the market operates, with deals being predominantly struck on a basis reflecting (in part or totally) the number of cash transactions. Operators are typically agreeing a minimum fixed fee in addition to a fee per transaction if transactions exceed a pre-determined threshold.

2.2 The scheme of valuation has been agreed based on a broad and all embracing approach having regard to the number of annual cash transactions the site is capable of consistently sustaining. The scheme is underpinned by rental and other evidence provided by the ATM operators and LINK on behalf of their members.

2.3 Cash transactions are, wherever possible, to be taken for the periods 2006 and 2007 to evidence the sustainable level of transaction numbers for the ATM at the site, but reflecting the physical circumstances at the material day. Transaction numbers are an economic factor as at the Antecedent Valuation Date (AVD) and therefore those to be retained for the 2010 rating list unless a valid MCC is evidenced. An MCC may physically affect the site of the existing ATM or be physically manifest in the locality, for example siting of a new ATM, or removal of site of existing ATM. A change in operator alone is not considered an MCC and the level of transactions evidenced at AVD should be retained.

2.4 If the site of the ATM becomes operative after AVD then volumes of transactions evidenced for the later period may require some adjustment to represent fairly the economic circumstances as they existed at the Antecedent Valuation Date (AVD), 1 April 2008, but reflecting the physical circumstances at the Material Day. Comparison with similarly located sites will enable this.

2.5 The valuation bands below are replicated from the 2005 agreed scheme and are unaltered. They are drawn sufficiently wide to accommodate the majority of material changes of circumstances (MCCs) and consequential fluctuations in transactions. There is an expectation that most MCCs, which occur through the life of the 2010 list, will not result in a change in rateable value (RV).

2.6 The rateable value to be adopted reflects the average price per cash transaction (ppt) evidenced for the band.

3. The 2010 Scheme of Valuation

Band Maintainable Cash transactions Rateable Value
A 0 2,499 250
B 2,500 4,999 550
C 5,000 9,999 900
D 10,000 14,999 1,300
E 15,000 24,999 2,000
F 25,000 49,999 3,750
G 50,000 74,999 5,950
H 75,000 99,999 8,300
I 100,000 149,999 11,250
J 150,000 199,999 14,000
K 200,000 249,999 18,000
L 250,000 299,999 22,000
M 300,000 and over 25,000

3.1 There is no interpolation between the bands which are wide by design to maintain confidentiality of the cash transaction base.

3.2 With regard to Band M it is recognised that very high volume sites may require a degree of flexibility, and whilst £25,000 RV is expected to provide a ceiling value this may be exceeded if in all the circumstances it appears reasonable.

3.3 Two or more rateable sites in the same occupation will comprise one relevant hereditament and the approach to valuation is to be by reference to the volume of cash transactions that each ATM site is reasonably capable of maintaining as at the AVD. The rateable value will be the aggregate of the appropriate scale values for each ATM.

3.4 Two or more rateable sites in different occupations will comprise separate relevant hereditaments.

Practice Note 2: 2010: Appendix 1

IBRF/LINK Overview of market conditions

ATMs are a familiar sight on the high street, and elsewhere in locations such as railway stations, leisure parks and within shopping centres. In recent years both banks and independent ATM deployers have been placing a growing number of ATMs in locations remote from bank branches in response to customer demand for greater convenience in obtaining cash.

The remote ATM market is beginning to mature with operators concentrating on “quality rather than quantity”. With the benefit of the experience that not all new locations prove successful, operators are typically agreeing a minimum fixed fee in addition to a fee per transaction if transactions exceed a pre-determined threshold. A fee based upon the actual level of usage has its attractions especially as the supply of prime remote locations is limited. When combined with the increasing servicing, maintenance and repair costs of operating the ATMs, many sites will represent a liability after the original fee has been taken into account and this inevitably influences whether or not the operator seeks to renew his agreement at the end of the term and at what licence fee level.

Another consideration taken into account by ATM operators as existing licenses come up for renewal is the fact that, over the period of the agreement, other ATMs (be they branch or remote) might have been installed. These installations will affect the levels of transactions of the existing ATM and reduce the value of the individual site.

Growth in the total number of ATMs has slowed in recent years, with the number of transactions per cash machine beginning to fall. Some expect a gradual shift away from cash towards electronic payment methods to reduce ATM transactions and the value of ATM sites over coming years.

