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

Section 715: museums and art galleries

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

1. Scope

This section applies to all museums and art galleries except those occupied by the National Trust, English Heritage or CADW which are dealt with in RM Vol 5 Section 1000 (Historic Properties);

1.1 Classification of Museums

For rating purposes, there is no distinction to be made between “museums” and “art galleries”, they may be regarded generically as “museums”. From a property perspective, there are different types of “museum”. In simple terms, a ‘museum building’ may be regarded as a form of protective barrier between a museum’s collections and the external environment. However, the museums “industry” has varying building requirements which are dependent upon the services provided by a particular type of museum. Consequently, there are different types of property which fulfil the function of a museum, depending on the particular type of museum activity. In order to apply consistency in assessing this class of property, it is necessary to identify the different types of museums and then apply the appropriate valuation method.

1.2 Eight different types of museums/galleries are identified by reference to the services provided by that sector of the industry:

Usually public museums set up for the public good. Run by government departments, local authorities, charitable trusts and universities. Often ‘monumental’ buildings, Victorian in style. Possibly including substantial ancillaries for research/and or educational use. They house collections of outstanding importance for present and future generations. They meet a wide range of educational needs within the context of life-long learning. They may also use the collection as a basis for study and scholarship, by the museum’s own professional curatorial staff and by visiting scholars and students. Also within this type are museums which fulfil a similar function to the above, but which comprise more modern buildings, usually, but not always, somewhat smaller and simpler. Typically, these museums are 1960’s and onwards build. There may or may not be admission charges for this type of museum.

b) Open Air Museums/Industrial Heritage and Social History Museums

These museums often house collections of buildings which have been removed from remote sites to be re-constructed at the museum. Alternatively, they may be special interest museums, typically centres for old steam trains and accessories. They may have extensive areas of land. The industrial heritage/social history museums comprise former working industrial sites, either original buildings which have undergone refurbishment, or re-constructed buildings. The buildings often house massive engines and equipment and enable visitors to view the work methods of steel workers, furnace men, coal, iron or slate miners etc. of the past. There may be rateable items of plant & machinery within the hereditament. There will normally be admission charges for these museums.

c) Country House type Museums

These often contain collections of artefacts/paintings from periods which are contemporary with the house. Typically, there are extensive grounds and gardens associated with the house and there may be children’s play areas and/or model farms. There is usually a shop/café/restaurant building as part of the facilities. There may or may not be a wide range of additional facilities. These properties may be occupied by local authorities, private owners or charitable bodies.

d) Museums of Ancient Ruins

These are archaeologically important sites which are open to the public, such as Roman and medieval remains of settlements. There may be the ruin with a visitor centre, or there may be just the ruin, covered by a building which is primarily to protect the ruin, but which also provides covered viewing facilities. Admission charges may or may not be made.

e) Commercially Operated Tourist Attractions

These resemble museums only in respect that they are aimed at some interpretation of the past, or of some scientific or artistic theme. They are normally purpose built, additional facilities may range from the presence of souvenir shop and refreshment centre, to include reconstructed settlements with life-size models, time-car rides, etc. These may or may not be currently dealt with as museums, and have probably been regarded as tourist attractions. Admission charges will always be made.

f) Homes of Famous People

Normally, illustrating their lives and often containing original artefacts. They may be operated by local authorities or charities. They are unlikely to be operated commercially, but admission charges may be made.

g) Small, Private Museums

These museums do not fall into any of the above classes, they are run by families, individuals, or special interest groups. There will always be an admission charge.

h) Museums which contribute to Economic Regeneration

These museums are deliberately sited in development areas and thereby helping to revitalise the surrounding areas. To this end, they are likely to have benefited from capital grant-aid and are also likely to be large buildings. Examples are: The Museum of Science and Industry in Manchester, The Tate Gallery at St.Ives and the Royal Armouries Museum in Leeds. There will always be admission charges. Although they are not operated for commercial profit they will achieve a gross operating surplus. They may or may not receive revenue grant.

2. List Description and Special Category Code

Museums - Contractors Basis List Description: Museum and Premises SCAT Code :195

Art Galleries - Contractors Basis List Description : Art Gallery and Premises SCAT Code : 195

Museums - non-Contractors Basis List Description: Museum and Premises SCAT Code :196

Art Galleries - non-Contractor Basis List Description : Art Gallery and Premises SCAT Code : 196

3. Responsible Teams

This is a specialist class and responsibility for valuation will lie with the specialist teams within each business unit. Queries of a complex nature arising from the valuation of individual properties should be referred to the NSU class facilitator via the class co-ordination team (CCT).

