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

Section 547: land used for storage, lorry parks and scrapyards

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 Rating Manual entry concentrates on:

  • Land Used for Storage- with regard to general storage land over 10,000m2 (SCat Code 148G)

  • Lorry Parks (SCat code 161G)

  • Car/Container Storage Land at ports & other key locations (mainly SCat Code 148G)

  • Large Car Parking plots at or close to airports (SCat Code 040 or 041G, although some may currently be within 148G)

  • Scrap-yards (SCat code 244G)

1.2. Car display land (046G), hand car wash sites (045G) and land used for car/van hire (should be 046G, but many are 148G) are not covered as they are more commercial in character. Please see the Practice Notes in respect of each of these classes for more detail.

1.3. The Class Co-ordination Team (CCT) for Land has reviewed Market Knowledge Reports and evidence for land hereditaments over 5,000m2 in order to determine if there are any categories of land which show sufficient consistency to justify co-ordination. This instruction gives advice on the data capture and referencing approach to be adopted for all Land Bulk Class, but primarily concentrates for co-ordination purposes on those hereditaments that must be data captured within the national sublocation categories. It is envisaged that the scope of this Rating Manual section can be expanded if more evidence comes to light.

1.4. The bulk class of this category of property should be L.

1.5. Further guidance to the data capture and survey requirements of these categories of property can be found at Appendix 1 and Appendix 2.

1.6. Not all plots of land over 5,000m2 are subject to national co-ordination. Many such plots should be valued on the appropriate Unit scheme because they are not at a key location. For example, large land plots in rural locations and/or those on most disused former airfields, are not covered nor are the majority of caravan storage sites.

2. List Description and Special Category Code

2.1. List descriptions and Scat codes relative to the types of land detailed at 1.1 should be: Scat Code and Primary Description Code Storage Land 148G CW1 e.g. Land Used For Storage And Premises Scrap Yards 244G IX Overwrite e.g. Scrap Metal/Breakers Yard Lorry Parks 161G CG4 e.g. Road Haulage Depot And Premises Display Land 419G CX Overwrite e.g. Land Used For Display Car/Caravan Sales Land 046G CX Overwrite e.g. Land Used For Car Sales

3. Responsible Teams

3.1. Generalist caseworkers are responsible for the survey and valuation of this class.

3.2. It is anticipated that each Unit will have a named individual responsible for the class. More than one named individual is recommended for succession planning.

3.3. It is also recommended that each Unit should allocate a named co-ordinator, or Lead Valuer, to act as a point of contact within the Unit. This Lead Valuer will be responsible for assisting in the delivery of the Unit’s valuation scheme and also for liaising on value and technical issues with other Lead Valuers across adjoining Units. The Lead Valuer will be responsible for ensuring compliance with this section.

4. Co-ordination

4.1. This is a Business Unit Class. Co-ordination responsibilities are set out in Rating Manual Section 6 Part 1.

4.2. The plans for all co-ordination activity are outlined in the CCT Practice Note linked here: Class Co-ordination Teams.

5.1. There are no particular legal issues relating to this class of property.

6. Survey requirements

6.1. The surveys to VSA Standards should be carried out as per (A) in the document linked below, with no circulation/access space deducted.

Survey Methods for Land Used for Storage and Builders’ Merchants

6.2. However, care should be taking when deducting the area of the land on which the temporary building stands in example (A) above that the value adopted on the building is suitably in excess of the value of the land deducted.

6.3. The data capture and referencing guide to all categories of property noted at 2.1 is detailed at Appendix 1.

6.4. Further guidance on the inspection of Land Used for Storage, Lorry Parks and Scrap Yards is outlined at Appendix 2.

7. Survey capture

7.1. These guidelines are for properties comprising land only, and also those with only a minor element of ancillary buildings. Any building element must be relatively insignificant. by that it is meant not significant in the context of the hereditament. As a guideline, buildings should comprise less than 25% of the rateable value.

7.2. Properties with buildings that are not relatively insignificant should be data captured and valued using a different bulk class, but the SCat code should not be changed. For further guidance on the approach to data capture, refer to Appendix 1.

