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

Section 170: bullion / money stores

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

1. Scope

This guidance concerns with the assessment of bullion/money stores which may range from warehouse conversions on industrial estates to purpose built buildings designed to provide a wide range of secure facilities.

Early secure stores were developed from standard warehouse units by the addition of secure areas. Increasingly modern purpose-built money stores/cash centres are being constructed at great cost to a high standard with elaborate security features and are strategically located. Typically, such buildings may be used for clerical administration of a specialised banking nature including money sorting, batching, clearing, shredding, machine packing, cheque processing, cheque clearance by cheque identification screening machines, etc.

2. List Description and Special Category Code

List description: Warehouse and Premises

SCAT code: 034, Scat suffix S

3. Responsible Teams

The valuation and referencing of this class of property is the responsibility of the specialist team within the NDR Unit.

4. Co-ordination

The Specialist Industrial classes Co-ordination Team and the Industrial Valuation Panel have responsibility for this class ensuring effective co-ordination across the business units. The team are responsible for the approach to and accuracy and consistency of bullion and money store valuations. The team will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating list. 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

The Lands Tribunal case of Barclays Bank PLC v Gerdes (VO) 1987 RA 117 considered the valuation for rating purposes of a purpose-built money store/cash centre. There was no useful rental information and whereas the VO argued that indirect evidence of 22 secure stores was so diverse as to be of no assistance, and consequently valued the appeal hereditament using the contractors basis the Lands Tribunal accepted the approach of the ratepayers. They argued that the appeal property could properly be valued by reference to six of the VO’s comparables, which had all been valued according to the warehouse tone for their localities with a variety of plus factors for security.

6. Survey Requirements

The basis of measurement for this class is Gross Internal Area. Reference should be made to the Code of Measuring Practice for Rating Purposes in England and Wales.

Care should be taken to take detailed note of the special fit out, strong rooms, security provision and plant and machinery, including strong room doors.

7. Survey Capture

The method of measurement is GIA .Rating surveys should be captured on the Rating Support Application (RSA). Plans and surveys should not be stored in the Electronic Document Records Management (EDRM) system, but retained in a separate securely stored folder..

8.Valuation Approach

Rental evidence for this type of hereditament is extremely limited.

The Rentals Plus Basis should be adopted. The hereditament is to be valued by reference to the level of values associated with Warehouses in the locality. The method of measurement is GIA

A rentals basis with uplifts, as set out in the Practice Notes

9. Valuation Support

Valuations for Bullion and Money stores are held on RSA.

Guidance on this class can be obtained by raising a query via the NSU inbox.

Section 170: Practice Note R2017: Bullion/Money Stores

1. Market Appraisal

This remains a small, specialist class of property, with approx. 90 hereditaments nationally.

They remain geographically spread out, with location driven by security provisions eg one boundary protected by a railway line or river/stream for example . Although many are located on industrial estates . Rental evidence of the complete hereditament is very rare. As are cost details of the security fit out .

The stock is now becoming dated, with few new builds. It is apparent that regular security upgrades are made however.

The demise of the High Street bank branch has been offset by the increase in the number of ATMs appearing in other locations, and the need for Bullion / Money Stores remains.

2. Changes from the last practice note

There have been no changes from the 2010 Practice Note.

3. Ratepayer Discussions

There have been no discussions for 2017 with agents representing the industry and the IBRF (Inter Banking Rating Forum).

4. Valuation Approach

The costs shown in this section are for ease of reference. In all cases where a cost guide code is shown it is this that which 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 different costs to those shown in a current version of this practice note please refer to the CCT.

I. The Rentals Plus Basis should be adopted.

The hereditament is to be valued by reference to the level of values associated with warehouses in the locality. The method of measurement is GIA. The base value, £/sq m., is to be uplifted by £50 m2 (RCG 201, £47.50 + 5% to cover the general increase in security provision) to reflect the value of the Bullion Store element.

The uplift is to be modified by reference to a factor appropriate for the locality (location factor found in the Cost Guide 2017 – Guidance Notes and Common Adjustments).

Should there be any specific reinforced strength to walls and/or roof, for example, refer to CCT or via the NSU inbox.

The Alarm security installation is referred to the P&M section of RCG2017.

ii. To the result of this add the value of the Strong Room by adopting £475 (50U00B) x statutory decapitalisation rate (SDR)/ sq.m GIA in terms of RV. If the Strong room requires piled foundations these should be in addition at £222m2 (50U00C) cost x statutory decapitalisation rate (SDR) of Strong room GIA. In each case apply the location factor as in i) above.

iii. To the result of ii above add the value of Strong room Doors at £9,000 to £19,000 each in terms of ERC.

