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

Section 381: wholesale warehouses

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

1. Scope

1.1 This RM section deals with wholesale warehouses, commonly known as “cash and carrys”.

1.2 This is a relatively small but diverse category of property that can be classified into two distinct groupings. The ‘Local Set’ comprising the small local/specialist wholesaler offering a limited range of products and the ‘National Set’ comprising the national operator offering, in some cases, a full range of goods including food, electrical, clothing, sports equipment, automotive products, tobacco, alcohol, toys, DIY, garden and home furnishings. Users generally occupy traditional industrial type buildings in industrial locations and are rarely distinguishable from neighbouring property other than by use.

1.3 The ‘National Set’ will most likely be occupied by one of the following:

  • Makro

  • Linfood/Booker

  • JTF Wholesale

  • Costco

  • Bestway

The term ‘National Set’ will apply to those hereditaments that stand out from the norm for the locality. This may be by reason of size, amount of car parking etc. There may be occasions where these named occupiers occupy hereditaments which are common to the locality and should be treated in accordance with the ‘Local Set’ approach.

1.4 The following characteristics are typical of a wholesale warehouse.

  • Sui Generis planning consent for wholesale cash and carry warehouse use.

  • Membership is required, restricted to trade only or selected employment groups (membership fee optional).

  • Excludes the general public.

  • Open 7 days a week with early shopping hours.

  • Large car park

This RM entry does not apply to the ‘Warehouse Clubs’ such as Matalan which are in essence large retail supermarkets for members only and can generally be found on retail warehouse sites.

2. List description and special category code

2.1 Special Category Code = 301, suffix G

2.2 Primary Description and Code should be standardised.

Code = CW

Description (overtype) = Wholesale Warehouse and Premises (as per VSA Standards document)

3. Responsible teams

3.1 Wholesale Warehouses should be dealt with by caseworkers in Business Units. Where due to their size or situation with other large distribution warehouses which are dealt with by the specialist team, it may be appropriate for them to be dealt with by that team.

3.2 The class co ordination team is available to assist in cases of difficulty.

4. Co ordination

4.1 The Class Co-ordination Team has overall responsibility for the co-ordination of this class.The team is responsible for approach, accuracy and consistency of valuations and will check valuations to ensure they accord with the recommended valuation methodology 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:

  • follow the advice given at all times

  • not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team

  • seek advice from the co-ordination team before starting any new work

5.1 There are no particular legal issues relating to the valuation of wholesale warehouses.

5.2 Planning permission usually contains conditions as described in 1.4 above.

6. Survey requirements

6.1 Method of Survey should be GIA in accordance with VOA Code of Measuring Practice.

6.2 Plant and Machinery. In accordance with SI 2000 No 540 (The Valuation for Rating (Plant and Machinery) (England) Regulations 2000) Items may include: Security cameras, lifts, travelators, sprinklers, air conditioning, and standby generators/compressors.

6.3 A national sub location code ‘WSWH’ should be used for the ‘National Set’ to improve co-ordination.

6.4 Address Protocols. Where WSWH has been adopted as a sub location code, the firm’s name must be included in the name/number field of the address in RSA.

6.5 Accommodation Use Codes should be applied in accordance with the VSA Standards Guidance for Industrial premises.

6.6 Dedicated staff parking should be captured as “car parking” in RSA.

6.7 Industrial valuation schemes will typically state “car parking reflected” with the result that £0 rateable value is applied to “car parking”. This approach is not appropriate for “customer car parking”. This should be captured as an ‘Other Addition’ using the codes LFH, LFG, LFU, LOH, LOG or LOU as appropriate and following the local scheme for the treatment of ancillary storage land. If customer parking has been recorded as a number of car spaces, use the local car parking density (usually between 20m2 and 25m2 per space) to convert to an area.

7. Survey capture

7.1 Surveys should be recorded in EDRM

7.2 Survey details for valuation will be recorded in RSA.

8. Valuation approach

8.1 Wholesale warehouses should be valued using an address matrix and the R2017 analysis and valuation scales AVGIA1 and VVGIA1.

8.2 In relation to the matrix, dependant on the numbers within a particular Unit, VOs may consider it appropriate to create matrices across Unit, following the current cluster arrangements for example.

8.3 ‘National Set’ wholesale warehouses should have their own valuation scheme for R2017 rather than be included in general industrial schemes. ‘Local Set’ wholesale warehouses should continue to be valued in accordance with local valuation schemes.

8.4 Adopted price. Regard should be had to both the local levels of industrial values and also to the overall cross Unit picture.

8.5 For the “National Set” the case of Makro v Brennan LT 1996 RA 341 is considered to contain the best guidance.

8.6 In this case the Lands Tribunal determined that Makro in Leeds should be valued on the following basis:

  • The building should be valued in comparison with warehousing in the locality

  • An addition should be made to reflect superior finishes compared to ordinary warehousing

  • The customer car parking should be separately valued

8.7 Quotes from the decision which are relevant:

Reference Quote
P399 1st para The main issue in these appeals is whether the appeal hereditament should be valued by reference to the general level of warehouse values in Leeds…[The LT approved this approach]
P403 2nd para “The only physical characteristics which differentiate the appeal hereditament from a wholesale or distribution warehouse are certain superior finishes and the large car parking provision; these would be of little or no value to a tenant wishing to use the premises as a wholesale or distribution warehouse; the same may also be true of other cash and carry warehouse operators, whose operations, on the evidence, appear to require a lower level of car parking provision…”
P406 3rd para “As to the value of car parking I agree with counsel for the ratepayers that it is preferable to value it separately…”
P407 The valuation is displayed and it is clear that 789 car parking spaces have been valued at £35 per space. (1990 Rating List).

Customer car parking – valuation consideration

8.8 Data capture should be as per 6.7 above.

8.9 In most circumstances the local valuation scheme for the treatment of ancillary land should be followed. For example, if a scheme states that a proportion of land is reflected in the basic price/sq.m for the building, that practice should be adopted for the customer car park.

8.10 Where it can be demonstrated by evidence that the customer car park provision is excessive for valuation date requirements consideration can be given to make an allowance in respect of the excess land.

8.11 Even if excess provision can be proved as per 8.10 no allowance should be made if it is evident that nearby “ordinary” warehouses have areas of land in valuation which are similar to that occupied at the wholesale warehouse.

9. Valuation support

  • Rating Support Application (RSA)

  • Survaid

  • Class Coordination team

  • National Specialist Unit

Practice note: 2017: wholesale warehouses

1. Market appraisal

www.wholesalenews.co.uk reports:

  • UK consumer confidence rises again – July 2015

  • The UK food and grocery market will grow by 13% between now and 2020

Bestway reported profits of £54.3m for year end June 2014 (on 18 February 2015).

It is considered that there are no matters which could result in valuing wholesale warehouses at rates less than the approach recommended in the Rating Manual main section.

2. Changes from the last practice note

There was no practice note for R2010.

The Rating Manual main entry is in accordance with an agreement reached with ratepayer representatives for “National Set” occupiers for R2010.

3. Ratepayer discussions

There have been no discussions with ratepayers other than those described in section 2.

4. Valuation scheme

No changes to the valuation scheme described in the main section of the Rating Manual.