7.3. The survey should be retained within the property folder on EDRM.

7.4. Units must identify and amend the data capture of all hereditaments that fall into the following National Sub-location categories:

National Sublocation Description
TRUK Lorry Parks above 5,000 m2 in key locations
LFLY Airports - Large Land Plots over 5,000m2 for car parking or storage, where there may be a premium in the land value influenced by its proximity and convenience for major airports
LDOK Dockside - Large Land Areas over 5,000m2 on or adjacent to the dockside at ports- may include storage land of imported/exported vehicles- the landlord will usually be the port company which should give consistency of value at each port and car importers will compete in the same market as other land users
LCAR Vehicle Storage- Large Land Plots over 5,000m2 for the storage of vehicles (e.g. those imported/exported for onward distribution), not located on or adjacent to the dockside at ports, though may be nearby ; security high with good surfacing, both usually being tenant's improvements
LBIG Key-Located Large Storage Land Plots- large storage land plots above approximately 10,000m2 in key locations, usually with good accessibility to motorways and/or in close proximity to other complementary hereitaments e.g. rail freight terminals

7.5. The use of MC Cases to correct SCat Codes is encouraged as is, alternatively, the use of the Revaluation assessment creation process as an opportunity to correct the SCat Codes. This will improve the quality of Valuation Schemes.

7.6. Units will appreciate the need for careful and correct analysis of rental evidence. Consequently they should ensure that rented plots of land are measured using the correct method. This will ensure that rents are analysed correctly.

7.7. Units should review industrial bulk classes to determine whether it is appropriate for any hereditaments to be re-data-captured as bulk class L by carrying out the main enquiry shown in Appendix 3.

7.8. Units should be careful about the line use codes adopted - For example the following should be noted.

  • LFH is only used when hard surfaced land is of good quality

  • LFG should be used for where the surface has seriously deteriorated because of its age, as well as for land that is covered with chippings, gravel, etc.

  • LOH is unlikely to be encountered as most hard surfaces will have suitable fencing (as the extra expense of providing a good surface usually justifies fencing and other security measures).

7.9. The non-italicised parts of the descriptions should be copied onto RSA as the standard descriptions of the National Sub-locations (including the sections in italics would mean the 256 characters allowed in RSA would be exceeded).

7.10. For land hereditaments falling within the national sublocation categories and where there are any ancillary buildings, it is recommended that they are data captured as a 2nd survey unit. Other Additions should only cover: portacabins, containers, open-stores and the like, which are usually tenant’s improvements and may be ignored for rental analysis. The bulk class of the 2nd survey unit should be F or W with a different sub-location to the Primary Survey Unit. In order to exclude the second survey unit from the total significant area in the first survey unit, the ‘Include in Significant Area’ flag within the second survey unit should be set to N.

8. Valuation approach

8.1. It is recommended that address matrices are used in each of the valuation access paths of the above National Sub-locations. However, where there are significant numbers of co-located hereditaments which fall within one of the national sublocation categories (e.g. at Southampton, Portbury, etc), it is permissible to use a size matrix to value these.

8.2. The 2nd survey unit mentioned above should access a dedicated address matrix with a value which ties in with the appropriate local industrial matrix. This will enable buildings to be valued at a price corresponding to the prevailing local industrial value rather than an approximation of the value in the Other Additions (OA) Table. The 2nd Survey Unit value will have a path to the dedicated Address Matrix as quantum is derived from the Primary Survey Unit (see R2010 IA 201207 - Changes to the Valuation Model - Multiple Survey Units, Other Additions and the Valuation of “Hybrid” Hereditaments.).

8.3. For locally-sub-located land hereditaments, Units should use the type of matrix (size or address) that is more appropriate in the local circumstances. When using a size matrix, the 2nd (and subsequent) survey units which may include any building elements should have the ‘Include in Significant Area’ flag set to N.

8.4. The practice of using adjustment codes in these classes should be discontinued. Classes of land which use address matrices should already have values which reflect all the characteristics of the property. Adjustment codes and end allowances should rarely be necessary and should only be used where the disability causing the allowance is not accounted for elsewhere.

9. Valuation support

  • Rating Support Application (RSA)

  • Survaid

  • Class Coordination team: your CCT representative can be found at this link.