4. Co-ordination

The CCT has overall responsibility for the co-ordination of this class.

The CCT is responsible for the approach to, the accuracy and consistency of valuations of museums and art galleries and will produce practice notes outlining the valuation basis for revaluation and provide advice as necessary during the life of a rating list.

Caseworkers have a responsibility to

  • Follow the advice in this section and in the relevant practice note.
  • Not to depart from any subsequent advice given in relation to appeals or maintenance work during the life of a list without approval from the CCT or NSU technical advisor
  • Seek advice from the CCT or NSU technical advisor should issues arise which are not covered in this practice note.

Museums and art galleries are a sui –generis class and consequently, as a general rule, only evidence relating to hereditaments in the mode or category of use is pertinent. Rental evidence is exceptionally rare.

See Scottish and Newcastle (Retail) Ltd v Williams (VO) RA 119 and the subsequent Court of Appeal decision – Williams (VO) v Scottish and Newcastle Retail and Allied Domecq and Dawkins (VO) v Royal Leamington Spa BC and Warwickshire County Council (1961) RVR 291.

See RM Volume 2 Section 5 paragraph 9.2 and appendix 1 thereof for further guidance on mode and category of use.

Other cases pertinent to the valuation approach to Museums include.

a) Trustees of Bowes Museum and Park v Cutts (VO) LT 1950 R&IT Vol. 43

Bowes Museum and Park had been left to the trustees for the purposes of a public museum and public park. An income was produced on investments which was used by the trustees, together with income from charges made to the public, to provide a small surplus after the payment of expenses. It was held that the premises were of value to the trustees for the purposes of carrying out their duties and they were held to be in beneficial occupation.

b) The National Trust v Hoare (VO) and Spratling (VO) 1998/RA/391

The Court of Appeal (CA) stated that the appeals raised an old problem of determining the rateable value of properties for which, in the real world, no tenant could be found and which do not generate sufficient income to cover the cost of maintenance. CA referred to the fact that there was no rental evidence for these properties and the contractor’s basis was not appropriate. CA referred to the receipts and expenditure method and noted that the National Trust (NT) applied this method to show that a loss would be made and therefore no tenant would pay rent for them. CA referred to the fact that the Lands Tribunal (LT) accepted no profit could be made but held that the NT would make an “overbid” for them. CA said that these cases were “exceptional when compared to most of the hereditaments which need to be valued”.

CA considered how the “doctrine of the overbid” developed in the context of properties occupied by local government and referred to relevant case law. CA accepted that although the NT had a policy of not taking an annual tenancy of such properties, this did not prevent it from being considered a bidder. CA accepted that NT had an “external surplus” which it could spend on annual rent for the properties. However, CA found that although the NT could take such properties, there was no evidence that they would do so; all the evidence pointed in the opposite direction. CA held that the LT was in error in not giving any weight to this evidence.

CA distinguished previous local authority overbid cases by stating that, in those cases, there was material before the tribunal or court that entitled it to conclude that the local authority would pay a rent for the properties concerned. In the NT case CA found there was no such material and therefore the assessments should be nil.

Stately homes are a different mode and category to museums and art galleries and therefore this case should be considered to be of little relevance to this part of the heritage sector. The tribunal stressed that the circumstances only apply in instances where the National Trust is the only conceivable hypothetical tenant; not usually the case with museums and art galleries.

c) Tomlinson (VO) v City of Plymouth and Plymouth Argyle Football Co Ltd (1960)( 6 RRC 173)

Generally speaking where the actual occupier is the only likely hypothetical tenant, the resources of that occupier must be taken into account. This is known as the “ability to pay” principle.