Grade Cost +Fitting @ 20% Cost Guide Code
5 £7,500 £9,000 50U00D
8 £9,000 £10,500 50U00E
11 £15,000 £18,000 50U00F

These figures will depend upon the specification. The standard is likely to be at the lower end of the range.

iv. Allowances for age and obsolescence in accordance with the scales contained in Rating Manual - section 4 part 3: The Contractor’s Basis of Valuation : R2017 Practice Note: Stage 2 - Age and Obsolescence Allowances.

These may be made to those elements valued by reference to cost. The Strong rooms should treated as ‘Buildings’ and the strong room doors treated as ‘Civils’ for the purpose of the adjustments.

v. Allowances for layout and other disabilities are to be applied as appropriate in accordance with the local basis for industrial hereditaments.

vi. Make additions for the associated yard area not used for access/circulation as per the local basis for industrial hereditaments.

vii. Make additions for any P&M not accounted for, in accordance with Rating Manual 4, Section 3 and the Cost Guide 2017. The Alarm security installation is referred to the P&M section of RCG2017

4.2 In all cases of doubt reference should be made to National Specialist Unit - Industrial for the appropriate advice.

In terms of carrying out the valuation within RSA, the hereditament should be valued on a matrix (address or size as preferred) drawing values from the Local Office tone for warehouse units for the appropriate size and age.

4.3 The Bullion store scale works on the assumption that central heating is present in a hereditament but air conditioning is not. Caseworkers should therefore ensure that matrix prices reflect this assumption, as adjustments will be required where the actual circumstances of a particular property do not accord with it.

4.4 The uplift for the security element should be carried out within the ‘Other Additions’ table using code ZO0. Although there is an AUC for strong rooms, the addition for the strong room element should also be treated as an ‘Other Addition ‘using code ZO1, recording the area of the strong room. OA tables need to be created specifically for the valuation of Bullion Stores and should have the unit prices for ZO0 and ZO1 set to the prescribed amounts. In all instances, the default text for the codes must be overwritten with “Security” and “Strong room” accordingly. The strong room doors should be added as plant and machinery [Class 2 table 2 (f) Protection from Hazards – doors] along with other security elements (security cameras and gates etc.) Accommodation not having high security features such as a separate office block will then be left out of the floor area used within ‘Other Additions’.

4.5 The 2017 prescribed rate of decapitalisation should be applied where appropriate.

Section 170: Practice Note R2010: Bullion/Money Stores

1. Co ordination

1.1 This is a Specialist Class

1.2 Responsibility for implementing the scheme as set out within this Practice Note lies with the SRU, as does responsibility for ensuring effective co-ordination.

1.3 For Further information see Rating Manual - section 6 part 1: Practice Note: 2010.

1.4 The R2010 Special Category Code 034 should be used. The appropriate suffix letter is (S).

2. Central Negotiations

2.1 Central discussions, with agents for the industry and the IBRF (Inter Banking Rating Form) have been very recently been carried out. However while the content of this practice note has been discussed with them no agreement has been reached.

2.2 A basis for 1990 was agreed with the agents representing the industry and a similar basis was recommended for 1995, 2000 and 2005 and you are advised, in the absence of any agreement, to adopt the basis as outlined below.

3. State of the Industry and Nature of the Hereditament

3.1 The first purpose built bullion stores were constructed by banks in the late 1970’s using what could be described as fortress methods of construction: walls, doors, floors & roofs were all very heavily constructed. The hereditaments have very few windows, if any at all, as openings of any sort were regarded as a point of weakness.

3.2 Since that time bullion store design has tended to rely more on electronic surveillance equipment rather than physical barriers but having said that the stores are still reasonably heavily constructed with very expensive doors and strong room linings. Stores constructed since the middle 1980’s will almost certainly have air-conditioning.

3.3 During the 1980s the banks built up their own networks throughout the country servicing their own branches. Since that time some rationalisation has taken place as the banking industry has responded to changes in technology and working practices. The introduction of ATMs, the greater use of plastic payment (credit cards, debit cards etc.) direct debit and standing orders has meant a general reduction in the demand for banking facilities in the form of high street banks and this in turn has meant a general reduction in the bullion store / cash centre requirements.

3.4 To counter balance this somewhat there has been a shift in the storage of money in high street banks to that of central storage in bullion and money stores. The policy now is to have a strong and reliable distribution system which allows the bullion /money store to respond to the branch cash requirements ‘just in time’.

3.5 Consequently bullion / money stores are usually located reasonably close to good road transport facilities to allow them to adopt this practice.

