Car washes (standalone)
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
This instruction applies to all stand alone car washes and is split between the purpose built automated conveyor washes and the wide variety of different types of hand car wash operation.
This class deals with stand alone car washes and does not cover car washes that form part of a larger hereditament such as petrol filling stations (which are dealt with in RM5:770) or those that form part of a forecourt assessed with a superstore as a single hereditament (which are dealt with in RM5:920).
Stand alone car washes fall into two distinct groups – automated and hand.
Automated Car Washes (ACWs)
This class of property is typically limited to one large national chain operation and a few smaller independent operators.
Hand Car Washes (HCWs)
Operation of this class of property varies from national companies mostly located within car parks of other properties, to much smaller independent enterprises at a variety of sites.
Car washes are a generalist RVU property type and whether automated or hand, the following should apply:
List description: Car Wash and Premises
Primary Description Code: CX
SCAT code: 045, suffix G
The Transport Class Coordination Team are responsible for the provision and application of both Rating Manual guidance and relevant Practice Notes.
As this is a split class of property, stand alone automated conveyor washes are typically dealt with by Specialists within each business unit. Generalists are responsible for those automated washes located on sites such as Petrol Filling Stations (PFS), in line with the PFS national scheme of valuation.
Hand car washes are a generalist category of property although it is considered there is the need for co-ordination given the synergy between these and automated washes.
The Transport Class Co-ordination Team has overall responsibility for the co-ordination of this class. The team are responsible for the approach to and accuracy and consistency of valuations. The team will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. Caseworkers and referencers have a responsibility to:
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Follow the advice given at all times – Practice Notes are mandatory.
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Not depart from the guidance given on appeals or maintenance work, without approval from the class co-ordination team.
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At certain sites a trolley wash operation exists within a car park, with occupation consisting of a steel container housing washing equipment. Due to the transient nature of such occupation, a Rateable Value of £1,000 is recommended for this type of hereditament.
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Seek advice from the co-ordination team before starting on any new work.
All car washes whether automated or hand should comply with PPG 13 - July 2007 - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/290144/pmho0307bmdx-e-e.pdf
These are the pollution prevention guidelines as laid down by the Environment Agency and others and are aimed at limiting the amount of ‘trade effluent’ discharged into the main drainage system.
The leading industry association is the Car Wash Advisory Service (CWAS) which replaced the Car Wash Association (CWA). Many operators seek to be accredited with the CWAS industry certification WashMark which can indicate quality and compliance with environmental and commercial legislation requirements.
Automated Car Washes
6.1 Types of Automated Car Wash
There are 2 main types of automated car wash: - rollover brush washes and conveyors. There may also be an addition of pressure washes on such sites.
Rollover brush washes are those more typically found on petrol filling station forecourts because they require less space and often form part of that hereditament.
The most common found on stand alone automated sites is the conveyor, which pulls the car through a series of revolving brushes, water jets and air blowers. These facilities generally recycle 95% of the water they use. A typical modern conveyor system can handle 4 cars at a time and up to 40-60 cars an hour, although these figures do not appear typical of most washes of this type within the UK.
6.2 Description
A typical automated stand alone car wash requires a site normally in excess of 1000m2 (usually about 1350m2) with good bitumen macadam surfacing and parking for 5 or 6 cars. It may well include 1 or 2 coin-operated vacuum cleaners and it is not uncommon to find fixed jet washes either open or in screened bays on a stand alone site.
An ideal site will be highly visible, usually on a main road and with a population of 50,000 -100,000 within the catchment area. Automated car washes have over the years spread to other key sites such as retail parks and superstore sites.
Traditionally, a typical older (pre 2000) car wash building, for example, usually extends to around 120m2 GIA (car wash 97m2, office 7m2, stores 9m2, WC’s 7m2). To facilitate the machinery, which at this size can handle 2 cars at a time, the building needs to be approximately 20m long. The construction is usually brick, although later builds use profiled metal sheets, with a profiled metal roof, concrete floor, internal tiled walls and roller shutter doors at each end of the building. Drainage channels are built into the concrete floor. In other cases operators have built larger car washes circa 175m2 GIA approximately 25-30m long of a modular design incorporating a pre wash area with roller shutters and capable of handling up to 4 cars at a time.
6.3 Survey Requirements
In accordance with the VO Code of Measuring Practice for Rating Purposes buildings should be measured to GIA (Gross Internal Area) as well as a measurement of the overall site.
When carrying out an inspection, note should be made of the following:
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Location The type of location should be noted. For example whether it is on a main road or Retail Park. A note should also be made of the surrounding catchment area – is it largely residential or commercial.
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Site The extent of the site should be noted including the split between developed land and soft landscaping. Other factors such as access, visibility, and whether the site is flat or sloping.
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Type of Automated Car Wash. Refer to 6.1 above.
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Additional facilities Such as coin-operated vacuums, air pressure, jet washes.
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Trade A note should be made of the tariffs, the number of cars that can be handled at a time, and the number of cars handled on average.
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Competition A note of any other competing car washes within a c.2 mile radius would be helpful. This would include hand car washes, other local conveyor washes, or those at PFS’s etc.
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Tenure If an independent operates the site clarify whether it is rented or owned freehold. If rented obtain further details or consider if a Form of Return is required. If the site is operated by a national chain details may have been provided centrally.
6.4 Plant & Machinery
The car wash plant itself is not rateable under the provisions of the Plant and Machinery Regulations and must therefore be ignored for the purposes of rating valuations. Therefore where a site has simply closed with such non rateable plant removed, it is considered no change in assessment is appropriate for this reason alone.
Hand Car Washes
6.5 Types of Hand Car Wash
Over the years both the numbers and types of hand car washes have increased significantly. Locations for hand car washes typically include:
6.6 Multi storey and surface car parks
Various main operators have entered into agreements with local authorities, superstores, health & fitness centres, garden centres, and also with retail parks whereby a number of car spaces are allocated for a fixed term, under lease or licence. Once the licence is secured, these sites are offered on a franchise basis by the main operator. The package usually includes wet wash bays, dry valeting area, drainage installation if required, fixed canopy in outdoor sites, office unit, and the overall site area fully branded in corporate colours.