One of the few areas of growth in 2007 and 2008 has been in free-to-use ATMs in lower income areas, which previously did not have free-of-charge access to cash. These ATMs form part of a government-sponsored and industry-supported initiative to improve financial inclusion in these areas. The ATMs have relatively low volumes of transactions, and may be run at a loss.

Practice note 3: 2010: site of electronic delivery lockers

1. General

1.1 Electronic Delivery Lockers are typically situated within covered shopping malls, supermarket car parks, bus/ railway stations and on petrol filling station forecourts. The main operators are Amazon, In Post and By Box, however other companies are now expanding into this developing market.

1.2 These sites house lockers used by the general public to collect parcels ordered online and are accessed by inputting a security code which is provided to the customer by text or email.

1.3 Historically the motor trade utilised similar lockers for the distribution of parts. These sites are now becoming more commercially viable with many operators expanding into the retail sector.

1.4 This class has rapidly expanded due to the gaining popularity of internet shopping offering more convenient delivery options. Indicative values contained within this Practice Note, do not reflect the market growth since the Antecedent Valuation Date of 01-April-2008.

1.5 It is important to be aware it is the actual site which is being assessed, not the structure which houses the lockers. The actual banks of lockers fall to be non rateable chattels as they are not a listed item within the plant and machinery regulations (see Rating Manual - Section 6 part 3 - Section 1120 paragraph 3 for full details).

1.6 The usual rules governing rateability apply, in that if a site is considered of sufficient permanence and definable then it will be rateable. Guidance on the identification of the hereditament and rateable occupation are contained within Rating Manual - Section 6 part 3 - Section 1120 paragraphs 3 and 4. Sites located physically inside other premises such as convenience stores might not fulfil the requirement of having paramount control, so may not be separately rateable.

2. The basis of valuation

2.1 Sites should be data captured on RSA using the following instructions. When input correctly, this survey data will automatically produce a pattern valuation.

2.2 The matrices and access paths have been created centrally.

2.3 Careful judgement must be taken in selecting the appropriate Sub Location Code from the list shown below, as this will automatically run to a designated matrix and produce the Rateable Value as indicated.

  • BOXA - This should be used for poorly located sites which have limited footfall and passing traffic RV £450

  • BOXB -This should be used for sites within predominately industrial locations, lack of visibility is likely to be problematic. RV £600

  • BOXC - For sites located within areas where there is a mix of commercial and residential use. This will include sites at neighbourhood shopping parades RV £750

  • BOXD - For sites in prominent locations within large towns or on major retail parks. A typical site may be located adjacent to a superstore. RV £1,000

  • BOXE - For sites in the best locations including high streets within major cities, busy transport hubs, or prime out of town shopping centres RV £1,750

2.3 Current passing rents should not be used in determining which Sub Location Code to use, as market demand and rental levels have significantly changed since the Antecedent Valuation Date. It is also very common for such rental agreements to cover multiple sites in more than one location.

3. Identification of the “unit of assessment”

3.1 Consideration must be given whether to bring the site into the Rating List as “new” or a “reconstitution”. In general terms where the site does not form part of an existing hereditament, such as those situated within shopping malls or railway stations, these should be treated as new assessments. Where sites are located within the demise of an existing assessment such as petrol filling stations or supermarket car parks, then reconstitution will be required. It is vital to consider if other split outs are required to the host property before progressing any case.

4. Adopting the correct effective date

4.1 The nature of Electronic Delivery Sites have changed dramatically in recent years from a predominately motor trade lead operation to a more commercial retail use. This potentially creates problems when attempting to establish the correct effective date for the site in its present state or position. Where difficulties arise in ascertaining this date, and it cannot be proven the site was in existence as at 01-Apr-2010 then Date of Schedule should be used. Where full facts are known, the actual effective date should be adopted.

Practice note 1: 2005

This memorandum provides guidance on the method of valuation for rating purposes of remote ATMs which has been accepted by the Chief Executive of the Valuation Office Agency and discussed and agreed with the representatives of the Inter - Bank Rating Forum [IBRF] and Association for Payment Clearing Services [APACS].

This memorandum is recommended to all rating surveyors for guidance.