3.6 Some agents have suggested that strong rooms are now superfluous to requirements in that they are no longer used as ‘extra secure rooms within a secure building’ as the whole building is extra secure. There may be some merit in that but it should be kept in mind that vacant and to let the hypothetical occupier may make good use of the strong rooms which in some stores are substantial and we should not be unduly influenced by the activities of the actual occupier which may not be the norm.

4. Basis of Valuation

4.1

I. The Rentals Plus Basis should be adopted. The hereditament is to be valued by reference to the level of values associated with Warehouses in the locality. The method of measurement is GIA. The base value, £/sq m., is to be uplifted by £47.5 /sq.m to reflect the value of the Bullion Store element. The uplift is to be modified by reference to a factor appropriate for the locality (location factor found in the Cost Guide 2010 – Guidance Notes and Common Adjustments).

ii. To the result of this add the value of the Strong room by adopting £60/ sq.m GIA in terms of RV. This figure is based upon costs supplied by the Building Surveyor (BS).

iii. To the result of ii above add the value of Strong room Doors at £35,000 to £70,000 each in terms of ERC. These figures have been determined as advised under ii and will depend upon the specification. The standard is likely to be at the lower end of the range.

iv. Allowances for age and obsolescence in accordance with the Cost Guide 2010 may be made to those elements valued by reference to cost. See Cost Guide 2010 Guidance Notes and Common adjustments: Section 8 Allowances. The Strong rooms should treated as ‘Buildings’ and the strong room doors treated as ‘Civils’ for the purpose of the adjustments.

v. Allowances for layout and other disabilities are to be applied as appropriate in accordance with the Local Office basis for industrial hereditaments.

vi. Make additions for the associated yard area not used for access/circulation as per the Local Office basis for industrial hereditaments.

vii. Make additions for any P&M not accounted for, in accordance with Rating Manual 4, Section 3 and the Cost Guide 2010.

4.2 In all cases of doubt reference should be made to National Specialist Unit - Industrial for the appropriate advice.

In terms of carrying out the valuation within RSA, the hereditament should be valued on a matrix (address or size as preferred) drawing values from the Local Office tone for warehouse units for the appropriate size and age.

4.3 The Bullion store scale works on the assumption that central heating is present in a hereditament but air conditioning is not. Caseworkers should therefore ensure that matrix prices reflect this assumption, as adjustments will be required where the actual circumstances of a particular property do not accord with it.

4.4 The uplift for the security element should be carried out within the ‘Other Additions’ table using code ZO0. Although there is an AUC for strong rooms, the addition for the strong room element should also be treated as an ‘Other Addition ‘using code ZO1, recording the area of the strong room. OA tables need to be created specifically for the valuation of Bullion Stores and should have the unit prices for ZO0 and ZO1 set to the prescribed amounts. In all instances, the default text for the codes must be overwritten with “Security” and “Strong room” accordingly. The strong room doors should be added as plant and machinery [Class 2 table 2 (f) Protection from Hazards – doors] along with other security elements (security cameras and gates etc.) Accommodation not having high security features such as a separate office block will then be left out of the floor area used within ‘Other Additions’.

4.5 Authority needs to be obtained from National Specialist Unit - Industrial and RLO for the use of the ZO codes in this way and to ensure co-ordination.

5. Plant and Machinery

5.1 There are no proposals for another Wood Committee and it is unlikely that there will be any changes to the existing regulations (SI 2000/540 & SI 2001/ 846).

6. Decapitalisation Rate

6.1 The 2010 prescribed rate of decapitalisation should be applied where appropriate.

Practice Note 1 : 2005 : Bullion /Money Stores

1. Co-Ordination Arrangements

This is an SRU/ National Scheme Class. Responsibility

for implementing the scheme as set out within this Practice Note lies with the SRU as does responsibility for ensuring

effective co-ordination.

For Further information see Rating Manual - section 6 part 1: practice note: 2005.

The R2005 Special Category Code 034 should be used. As a SRU Class the appropriate suffix letter should be (S).

2. Central Discussions

Central discussions, with agents for the industry and the IBRF (Inter Banking Rating Form ) have been very recently been carried out. However while the content of this practice note has been discussed with them no agreement has been reached.

A basis for 1990 was agreed with the agents representing the industry and a similar basis was recommended for 1995 and 2000 and you are advised, in the absence of any agreement, to adopt the basis as outlined below.

3. State of the Industry and nature of the hereditament.

The first purpose built bullion stores were constructed by banks in the late 1970’s using what could be described as fortress methods of construction: walls, doors, floors & roofs were all very heavily constructed. The hereditaments have very few windows, if any at all, as openings of any sort were regarded as a point of weakness.