It should be noted that where a separate assessment of a hand car wash is required from a host property such as a superstore, in most cases, a reconstitution of the host is required.
6.7 Former petrol filling stations
Redundant PFS’s are sometimes converted for use as a car wash. Few adaptations are required. The forecourt with or without canopy forms the car wash, with the shop used for administration, customer waiting room and retail space. Land to the rear and side of the site may be used for valeting purposes. There is normally a container type structure for the water and/or foam.
Filling stations tend to occupy main road sites and with the increasing trend over the years of fewer filling stations there is an availability of vacant sites which are particularly well suited for hand valeting /car wash operators. Their location on road frontages is clearly of benefit to the operation and should be reflected in any rents paid.
6.8 Other sites
These often include cleared sites, sites formerly used as storage land, car sales, or sites with existing commercial/industrial buildings.
These types of wash facilities are covered in the following instructions.
6.9 Survey Requirements
A measurement of the overall site covered by the HCW operation is required.
In accordance with the VO Code of Measuring Practice for Rating Purposes where buildings exist, they should be measured to GIA (Gross Internal Area).
When carrying out an inspection, note should be made of the following:
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Location The type of location should be noted. For example whether it is on a main arterial road, a quieter B road, industrial estate, or superstore car park. A note should also be made of the surrounding catchment area – is it largely residential or commercial.
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Site The extent of the site should be noted particularly whether there is any circulation space within the site occupied by the HCW. Other factors such as access, visibility, and whether the site is flat or sloping.
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Type of drainage – what type of drainage is available for disposing of waste water.
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Additional facilities - Such as coin-operated vacuums, air pressure, jet washes.
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Trade - A note should be made of the tariffs, the number of cars that can be handled at a time, and the number of cars handled on average per day or week - the operator should be able to provide these details.
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Competition - A note of any other competing car washes within a c.2 mile radius would be helpful. This would include hand car washes, local conveyor washes, or those at Petrol Filling Station’s etc.
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Rateable Occupier – In order for a separate hereditament to exist there must be a separate rateable occupier from any host assessment. For instance if a HCW has taken over a former valet area within a petrol filling station, confirmation must be obtained that the operator is different from the PFS operator as at times it can be one and the same.
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Tenure / Franchise - a note of any rental or franchise fee should be recorded. For example, the rent or franchise fee that is paid, whether there has been a capital sum paid in addition, and what is included in the rent/franchise fee and capital sum. Consideration must be made of whether a Form of Return should be issued.
Plant & Machinery
There is unlikely to be any rateable plant and machinery on a site of a hand car wash operation, although those on former petrol filling stations may have some form of plant, so a note should be taken.
6.10 Rateability
The question of rateability is likely to arise in respect of a car wash located in a car park as described in 6.6 (above) but, where land is not used for any purpose other than as a hand car wash, complications are less likely to arise in identifying the rateable occupier.
The first stage is to identify who is in rateable occupation of the site used as a hand car wash, the owner of the car park as principal user or the car wash operator. The four tenets of rateable occupation need to be considered to ensure that all are satisfied before accepting that the operator is the rateable occupier. (J Laing & Son v Kingswood AC [1949] 1KB 344), but it is envisaged that exclusive occupation and permanent occupation may need to be looked at in more detail.
It will be necessary to review all the facts and in particular regard should be had to the licence or agreement in place as to who has the benefit of exclusive occupation. It should however be remembered that what actually occurs takes precedence over any documentation.
There must be a necessary degree of permanence and to be rateable the occupation of the land comprising the hereditament must exist for not too transient a period.
There is also the issue of whether the structure erected by the operator can be regarded as having a sufficient degree of permanence to be regarded as a rateable chattel. In Field Place Caravan Park Ltd v Harding (VO) [1966] RA 521 Lord Denning MR said “The correct proposition today is that, although a chattel is not a rateable hereditament by itself, nevertheless it may become rateable together with land, if it is placed on a piece of land and enjoyed with it in such circumstances that the chattel with the land can together be regarded as one unit of occupation.”
Another case concerning rateable chattels is Hobbs (VO) v Madden [1992] RA 79. This case concerned a flower stall which frame was screwed to the wall and rested on the surface of the shopping mall. In deciding whether the stall comprised a rateable hereditament, it was considered that it was enjoyed with the land, enhanced its value and had sufficient degree of permanence and attachment.
So, if something is enjoyed with the land and has a sufficient degree of permanence it can become rateable with the land, for example builders huts and caravans. It is considered that the type of arrangement usually entered into by Car Park Valeting would satisfy the criteria referred to above.
Having identified the rateable occupier, the next step is to identify the hereditament, the leading cases being Gilbert (VO) v Hickinbottom & Sons [1956] 2 QB 40 and Woolway (VO) v Mazars. It is considered that this would present little difficulty within the description above but there may be cases where a hand car wash operation moves from one part of a car park to another without any single definable position making it impossible to clearly define the extent of the hereditament. In such cases it is not considered that a separate assessment will arise although the value of this use could be included within the rateable value of the “host” hereditament.
Where a hand car wash is truly mobile within the car park, that is to say, the valeting staff moves around the car park with their equipment, care should be taken to note whether storage facilities, such as a small container or shed, have been provided. These storage facilities are likely to form a unit of assessment.
Where the hand car wash is situated on a cleared site the test of rateable occupation should be applied and if satisfied an appropriate value adopted for the use to which the land is put.
The issue is more clear-cut with regard to redundant petrol filling stations and other commercial/industrial buildings.
Automated Car Washes
Survey Data captured should be captured via RSA within the Central Database.