1. General

1.1 ATMs are commonly located in a wide variety of commercial, business, leisure and other locations, and may present in many types and combinations of features. This agreement relates only to those ATMs which are remotely sited from and do not form part of an institution’s hereditament. The more detailed aspects of unit of assessment are not within the scope of this memorandum.

1.2 The agreement is applicable to all remotely located rateable ATM sites irrespective of the type of facility or structure housing the ATM. For the avoidance of doubt it does not apply to ATM sites which are included in their host hereditament and are not separately assessed.

1.3 The ATM should be treated as non-rateable since it is not specified in the Valuation for Rating (Plant and Machinery) Regulations. The foundation or setting may however be rateable within Table A of Class 4 of the Regulations. The site of the ATM, including any hole in the wall through which it projects, is rateable, together with that element of any associated structure which provides shelter and security for the ATM, and any contiguous premises occupied with it (i.e. a secure room).

1.4 An appraisal by IBRF of market conditions and issues relevant to the providers is contained at Appendix 1. For the avoidance of doubt it does not form part of this Memorandum of Agreement and is included for information only.

2. The basis of the agreement

2.1 The agreement has been formulated having regard to the fact that the majority of remote ATM sites are held on licence/lease terms which are difficult to reconcile with a uniform and fair basis for assessment. It also recognises how the market operates, with deals being predominantly struck on a basis reflecting (in part or totally) the number of cash transactions.

2.2 The scheme of valuation has been agreed based on a broad and all embracing approach having regard to the number of annual cash transactions the site is capable of consistently sustaining. The scheme is underpinned by a limited amount of rental and other evidence provided by the IBRF and APACS on behalf of their members.

2.3 Cash transactions are wherever possible to be taken for the periods 2000, 2001 and 2002 but may of necessity relate to a later period for sites first operative after that period. In these circumstances some adjustment may be required to the volumes to fairly represent the economic circumstances as they existed at the Antecedent Valuation Date (AVD) of 1 April 2003 but reflecting the physical circumstances at the Material Day.

2.4 The valuation bands have been increased to thirteen but nevertheless are still drawn sufficiently wide to accommodate the majority of material changes of circumstances (MCCs) and consequential fluctuations in transactions. There is an expectation that most MCCs which occur through the life of the 2005 list will not result in a change in rateable value (RV).

3. The 2005 scheme of valuation

Band Maintainable Cash Transactions Rateable Value
A 0 2,499 £100
B 2,500 4,999 £300
C 5,000 9,999 £600
D 10,000 14,999 £950
E 15,000 24,999 £1,500
F 25,000 49,999 £2,750
G 50,000 74,999 £4,500
H 75,000 99,999 £6,300
I 100,000 149,999 £9,000
J 150,000 199,999 £12,750
K 200,000 249,999 £16,300
L 250,000 299,999 £20,000
M 300,000 and over £24,000

3.1 There is no interpolation between the bands which are wide by design to maintain confidentiality of the cash transaction base.

3.2 With regard to Band M it is recognised that very high volume sites may require a degree of flexibility, and whilst £24,000 RV is expected to provide a ceiling value this may be exceeded if in all the circumstances it appears reasonable.

3.3 Two or more rateable sites in the same occupation will comprise one relevant hereditament and the approach to valuation is to be by reference to the volume of cash transactions that each ATM site is reasonably capable of maintaining as at the AVD. The rateable value will be the aggregate of the appropriate scale values for each ATM.

3.4 Two or more rateable sites in different occupations will comprise separate relevant hereditaments.

There may be circumstances where an adjoining site is occupied by a provider with a smaller customer base and consequential inability to generate the volume reasonably to be expected and achieved by the other occupiers. The point on the scale should have regard to the volume of cash transactions that this site is reasonably capable of maintaining at the AVD having regard to the volumes achieved by those larger customer based providers. There may be relevant locational factors [possibly siting at the remoter end of the block of sites] which would indicate that the particular site would always attract a smaller operator with a lower rental bid and it would be appropriate to have regard to this in determining the volume of transactions.

Practice note 1: 2005: Appendix 1

Extracts from the IBRF statement of market conditions

ATMs are a familiar sight on the High Street. The ATM provides the Bank or Building Society customer with quick access to cash, both inside and outside normal banking hours. Over the last three or four years, independent ATM deployers have been placing a growing number of ATMs in non-bank locations in response to customer demand for greater convenience in obtaining cash (and other services such as balance statements and deposit facilities).