Since that time bullion store design has tended to rely more on electronic surveillance equipment rather than physical barriers but having said that the stores are still reasonably heavily constructed with very expensive doors and strong room linings. Stores constructed since the middle 1980’s will almost certainly have air-conditioning.

During the 1980s the banks built up their own networks throughout the country servicing their own branches. Since that time some rationalisation has taken place as the banking industry has responded to changes in technology and working practices. The introduction of ATMs, the greater use of plastic payment (credit cards, debit cards etc.) direct debit and standing orders has meant a general reduction in the demand for banking facilities in the form of high street banks and this in turn has meant a general reduction in the bullion store / cash centre requirements.

To counter balance this somewhat there has been a shift in the storage of money in high street banks to that of central storage in bullion and money stores. The policy now is to have a strong and reliable distribution system which allows the bullion /money store to respond to the branch cash requirements ‘just in time’.

Consequently bullion / money stores are usually located reasonably close to good road transport facilities to allow them to adopt this practice.

Some agents have suggested that strong rooms are now superfluous to requirements in that they are no longer used as ‘extra secure rooms within a secure building’ as the whole building is extra secure. There may be some merit in that but it should be kept in mind that vacant and to let the hypothetical occupier may make good use of the strong rooms which in some stores are substantial and we should not be unduly influenced by the activities of the actual occupier which may not be the norm.

4. Basis of Valuation

i. The Rentals Plus Basis should be adopted. The hereditament is to be valued by reference to the level of values associated with Warehouses in the locality. The method of measurement is GIA. The base value, £/sq m., is to be uplifted by £35/sq.m to reflect the value of the Bullion Store element. The uplift is to be modified by reference to a factor appropriate for the locality (location factor found in the Cost Guide 2005 – Guidance Notes and Common Adjustments).

ii. To the result of this add the value of the Strongroom by adopting £45/sq.m GIA in terms of RV. This figure is based upon costs supplied by the Building Surveyor (BS).

iii. To the result of ii above add the value of Strongroom Doors at £25,000 to £50,000 each in terms of ERC. These figures have been determined as advised under ii and will depend upon the specification. The standard is likely to be at the lower end of the range.

iv. Allowances for age and obsolescence in accordance with the Cost Guide 2005 may be made to those elements valued by reference to cost. See Cost Guide 2005 Guidance Notes and Common adjustments: Section 8 Allowances. The Strongrooms should treated as ‘Buildings’ and the strongroom doors treated as ‘Civils’ for the purpose of the adjustments.

v. Allowances for layout and other disabilities are to be applied as appropriate in accordance with the Local Office basis for industrial hereditaments.

vi. Make additions for the associated yard area not used for access/circulation as per the Local Office basis for industrial hereditaments.

Vii Make additions for any P&M not accounted for, in accordance with Rating Manual 4, Section 3 and the Cost Guide 2005.

In all cases of doubt reference should be made to CEO (Rating) for the appropriate advice.

In terms of carrying out the valuation within RSA, the hereditament should be valued on a matrix (address or size as preferred) drawing values from the Local Office tone for warehouse units for the appropriate size and age.

The Bullion store scale works on the assumption that central heating is present in a hereditament but air conditioning is not. Caseworkers should therefore ensure that matrix prices reflect this assumption, as adjustments will be required where the actual circumstances of a particular property do not accord with it. Full details of how the adjustments should be made can be found in I&A R2005 290103 at Para 2.8.

The uplift for the security element should be carried out within the ‘Other Additions’ table using code ZO0. The addition for the strong room element should also be treated as an ‘Other Addition ‘using code ZO1, recording the area of the strong room. OA tables need to be created specifically for the valuation of Bullion Stores and should have the unit prices for ZO0 and ZO1 set to the prescribed amounts. In all instances, the default text for the codes must be overwritten with “Security” and “Strongroom” accordingly. The strong room doors should be added as plant and machinery [ Class 2 table 2 (f) Protection from Hazards – doors ] along with other security elements (security cameras and gates etc.) Accommodation not having high security features such as a separate office block will then be left out of the floor area used within ‘Other Additions’.

Authority needs to be obtained from each SRU and RLO for the use of the ZO codes in this way and to ensure co-ordination.

5. Plant and Machinery

There are no proposals for another Wood Committee and it is unlikely that there will be any changes to the existing regulations ( SI 2000/540 & SI 2001/ 846).

6. Decapitalisation Rate

The 2005 prescribed rate of decapitalisation should be applied where appropriate.