Valuations are to be carried out by NDR Unit Specialist Valuers on a spreadsheet with the resulting valuation transferred to RSA as a one-line entry. The Bulk Class Indicator should be recorded as M (miscellaneous) and the Accommodation Use Code CWS should be used.
Hand Car Washes
Survey Data Capture approach can depend on the individual HCW site and the varying types of HCW in existence. It may be appropriate to adopt a range of sub locations and levels of value/spot prices, supported by rental evidence, reflecting the differing qualities and locations/prominence of HCWs in a certain area with regard had to local market rental evidence. This includes HCWs located on other premises such as superstore car parks. In these instances it is considered a 1 x CWS (over typed hand car wash) approach is adopted using an overall figure via an address based matrix.
In other cases an area of land may be the primary element of what is present at a site and it should be data captured as such, with regard had to any competing use and ancillary buildings noted as other additions. If the building is industrial then it should be data captured as such.
Automated Car Washes
Following a consideration of the available rental evidence very little evidence has yet been found which relates to developed sites, i.e. including both site and buildings.
Typically sites are held on ground rents or the land is acquired freehold and then developed by the operator. Many rental agreements are for site only and are often part of sale and leaseback transactions. Furthermore many rent reviews are linked to RPI or geared to another use.
In the absence of direct rental evidence the recommended valuation approach is to consider available site rental evidence and value based on a consideration of this evidence, with an addition for the cost of rateable improvements. See the relevant practice note for details.
Hand Car Washes
It is important that in assessing hand car washes the facts of the particular case are fully researched and details of tenure confirmed. In the absence of a passing rent on the property under consideration evidence of similar sites should be considered. Local evidence is preferred, however in some locations such evidence may be sparse and it may be necessary to search over a wider area in order to fully inform the valuation.
Regard must also be had to the rent/rates equation on many HCW operations in that some occupants may not have envisaged paying rates. Some may have assumed that the rent was a “total occupancy cost” and therefore have paid an inflated rent. If there is no clear agreement on rates and the lease/agreement is silent about rates, this may need to be reflected in any rental analysis – i.e. if the tenant had known he would be paying rates, he or she would in all likelihood have agreed to pay less in rent.
Whilst it is important to carry out the research outlined above, each relevant Practice Note may give a very broad range of values collated purely as an indicator of value over a range of sites for a limited number of types.
Car Park Sites
Head rents for hand car washes within car parks can vary and it is not entirely clear in all cases who is responsible for utility payments or whether drainage has been installed by the Landlord and these facts will need to be established for any rent to be meaningful.
The franchise fee paid to the franchisor to run the operation often seems to be in excess of £25,000, sometimes significantly. It is typical that the operator provides adequate training and guidance, but the franchisee appears to bear all the additional costs.
In the absence of site values, the franchise rent, if provided, may form the starting point of the improvement with insertion on canopies and container offices as well as the drainage and services provisions.
Existing Commercial and Bare Sites
It should be appreciated that there are a wide variety of styles of hand car washes falling within the bare site/existing commercial building category. When considering bare land sites, in the absence of a passing rent, display land values may prove a useful indicator of value. Additions should then be made for improvements such as fencing, temporary offices, storage containers and drainage.
When considering a hand car wash within a redundant industrial building or petrol filling station, regard should be had to the rent passing but in the absence of this or comparable evidence, and as this is a different mode or category of occupation from its original use, it may be necessary to follow the appropriate industrial scale making an addition for the land.
Factors affecting valuation will include access, location, good road frontage and type and size of the potential catchment area. Redundant petrol filling stations often occupy superior sites to redundant industrial units in busy locations with good road frontage.
As a fall back position, it might be that the majority of such occupations are best valued with regard to the local land values, particularly display land values, and this can always be used as a guide to the end value of such operations, no matter which approach to value is taken.
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Rating Support Application (RSA)
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Class Coordination Team
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National Specialist Unit
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Survaid
1. Market appraisal
1.1 Following a drop in standalone automated car wash (ACW) numbers from 2008 to 2015, active numbers have continued to fall up to 2021, albeit at a much slower rate. This is due in part to competition from hand car washes possibly reaching saturation point, and active automated operators having sold off most of their sites that were uneconomic to operate.
1.2 When sold off automated car washes have often been redeveloped for alternative use such as residential accommodation, or other retail or catering use.
1.3 The previous impact of hand car washes on the automated industry cannot be understated. This is the case whether an automated car wash is operated as part of a petrol filling station, or, as a standalone car wash site. The number of automated car washes on forecourts alone has fallen since 2015 and whilst many sites have remained in existence, they have seen lower wash numbers.
1.4 It is understood that most if not all standalone automated car wash operators have not opened a single new unit in recent years and are now attempting to consolidate their offer within the UK. Certain operators are instead focusing on developing new sites in Europe and the USA.
1.5 As at the AVD of 1st April 2021 Covid was in existence. It was anticipated that the vaccine rollout which commenced in December 2020 would reduce its impact on society.
2. Changes from the last practice note
2.1 The market appraisal section has been updated along with supporting valuation elements for example rateable improvement costs.
3. Ratepayer discussions
No central discussions have taken place at the time of writing.
4. Valuation scheme
4.1 Whilst research should naturally be carried out to collect relevant rental evidence, it is understood the vast majority of agreements for rented ACWs are not helpful due to a variety of reasons. Certain rents may be for the site only i.e., excluding buildings, and are often geared on review to values on other uses, for example nearby industrial units, or indexed in some way. Consequently, review evidence should be treated with caution and fully investigated to establish its relevance.
4.2 Any rents whether new leases, lease renewals or rent reviews should be investigated to consider whether they include both buildings and land. Separately assessed automated car washes situated on superstore forecourts should be considered and valued having regard to the higher rents generally expected to be paid to reflect location and the higher levels of potential custom. If appropriate regard should also be had to the value of the better quality nearby hand car washes.