The banking sector has become more competitive in recent years with the emergence of former Building Societies as retail banks to compete “head to head” for customers with the established High Street Banks. In addition, competition from direct telephone and Internet banking from existing and new organisations such as the supermarkets (e.g. Sainsbury Bank) and insurance companies (e.g. Prudential’s Egg) is beginning to take effect. Many in the financial sector have looked at new and existing areas in which to expand in order to maintain or improve their offer to existing and potential customers. Remote ATM’s are one area being used.

As a consequence, demand for suitable remote ATM sites has been considerable over the last few years with most Banks and Building Societies deciding to urgently seek remote ATM sites. Now that most of the large supermarkets have their own ATM’s in installations previously housing other operators the Banks/Building Societies are attempting to place ATMs in ‘new’ locations. A new ATM location may not prove to be as popular and well used. This makes determining what licence fee to pay during negotiations more difficult.

Typically, major hosts such as the petrol station companies are inviting ATM operators to competitively bid for multi site agreements. For the ATM operator this is perhaps the easiest and quickest route to securing increased representation. Earlier tenders saw the host identifying a list of sites upon which they would allow the successful bidder to install an ATM. The ATM operator would have to agree to install a specific number of ATMs and pay a fixed fee per installed ATM. Often the ATM operator would be bidding “blind” with little or no information on the potential of the site as a profitable ATM location.

The subsequent agreement would typically last for a specific number of years with no review provisions or security of tenure in favour of the operator, and be non-transferable. In many cases the ATM operator could be required to re-site his machine on demand by the host and a licence fee would have to be paid even if the site was not well used. The host had the upper hand in the process. In the initial flurry of activity to secure multi-site agreements the successful operator was likely to have made a considerable overbid in order to secure a batch of sites. If individual remote ATM rateable values are to be based on licence fees the bids of the unsuccessful parties should also be considered in order to arrive at a reasonable hypothetical rent as opposed to the artificial and highest rent.

ATM operators do of course enter into agreements with hosts for remote sites on a one to one basis, i.e. not in a competitive bid scenario.

ATM Operators have become more selective in the multi-site opportunities they consider for a number of reasons including the following:

  • Some newer ATM locations are not proving to be as successful as initially estimated and usage of machines has been below expectations.

  • Of particular significance is the fact that when entering into those earlier agreements there was no knowledge of any liability to pay business rates on remote ATMs. This fact was not taken into account during licence fee discussions.

  • When combined with the increasing servicing, maintenance and repair costs of operating the ATMs many sites will represent a liability after the original fee has been taken into account and no doubt this will determine whether or not the operator seeks to renew his agreement at the end of the term and at what licence fee level.

  • Now that some locations have become established, ATM operators are able to appraise new opportunities by consideration of levels of usage on similar sites. Some ATM operators are beginning to consider what sum they should offer for a remote site having estimated what surplus may be available. The surplus would pay a fee after fixed capital and annual costs and a return on capital costs. This would be deducted from the income received from reciprocal arrangement usage, i.e. the licence fee the operator receives from a competitor when its customer uses the subject ATM. It is also only now that ATM operators are beginning to consider the impact of business rates.

The remote ATM market is beginning to settle down with operators concentrating on “quality rather than quantity“. With the benefit of the experience that not all new locations prove successful, some ATM operators are now seeking to agree a licence fee based on a price per transaction. Alternatively, they are agreeing a minimum fixed fee in addition to a fee per transaction if transactions exceed a pre-determined threshold. It is becoming a requirement of those responsible for acquiring remote ATM sites to demonstrate that the ATM will not be a liability, i.e. costs would not exceed the returns. Consequently a fee based upon the actual level of usage has its attractions especially as the supply of what are considered to be the prime/established remote locations are reduced by take up, and more marginal locations are having to be considered. Additionally operators are beginning to incorporate a provision in agreements that will enable them to “pull out” from a location, without penalty, should it not reach a pre-determined “break-even” level of usage.

Another consideration taken into account by ATM operators as existing licenses come up for renewal is the fact that, over the period of the agreement, other ATM’s (be they branch or remote) might have been installed. These installations will affect the levels of transactions of the particular ATM. Also levels of usage have been affected by the expansion of the “cash back” service offered by supermarkets.