  • National Specialist Unit

Appendix 1

  Data Capture and Referencing Guide Storage Land, Lorry Parks, and Scrap Yards Display Land, and Car/Caravan Sales  
Background ·         Units should consider whether they have the two main corner stones in place- up-to-date rental information and accurate surveys- to enable accurate analysis and valuation. ·         Many surveys are out-of-date and therefore Units are encouraged to consider whether there is a need to carry out a systematic programme of full inspections to bring survey records up-to-date where appropriate, prioritising this task as they see fit.   
General ·         These guidelines are for properties comprising land only, and also those with only a minor element of ancillary buildings.  Any building element must be relatively insignificant. by that it is meant not significant in the context of the hereditament.  As a guideline, buildings should comprise less than 25% of the rateable value.  ·         Properties with buildings that are not relatively insignificant should be data captured and valued using a different bulk class, but the Scat code should not be changed.
Bulk Class L
Survey Method ·         The land element should always be the primary survey unit (SU1) ·         The survey method to be input on RSA is OTH.  ·         The actual area calculation is the gross area of the site less the site area of any buildings and any unusable land, (e.g. landscaping, embankments etc), as per VSA Standards.  ·         No  deductions for access, notional access or circulation within a site should be made.  The former practice of reducing the gross area by up to 30% to allow for access should be discontinued.   
Sublocations ·         Consider whether it is appropriate to use one of the national land sub-locations noted below- none of these are usually appropriate for plots of land under 5000m2. ·         Once this has been considered, ensure an appropriate sub-location for Land Bulk Class is used by viewing local office guidelines.  
National Sub-locations
TRUK Lorry Parks above 5000 m2 in key strategic locations
LFLY Airports- Large Land Plots over 5000m2 for car parking or storage, where there may be a premium in the land value influenced by its proximity and convenience for major airports
LDOK Dockside- Large Land Areas over 5000m2 on or adjacent to the dockside at ports- may include storage land of imported/exported vehicles
LCAR Vehicle Storage- Large Land Plots over 5000m2 for the storage of vehicles (e.g. those imported/exported for onward distribution), not located on or adjacent to the dockside at ports.
LBIG Key-Located Large Storage Land Plots- large storage land plots above approximately 10000m2 in key strategic locations, usually with good accessibility to motorways and/or in close proximity to places of national significance e.g. rail freight terminals
BUT

Practice note: 2017: Land used for storage, lorry parks and scrapyards

1.0 Market Appraisal

1.1 Individual Unit Market Knowledge Reports with regards to the above classes of property are held within L:\NDR\2017 Reval\NDR \Market Knowledge, where ‘’ is the Unit name.

1.2 There are some consistencies around the country with most reports produced so far outside the South East suggesting a fairly narrow range of values over 5,000m2 for land in accessible commercial locations. It’s likely that at strategic positions covered by the national sublocations - see Rating Manual entry section 7.1 (e.g. at docks, major motorway junctions/intersections and near airports) that values will be mainly well in excess of that and so Units need to ensure that data capture work identifies those plots which are suitable for the national sublocations. In terms of the evidence outlined in the National Market Knowledge Report above, this is clean and consistent at each location, although other rents which may assist have doubts hanging over them because of RPI increases or being between connected parties. At Portbury and Avonmouth, rents are consistently at a higher level than the ‘norm’ and, at certain dock locations such as Southampton, rents are far higher than that the national average. Values in the South East are the highest, particularly close to Gatwick and Heathrow where values over £30/m2 are not uncommon.

1.3 With regard to scrap yards, there are a whole host of approaches to 2010 valuation of this class, some with uplift, some without. There is very little evidence to go off for the larger properties and it would appear that what there is should be valued on its own merits. There appears to be a premium in rents in some locations but not all and this therefore has to be the decision made by Units themselves, based on local evidence. See 4.7 below for more detail on scrapyards and recycling permits.

1.4 Units are reminded that Forms of Return, when issued, should be directed to the postal address of the occupier rather than, as a matter of course, to the hereditament itself. In view of the nature of these hereditaments, there has historically been a relatively low return rate for this class of property.

2.0 Changes from the 2010 Practice Note

2.1 Whilst the need to identify and adopt national sublocations was part of the 2010 PN, this 2017 PN reinforces the need to identify several more of these. For example, there are undoubtedly many portside plots that remain on local sublocations and, similarly, many large plots close to some of the major airports and used for airport parking are not captured using the national sublocations.

2.2 There is now renewed emphasis on the requirement to identify large plots of land which should be data captured using the national sublocations (RM 7.1).

2.3 There is now a slight relaxation in certain locations of the need to adopt address matrices for nationally-sublocated hereditaments (RM 8.1).

2.4 The requirement to identify 2nd survey units (RM 7.7) has been limited to the national sublocations. There is also additional clarity regarding the use of address matrices on second survey units.

2.5 Recommendations as to the type of matrix to use for hereditaments data captured using local sublocations have been removed (RM 8.3).