4.3 Depending on the level of evidence valuers should also consider any available site rental evidence in their areas and prepare a scale of site values ranging from the poorest sites up to the best. At the date of preparation of this Practice Note there is very little direct rental evidence available for Revaluation 2023. However, it is expected that site values of most typical roadside standalone car washes will be in the region of £10,000 to £20,000.
4.4 In order to assist in the consideration of the costed element, VOA BEAMS (Built Environment and Building Surveyors) team has provisionally provided the following advice.
As at 1 April 2021, for a typical automated car wash of 120m2 GIA on a site of approx. 1350m2 (one-third of an acre), a cost of £275,000 should be adopted. This figure includes site works, building works, service connections and landscaping. Relevant sites are usually positioned on a flat level site with good access from a busy main road. The site area is normally one-third to half an acre with good bitumen macadam surfacing and car parking for 5 or 6 cars. The car wash equipment is housed in a steel framed building around 120m2 in area with a profile metal flat roof or pitched roof covered with artificial slate or tile. Under the floor of the building there are concrete re-circulation chambers where grit is allowed to settle out of used water. The walls to the building are usually tiled internally with ceramic tiles. Eaves height is around 3.6m. The Building Surveyor has also given informal advice on the estimated replacement cost of a new style larger car wash often found attached to superstore petrol forecourts and comprising of a larger building of around 175m2. In the absence of direct evidence BEAMS does not anticipate that these costs will significantly exceed the typical £275,000 - however in the circumstances it is suggested that a 10% cost addition is made for these larger buildings.
4.5 With many automated car washes being dated there may be an element of depreciation that requires reflecting in each particular case. However, where appropriate, it is envisaged that the increase in building costs between AVDs may have been extinguished due to the increasing obsolescence of the buildings, (as well as some indications as to the building’s economic obsolescence, given that the automated sector has shrunk, and some hand car wash operators are making use of former rollover/conveyor wash buildings).
4.6 It is recommended that the Units’ co-ordinate levels of any OMV site rents through the Transport Class Co-ordination Team.
1. Market appraisal
1.1 Hand car washes (HCW) remain a common feature in many urban and commercial areas due to their popularity and flexibility. Types can vary from former forecourts on busy trunk roads, sites within multi-story or superstore car parks, to much smaller operations on industrial estates simply consisting of a steel container housing basic washing equipment.
1.2 There are many operators in this sector ranging from larger companies with over a hundred HCWs spread nationally over the UK, to more local operators with a single enterprise. Many of the national operators tend to carry out hand car wash facilities on another property such as car parks at superstores, shopping centres or garden centres.
1.3 Industry regulation is as important as ever with operators having to comply with strict rules regarding disposal of wastewater, and staffing. The increase in hand car washes since 2008 and 2015 was exponential and as a result, the number of automatic car washes dropped with hand car washes now making up the bulk of the vehicle washing market. It is understood however that HCW growth up to 2021 has slowed.
1.4 A major impact on the HCW market has been superstore operators considering how best to utilise large areas of at times empty car parking. HCWs are becoming increasingly evident within superstore car parks and many operators are approaching HCW operators about entering in agreements for HCWs to be located in their car parks. The best superstore sites are understood to wash approx. 1,500 cars a month with average sites achieving approx. 600-800 a month. In the vast majority of cases the HCW is not operated by the superstore, but a separate occupier hence separate assessment is usually required.
1.5 Trolley wash operations within car parks are still prevalent whereby washing equipment is typically housed overnight in a steel container. In these cases, car wash staff will retrieve their equipment at the start of the day, spend the day roaming around the car park washing cars, and return their equipment to the container at the end of the day.
2. Changes from the last practice note
2.1 The market appraisal section has been updated.
3. Ratepayer discussions
3.1 National discussions have taken place between the VOA and some national HCW operators in order to understand their business model and the typical levels of rents paid to the host for the sites they occupy. These rents often form a type of head lease between the HCW operator and the host property e.g. a superstore, before any further franchise arrangement between the HCW operator and a franchisee takes place.
3.2 For smaller more local operations no central discussions have taken place and values should be driven by local rental evidence within regional valuation units.
4. Valuation scheme
4.1 It appears that the rental evidence available on hand car wash operations varies widely from between £5,000 to £50,000 or more. As stated no central valuation scheme exists for HCWs, as values should be based on local rental evidence.
4.2 It should be appreciated that due to the nature of the hand car wash market a prescriptive approach to valuation to suit all scenarios is not appropriate. Sites that are occupied by hand car washes are diverse and the valuation approach will vary accordingly.
4.3 The full facts of any rental evidence should be carefully considered and weighted accordingly along with any comparable evidence.
4.4 Further guidance and indicative values are provided below but it should be emphasised local research as to rental evidence and comparables should always be carried out and the values quoted below are only a broad guide.
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Well located main road sites on former Petrol Filling Stations – lettings are often in the region of £15,000 - £30,000 but in some instances can reach up to £50,000, depending on general location and prominence.
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Hand Car Wash operations located on superstore car parks often consist of a three-party arrangement. A company will normally rent a site / number of car spaces from the host superstore and fund rateable improvements/additions to the site such as canopy, portacabin and full drainage works. In most cases the company will then franchise the HCW out to a 3rd party (franchisee), who will pay an upfront sum, often covering the company’s original cost of improvements, and typically sign a 5-year agreement with a franchise rent due each year which can vary from site to site. In most cases the franchisee will be the ratepayer and, the rateable occupier. Any franchise rent would usually cover the company’s site rent to the host property, an element of profit, and on-going franchisee support including training, marketing guidance & administration. Extra care needs to be exercised where any rent quoted relates to a franchise rent, and not necessarily an open market site rent paid to the host by the franchisor. The same caution should be applied to site rents passing between the host & the franchisor. Site rents paid to a host store can often vary and be based in part on the location and size of the host store, along with the fact that many sites are in more affluent areas than others. Quite clearly, some locations will attract more custom for a HCW operator than others e.g. an 8000 square metre superstore with a large car park, located on a retail park, compared with a 4000 square metre superstore with a smaller car park, in an isolated position. Any agreement may also reflect the close proximity of any competitor car washes in the area, be it hand or automated. These factors are normally reflected in the site rents paid to superstore operators and consequently, Rateable Values. These values are normally expected to be in the range of £6,000 - £15,000 including rateable improvements, and regional valuation unit Transport CCT members plus the National Valuation Unit (NVU), should be consulted for any valuation guidance in this regard. The NVU have built up contacts with several of the national HCW operators and were able to prior agree many 2017 Rateable Values for such sites, as well as a basis going forward. At the time of writing the NVU are in discussions with national HCW operators about prior agreeing 2023 Rateable Values.
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Trolley washes – in these circumstances due to the transient nature of the washing operation, the hereditament to be valued is simply the steel container and land it sits on. NVU suggests an RV of £1,000 is applied in these circumstances.
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Other existing commercial and bare sites – a wide variety of sites exist, and consequently rental values do also. Indicative values show general levels to be in the region of £5,000 - £25,000 but when considering bare land sites, in the absence of a passing rent display land values may prove a useful indicator of value, with additions for any improvements such as storage containers, temporary buildings etc. It is considered this can always be used as a guide to the end value of such operations, no matter which approach to value is taken.
4.5 It is recommended that the units’ co-ordinate levels of any key open market value site rents through the Transport Class Co-ordination Team.
1. Market Appraisal
Leading up to 2008 the automated car wash industry saw the number of sites increase both at roadside and superstore locations. However since 2008 the market has seen a decline both in terms of number of active sites and market share.
The automated car wash industry mainly consists of 1 large operator who operates most of the active sites in the UK. A handful of smaller operators exist in the market however all operators have generally seen a fall in numbers and market share within the wider car wash industry.
The main reason for the fall in numbers and loss of market share has been the significant rise in number of UK hand car washes (HCWs), often situated close to an existing automated car wash. This growth is summarised below:
Year Number of active HCWs Market Share of HCWs
2008 7,000 54%
2013 10,380 72.5%
Many of the automated sites no longer operating have either been sold by the ACW operators for redevelopment or simply vacated.
Following the drive to develop new ACWs up to 2008, most if not all operators have not opened a single new unit and are now attempting to consolidate their offer within the UK. This means there is very little new rental evidence which can be followed in the lead up to 1st April 2015 AVD for the 2017 rating list.
2. Changes From The Last Practice Note
The market appraisal section has been updated along with supporting valuation elements e.g. rateable improvement costs.
3. Ratepayer Discussions
National discussions have taken place between IMO and the VOA surrounding the appropriate valuation method and general market conditions/levels of value. No central valuation scheme has been agreed, however it was agreed between the parties that the existing method of valuation of site rents plus rateable improvements would be adopted for R2017, the same approach as adopted in previous rating lists.
4. Valuation Scheme
As part of the Revaluation process the VOA has reviewed the available rental evidence on the majority of UK ACWs. However is it clear the vast majority of these rents are unhelpful as to determining open market value.
Valuers should consider any available site rental evidence in their areas and prepare a scale of site values ranging from the poorest sites up to the best. At the date of preparation of this Practice Note (Sep 2015), there is very little direct rental evidence available for Revaluation 2017. However, it is expected that site values of most typical roadside stand alone car washes will be in the region of £10,000 to £20,000. Regard should also be had to the value of the better quality nearby hand car washes. Separately assessed conveyor car washes situated on superstore forecourts should be considered and valued having regard to the higher rents generally paid to reflect location and the higher levels of potential custom. Further rental enquires are being pursued and the site rental values will need to be reviewed before valuations are carried out. Site rents on IMO operations are often geared on review to values on other users e.g. nearby industrial units, or the RPI and consequently review evidence should be treated with caution and fully investigated to establish its relevance.
In order to assist in the consideration of the costed element, the Building Surveyor has provided the following advice : As at 1 April 2015, for a typical IMO (ARC) type car wash of 120m2 GIA on a site of approx 1350m2 (one-third of an acre) a cost of £225,000 should be adopted. This figure includes site works, building works, service connections and landscaping. The Building Surveyor has also given informal advice on the estimated replacement cost of a new style larger car wash often found attached to superstore petrol forecourts and comprising of a larger building of around 175m2. In the absence of direct evidence the Building Surveyor does not anticipate that these costs will significantly exceed the typical £225,000 however in the circumstances it is suggested that a 10% cost addition is made for these larger buildings.
With most of these buildings now being more than 7 years old there may be an element of depreciation that requires reflecting in each particular case. However where appropriate, it is envisaged that the increase in building costs between 1/4/08 and 1/4/15 may have been extinguished due to the increasing obsolescence of the buildings, as well as some indications as to the buildings economic obsolescence, given that the automated sector has shrunk and some hand car wash operators are making use of former rollover/conveyor wash buildings.
It is recommended that the units’ co-ordinate levels of any OMV site rents through the Class Co-ordination Team. Further details are available VP and CCT Members
1. Market Appraisal
Since 2008 the growth of the hand car wash element of the car wash industry has been a real success story compared with many other types of commercial activity during the economic downturn.
In 2008 it was reported there were approximately 7,000 Hand Car Wash (HCW) operations in the UK.
At the time this accounted for 54% market share of all car washes in the UK with the remainder being Rollover Washes (26%), Conveyor Washes (12%) and Jet Washes (8%).
The growth of HCWs in the UK is illustrated by statistics from 2013 which show approximately 10,380 HCW operations (source: Car Wash Association).
These accounted for 72% market share of all cars washed in the UK, with the remainder being Rollover Washes (12%), Conveyor Washes (8%), Jet Washes (6%), Mobile Washes (0.7%) & Truck Washes (1.2%).