2.6 Although there is no CCT guidance as to whether a valuation premium should be applied to scrap-yards and storage land that has a recycling permit, Units are encouraged to adopt a separate sub-location for these in order to separately identify such plots and their rental evidence, thereby removing these rents from the general land evidence and allow them to be valued on a separate valuation scheme. In order to identify such properties, Units should use the following search facility: http://epr.environment-agency.gov.uk/ePRInternet/SearchRegisters.aspx.

3.0 Ratepayer Discussions

3.1 No discussions have been held with any ratepayer representatives or trade bodies, primarily because values will be based for the vast majority of hereditaments on the local rental evidence and because of the wide variety of different parties likely to represent occupiers. No great benefit is likely to be derived from central discussions being held within these land classes.

4.0 Valuation Scheme

4.1 The CCT will not give specific valuation advice on any class of property covered by this PN. However, the use of National Sublocations will enable Units to review a greater pool of evidence to inform their valuation decisions and, on an ongoing basis, provide a ready source of comparable evidence.

4.2 It has been difficult to reconcile the value and cost relationship between surfaced and unsurfaced sites of varying levels of value. Consequently, there is likely to be regional variation in the relativities and for hereditaments with local sub-locations, the decision as to which of the national valuation scales to adopt is left to each Unit.

4.3 However, for the National Sub-locations, the valuation scale VXLSTORAGE1 should be adopted within valuation access paths, this being the one where all land use codes are set at relativities of 1.00. This will minimise the need for ‘handcrafting’ of valuations where there is more than one surface present at a hereditament.

4.4Within the scope of this PN, there is no recommendation on the relativities to be adopted between surfaced and unsurfaced land for any land hereditaments other than those with the National Sub-locations.

4.5 Each separate class of property covered by this PN should have its own valuation scheme i.e. separate schemes for storage land, scrap-yards and lorry parks.

4.6 Some Units have set up Valuation Schemes for Land Used for Storage based on the nature of their locations e.g. separate schemes (and therefore sub-locations) for prime urban (e.g. in key locations near major motorway locations); urban/industrial; rural. Units may consider it appropriate to subdivide the rural category into those plots where they may be varying degrees of demand (e.g. there is no alternative demand for many county council occupied sites for salt, etc, storage).

4.7 Rents on scrap-yards across England and Wales have been investigated and there has been some evidence found to justify a premium above local land values, this is by no means universal. Scrap-yards should be valued on their own Scheme but adopting local evidence - this is best achieved by giving all scrap yards their own dedicated sublocation which should access an address matrix. It should also be borne in mind that those with permits noted at 2.6 above may be more likely to have a premium and therefore should be drawn out of general scrapyards by separately sublocating them.

Rental Analysis

4.8 One analysis scale should be adopted for the analysis of rents on all Land Used for Storage and Lorry Parks with all factors for each line use code set to 1.00. The existing national R2017 analysis scale AVLSTORAGE1 should be adopted and be used by all.

4.9 The Land CCT has compiled a spreadsheet of rents for key large plots of land which, in the main, are sub-located or should be re-sub-located with one of the National Sub-locations. The spreadsheet can be used to inform Units of the properties which will require (a) sub-location changes to one of the National Sub-locations and/or (b) re-inspection to ensure that the rents are analysed correctly, as well as providing the evidence supporting CCT Recommendations.

4.10 The CCT will add evidence to the above spreadsheet on an ongoing basis to enable Units to view all the evidence gathered. However, once sub-locations have been amended on RSA, this will be of far greater assistance to all and will enable the CCT to regularly download an AssFOR spreadsheet from RSA, providing guidance to Units when carrying out their R2017 valuations. In the longer term, the spreadsheet will assist in maintaining Rateable Values on appeal, enabling caseworkers to compare evidence and levels of value on, for example, car storage land close to major airports across the country.

4.11 The alterations of sub-locations to the National Sub-locations is not key to having rents analysed correctly as all Land Used for Storage should be analysed using the same analysis scale (all factors at 1.00). Consequently, at analysis stage, the sub-location is not a key factor. What the sub-location amendment does do is to enable values to be co-ordinated and ascertain the type of plot for which the rent is paid.

4.12 Identification of large land plots which may warrant a National Sub-location is made easier using the websites in the link below:

4.13 Units are encouraged to use the FORT1 spreadsheet for the whole of Bulk Class L if existing approaches do not produce a good return rate for FORs. The nature of land hereditaments may present difficulties in delivering FORs so the importance of obtaining the correct delivery address cannot be over-emphasised.