This shows an increase in the number of UK HCWs of 48% when comparing 2013 with 2008. Figures for 1st April 2015 are not presently known but are expected to be similar to 2013 if not possibly slightly higher.
There are many operators in this sector ranging from national companies with over 100 operations spread over the UK, to more local operators with a single enterprise. Some of the larger national companies include Waves Car Wash (www.wavescarwash.co.uk), Car Park Valeting (www.carparkvaleting.com) and FS Partnership Car Wash (www.fspartnership.com).
All of the national operators tend to carry out hand car wash facilities on another property such as a superstore, shopping centre, garden centre car parks etc. Whereas more local HCWs operators can be located at many different sites ranging from former petrol filling stations, former car sales land or former industrial buildings.
In December 2010 Tesco banned all trolley HCW’s from their sites however, through agreements with Tesco, Waves became their hand car wash operator of choice from October 2011 onwards. Operations consisted of fixed locations on the superstore car park but by 2015 all had been re-branded as Tesco Hand Car Wash. This is despite most if not all, still being actually operated, and ran, as a Waves franchise with separate assessment from the superstore usually appropriate.
2. Changes From The Last Practice Note
The market appraisal section has been updated along with indicative values
3. Ratepayer Discussions
National discussions have taken place between the VOA and some of the national HCW operators in order to understand their business model and the typical levels of rents paid to the host for the sites they occupy. These rents often form a type of head lease between the HCW operator and the host property e.g. a superstore, before any further franchise arrangement between the HCW operator and a franchisee takes place.
For smaller more local operations no central discussions have taken place and values should be driven by local rental evidence within local non–domestic business units. Care should be taken to determine whether the rent is inclusive of rates or not.
4. Valuation Scheme
It appears that the rental evidence available on hand car wash operations varies widely from between £5,000 to £50,000 +.
As stated no central valuation scheme exists for HCWs as values should be based on local rental evidence.
It should be appreciated that due to the nature of the hand car wash market a prescriptive approach to valuation to suit all scenarios is not appropriate. The sites that are occupied by hand car washes are diverse and the valuation approach will vary accordingly.
The full facts of any rental evidence should be carefully considered and weighted accordingly along with any comparable evidence.
Further guidance and indicative values are provided below but it should be emphasised local research as to rental evidence and comparables should always be carried out and the values quoted below are only a broad guide.
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Well located main road sites on former Petrol Filling Stations – lettings are often in the region of £15,000 - £30,000 but in some instances can reach up to £50,000, depending on general location and prominence.
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Hand Car Wash operations located on superstore car parks often consist of a three party arrangement. A company will normally rent a site / number of car spaces from the host superstore and fund rateable improvements/additions to the site such as canopy, portacabin and full drainage works. In most cases the company will then franchise the HCW out to a 3rd party (franchisee), who will pay an upfront sum, often covering the company’s original cost of improvements, and typically sign a 5 year agreement with a franchise rent due each year which can vary from site to site. In most cases the franchisee will be the ratepayer and, the rateable occupier. Any franchise rent would usually cover the company’s site rent to the host property, an element of profit, and on-going franchisee support including training, marketing guidance & administration. Extra care needs to be exercised where any rent quoted relates to a franchise rent, and not necessarily an open market site rent paid to the host by the franchisor. The same caution should be applied to site rents passing between the host & the franchisor. Site rents paid to a host store can often vary and be based in part on the location and size of the host store, along with the fact that many sites are in more affluent areas than others. Quite clearly, some locations will attract more custom for a HCW operator than others e.g. an 8000 m2 superstore with a large car park, located on a retail park, compared with a 4000 m2 superstore with a smaller car park, in an isolated position. Any agreement may also reflect the close proximity of any competitor car washes in the area, be it hand or automated. These factors are normally reflected in the site rents paid to superstore operators and consequently, Rateable Values. These values are normally expected to be in the range of £7,500 - £15,000 including rateable improvements, and NDR unit CCT members for Car Washes along with the NVU should be consulted for any valuation guidance in this regard. The NVU have built up good relationships with several of the national HCW operators and were able to prior agree many 2017 Rateable Values for such sites, as well as a basis going forward. For any doubt whatsoever please contact the NVU/CCT.
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Other existing commercial and bare sites – a wide variety of sites exist and consequently rental values do also. Indicative values show general levels to be in the region of £5,000 - £25,000 but when considering bare land sites, in the absence of a passing rent display land values may prove a useful indicator of value, with additions for any improvements such as storage containers, temporary buildings etc. It is considered this can always be used as a guide to the end value of such operations, no matter which approach to value is taken.
It is recommended that the units’ co-ordinate levels of any key open market value site rents through the Class Co-ordination Team. Further information is provided VP and CCT Members
1. Co-ordination Arrangements
Automated Stand Alone Car Washes, of the type described in Section 190: Car Washes (Stand Alone) are subject to SRU Co-ordination. Special Category Code 045S should be used and the description “Automated car wash & Premises” should be used.
2. State of the Market
Since the late 1980’s the number of stand alone car washes in the UK has risen sharply with Anduff Car Wash Ltd, previously trading as IMO, but now re-branded as ARC, the major operator of automated, rather than ‘hand-wash,’ sites. The remainder of the market is spread thinly across private individual operators or smaller companies such as Mister Clean and Spangles.
In recent years, leading up to AVD, there have been two separate developments affecting the market. Firstly, there has been a large increase in the number of hand car wash operations ranging from the sites of redundant petrol filling stations to superstore car parks; the growth and use of hand car washes has had a clear adverse effect on the operation of some, if not most, Automated Washes.
Secondly, within the Automated Car Wash sector most recent developments have occurred on the forecourts of food superstore sites; Anduff have reached agreement with the major food store operators such as Tesco and ASDA to roll out new conveyor car washes attached to the superstore’s petrol forecourt. It is assumed that the developments of these new sites will adversely affect existing operations but at AVD firm evidence was not available.
3. Data Capture
Valuations are to be carried out by each SRU on a spreadsheet with the resulting valuation transferred to RSA as a one-line entry. The Bulk Class Indicator should be recorded as M (miscellaneous) and the Accommodation Use Code CWS should be used.
Survey requirements are set out in RM: Section 6: Part 3: Section 190
4. Valuation Approach
Following a consideration of the available rental evidence no evidence has yet been found which relates to developed sites, i.e. including both site and buildings.
Typically sites are held on ground rents or the land is acquired freehold and then developed by the operator.
In the absence of direct rental evidence the recommended valuation approach is to consider available site rental evidence, and value based on a consideration of the site evidence with an addition for the cost of rateable improvements.
SRU’s should consider the site rental evidence in their areas and prepare a scale of site values ranging from the poorest sites up to the best. At the date of preparation of this Practice Note (October 2008) there is little direct rental evidence available for Revaluation 2010 but it is expected that site values of typical roadside stand-alone car washes, outside of London and the south of England, will be in the region of £12,500 to £20,000. Regard should also be had to the value of the better nearby hand car washes. Separately assessed conveyor car washes situated on superstore forecourts should be considered separately and valued having regard to the higher rents generally paid to reflect location and potential custom. Further rental enquires are being pursued and the site rental values will need to be reviewed before valuations are carried out. Site rents on ARC operations are often geared on review to values on other users e.g. nearby industrial units, or the RPI and consequently review evidence should be treated with caution and fully investigated to establish it’s relevance.
In order to assist in the consideration of the costed element, the Building Surveyor has provided the following advice. As at 1 April 2008, for a typical IMO (ARC) type car wash of 120m2 GIA on a site of approx 1350m2 (one-third of an acre) a cost of £188,000 should be adopted. This figure includes site works, building works, service connections and landscaping. The following is provided as an approximate apportionment of the total: - buildings works £107,000 site works £60,000, service connections £8,000, and preliminaries/professional fees £13,000). The Building Surveyor has also given informal advice on the estimated replacement cost of a new style larger car wash often found attached to superstore petrol forecourts and comprising of a larger building of around 175m2 but on a smaller site; Anduff Car Wash Ltd have been invited to provide actual costings but in the absence of direct evidence the Building Surveyor does not anticipate that these costs will significantly exceed the typical £188,000. In the circumstances it is suggested that a 10% cost addition is made for these larger buildings. Except for sites within the M25 around London the cost should not generally be adjusted for location in accordance with the factors shown in the Cost Guide and there is no need to make contract size adjustments.
It is recommended that the four SRUs co-ordinate levels of site rents through the Class Co-ordination Team.
The car wash scale contained in Rating Manual Section 6 part 3 Section 770 :(Petrol Filling Stations) is applicable only to those car washes found on petrol forecourts and which form a single assessment with the petrol filling station. It should not be used for the valuation of stand-alone car washes because it relates solely to those car washes, which form a small part of a large, distinct and totally different hereditament.
5. Central Discussions
Anduff Car Wash Ltd (IMO/ARC) currently deals with rating matters in-house. Some discussions regarding the Revaluation 2010 approach and levels of value have taken place with the Company, although no agreement has been reached. The relationship on superstore sites is slightly more complicated with a variety of agreements in place and in some instances the host operator being responsible for the payment of rates. It is unlikely that formal valuation agreement will be reached.
1 Co-ordination Arrangements
Hand Car Washes, as a distinct category from stand alone automated car washes, are the responsibility of Groups and should be valued based on local rental evidence regardless of their location. Special Category Code 045G should be used with the description “Hand car wash & Premises”.
2 State of the Market
Since 2003 the number of hand car washes in the UK has risen sharply and, typically they appear to go head-to-head in competition with the automated car wash sites. There are some fairly large operations beginning to form, such as Car Park Valeting, Hands-On Group, Capital Car Wash and Waves Car Wash. All of these operations tend to carry out hand car wash facilities on another property, such as superstore car parks, shopping centre car parks, and garden centre car parks etc.
From initial discussions with Car Park Valeting, they see their operation as providing a service to the unit car park they operate from. They have suggested they are invited to place a bid with the superstore/car park operator in terms of how much they are willing to pay to operate from that car park. If successful, they then install a franchisee, who is responsible for all outgoings, including the rent. They naturally have not had any thought to rates, as they believed the rates to be covered by that paid by the host hereditament.
Between April 2003 and April 2008 (AVD) the types of sites being utilised by hand car wash operators has also increased significantly. The market has grown significantly and at AVD was continuing to grow, although with the post AVD concerns over the economy as a whole, and the possibility of the car wash market reaching saturation point, this level of growth is unlikely to be sustained.
3. Data Capture
Data Capture will depend on the site occupied by the Hand Car Wash. In the many cases, the land will be the driver for the valuation, and should be data captured as such, with any buildings noted as other additions. Where the building is industrial, it may be appropriate to data captured as such.
Operations on other premises, such as superstores (SRU) or public car parks (Groups), should be data captured as 1x hand car wash (CWS) using an overall figure in the address matrix.
4. Valuation Approach
It is important, in assessing hand car washes, that the facts of the particular case are fully researched and details of tenure confirmed. In the absence of a passing rent on the property under consideration evidence of similar sites should be considered. Local evidence is preferred, however in some locations such evidence may be sparse and it may be necessary to search over a wider area in order to fully inform the valuation. Rents appear to vary from the very low, below £1000, to very high, above £50,000, so care will need to be taken over the correct weighting of evidence.
Due to the nature of the hand car wash market a prescriptive approach to valuation to suit all scenarios is not appropriate. The sites that are occupied by hand car washes are diverse and the valuation approach will vary accordingly. However, the following further guidance is provided:
4.1 Car Park Sites
With hand washes within car parks as provided by the likes of Car Park Valeting Ltd, evidence suggests that head rents would appear to be in the region of £7,000 - £15,000 p.a. It is not entirely clear in all cases who is responsible for utility payments or whether drainage has been installed by the Landlord and these facts will need to be established for the rent to be meaningful.
The franchise fee paid to the franchisor to run the operation often seems to be in excess of £20,000, sometimes significantly. It is typical that the operator provides adequate training and guidance, but the franchisee appears to bear all the additional costs.
In the absence of site values, the franchise rent, if provided, should form the starting point of the improvement with insertion on canopies and container offices as well as the drainage and services provisions.
4.2 Existing Commercial and Bare Sites
It should be appreciated that there are a wide variety of styles of hand car washes falling within the bare site/existing commercial building category. When considering bare land sites, in the absence of a passing rent, display land values may prove a useful indicator of value. Additions should then be made for improvements such as fencing, temporary offices, storage containers and drainage.
When considering a hand car wash within a redundant industrial building or petrol filling station, regard should be had to the rent passing but in the absence of this or comparable evidence, and as this is a different mode or category of occupation from its original use, it may be necessary to follow the appropriate industrial scale making an addition for the land.
Factors affecting valuation will include access, location, good road frontage and type and size of the potential catchment area. Redundant petrol filling stations often occupy superior sites to redundant industrial units in busy locations with good road frontage.
As a fall back position, it might be that the majority of such occupations are best valued with regard to the local land values, particularly display land values, and this can always be used as a guide to the end value of such operations, no matter which approach to value is taken.
1. Co-ordination Arrangements
Automated Stand Alone Car Washes, of the type described in Section 190: Car Washes (Stand Alone) are subject to SRU Co-ordination. Special Category Code 045S should be used and the description “Automated car wash & Premises” should be used.
2. State of the Market
Since the late 1980’s the number of stand alone car washes in the UK has risen sharply with Anduff Car Wash Ltd, previously trading as IMO, but now re-branded as ARC, the major operator of automated, rather than ‘hand-wash,’ sites. The remainder of the market is spread thinly across private individual operators or smaller companies such as Mister Clean and Spangles.
In recent years, leading up to AVD, there have been two separate developments affecting the market. Firstly, there has been a large increase in the number of hand car wash operations ranging from the sites of redundant petrol filling stations to superstore car parks; the growth and use of hand car washes has had a clear adverse effect on the operation of some, if not most, Automated Washes.
Secondly, within the Automated Car Wash sector most recent developments have occurred on the forecourts of food superstore sites; Anduff have reached agreement with the major food store operators such as Tesco and ASDA to roll out new conveyor car washes attached to the superstore’s petrol forecourt. It is assumed that the developments of these new sites will adversely affect existing operations but at AVD firm evidence was not available.
3. Data Capture
Valuations are to be carried out by each SRU on a spreadsheet with the resulting valuation transferred to RSA as a one-line entry. The Bulk Class Indicator should be recorded as M (miscellaneous) and the Accommodation Use Code CWS should be used.
Survey requirements are set out in RM: Section 6: Part 3: Section 190
4. Valuation Approach
Following a consideration of the available rental evidence no evidence has yet been found which relates to developed sites, i.e. including both site and buildings.
Typically sites are held on ground rents or the land is acquired freehold and then developed by the operator.
In the absence of direct rental evidence the recommended valuation approach is to consider available site rental evidence, and value based on a consideration of the site evidence with an addition for the cost of rateable improvements.
SRU’s should consider the site rental evidence in their areas and prepare a scale of site values ranging from the poorest sites up to the best. At the date of preparation of this Practice Note (October 2008) there is little direct rental evidence available for Revaluation 2010 but it is expected that site values of typical roadside stand-alone car washes, outside of London and the south of England, will be in the region of £12,500 to £20,000. Regard should also be had to the value of the better nearby hand car washes. Separately assessed conveyor car washes situated on superstore forecourts should be considered separately and valued having regard to the higher rents generally paid to reflect location and potential custom. Further rental enquires are being pursued and the site rental values will need to be reviewed before valuations are carried out. Site rents on ARC operations are often geared on review to values on other users e.g. nearby industrial units, or the RPI and consequently review evidence should be treated with caution and fully investigated to establish it’s relevance.
In order to assist in the consideration of the costed element, the Building Surveyor has provided the following advice. As at 1 April 2008, for a typical IMO (ARC) type car wash of 120m2 GIA on a site of approx 1350m2 (one-third of an acre) a cost of £188,000 should be adopted. This figure includes site works, building works, service connections and landscaping. The following is provided as an approximate apportionment of the total: - buildings works £107,000 site works £60,000, service connections £8,000, and preliminaries/professional fees £13,000). The Building Surveyor has also given informal advice on the estimated replacement cost of a new style larger car wash often found attached to superstore petrol forecourts and comprising of a larger building of around 175m2 but on a smaller site; Anduff Car Wash Ltd have been invited to provide actual costings but in the absence of direct evidence the Building Surveyor does not anticipate that these costs will significantly exceed the typical £188,000. In the circumstances it is suggested that a 10% cost addition is made for these larger buildings. Except for sites within the M25 around London the cost should not generally be adjusted for location in accordance with the factors shown in the Cost Guide and there is no need to make contract size adjustments.
It is recommended that the four SRUs co-ordinate levels of site rents through the Class Co-ordination Team.
The car wash scale contained in Rating Manual Section 6 part 3 Section 770 :(Petrol Filling Stations) is applicable only to those car washes found on petrol forecourts and which form a single assessment with the petrol filling station. It should not be used for the valuation of stand-alone car washes because it relates solely to those car washes, which form a small part of a large, distinct and totally different hereditament.
5. Central Discussions
Anduff Car Wash Ltd (IMO/ARC) currently deals with rating matters in-house. Some discussions regarding the Revaluation 2010 approach and levels of value have taken place with the Company, although no agreement has been reached. The relationship on superstore sites is slightly more complicated with a variety of agreements in place and in some instances the host operator being responsible for the payment of rates. It is unlikely that formal valuation agreement will be reached.