In such cases the actual occupier’s ability to pay rent, as measured by the income available to them (including donations) and their operating costs, having regard to their use of any voluntary help, may cap the appropriate rateable value . “Ability to Pay” cases are rare and should only be regarded as relevant by VOs where:

  • The actual occupier is the only likely tenant(subject to caveat below), and
  • There is no reason to suppose that the actual occupier would be prepared to cross-subsidise the costs of occupation of the hereditament by other resources (e.g. income derived from statutory revenue raising powers, revenue grants, etc, see Eastbourne BC and Wealdon BC v Allen (VO) [2001] RA 273).
  • The VO is satisfied that the actual occupier could not increase his or her resources by managing their affairs differently (e.g. charging an amount for entry) (see Marylebone Cricket Club v Morley (VO) [1960] 53 R&IT 150)

Effectively therefore “ability to pay” of public bodies should not be regarded as a constraint on valuation. In the case of museums and art galleries it will normally need to be considered only in the context of private occupiers, but even then VO’s need to consider whether a local authority or other public body could conceivably be considered as a hypothetical tenant.

There is a growing trend amongst local authority’s to pass over occupation and administration of their museums and art galleries to charitable trusts. Reasons cited include a more effective administration of the facility. However VO’s shouldn’t automatically assume that with a charitable trust in occupation there are insufficient resources to pay the hypothetical rent, i.e. the ability to pay scenario. In reality the trust will usually receive a substantial revenue grant subsidy from the local authority and the local authority themselves should not be discounted as a potential hypothetical tenant, with adequate resources through cross-subsidy.

Ability to pay does not necessarily require one conceivable hypothetical tenant, providing all the conceivable hypothetical tenants have insufficient resources. However the more hypothetical tenants that can be envisaged the more likely there will be one with adequate resources.

d) The Bradford and York Museum cases

The approach to the valuation of a number of museums was considered by the Valuation Tribunal for England (VTE) in 2015 when hearing appeals by Bradford MDC and York Museums and Gallery Trust against the assessments of a number of museums in Bradford and York. The VTE rejected the application of a full receipts and expenditure valuation which produced nil or nominal rateable value because the motives for occupation on the part of the hypothetical tenant were not financially motivated (i.e. they were socio-economic, educational, historical, cultural, etc.)

The VTE concluded that the VO was correct to value the museums by reference to the contractors basis and did not feel that the historic nature of the building was a constraint to the application of that valuation approach. In most of the cases the VO believed the contents and not the building itself was the attraction. One exception, a museum/stately home, known as Bolling Hall, was valued by the VO by applying the “alternative rent” approach and this approach was endorsed by the Tribunal.

Both parties have appealed some of the decisions to the Upper Tribunal on a number of grounds and this guidance note will be updated when the appeals are concluded. The principles underlying the methods of valuation for different types of museums are considered in more detail later in this guidance note.

6. Survey Requirements

6.1 Unit of Assessment

It is essential that prior to embarking upon a valuation of a museum the hereditament is correctly identified. It should not be assumed, for example that a shop, café or other commercial undertaking within the confines of a museum are occupied by the same undertaking that occupies the remainder of the museum. Many museums are now managed by trusts established specifically to take advantage of the fiscal advantages that such a status brings with it, not least partial or total relief from rating liability.

However because running a commercial undertaking such as a shop or café could undermine their charitable status (as defined by charity commission rules), a separate legal entity (a trading company) is often created to undertake the museums commercial undertakings and that company which, subject to the usual rules relating to the hereditament and paramount occupation, will likely be the rateable occupier of the café/shop which will fall to be separately assessed. It is also possible that an entirely independent operator or operators may be in occupation of parts of the museum and these again should be fully investigated to ensure the correct unit of assessment is identified and valued; in short, a “veil of incorporation” may have descended between the two occupations which can only be pierced or lifted in exceptional circumstances.

A two stage test is required. Firstly establish whether a corporate veil exists and, if so, whether the circumstances in which it descends give rise to rateable occupation by the company (usually the case). Secondly establish whether the area in question is physically identifiable as a separate hereditament. Further guidance can be found in the Rating Manual Volume 4 Section 2.

Due consideration needs to be given to issues around the lifting of the corporate veil where Trusts and Local authorities are concerned. The guidance given in Rating Manual Volume 4 Section 2 Part 6 should be strictly adhered to.

6.2 Basis of Measurement

a.Where the contractor’s basis is the appropriate valuation method: the standard method of measurement to be adopted is Gross Internal Area (GIA) of the buildings (see VOA Code of Measuring Practice for Rating Purposes). b.Where rental/comparable method is the appropriate basis the standard method of measurement to be adopted is Net Internal Area (NIA) of the buildings (see VOA Code of Measuring Practice for Rating Purposes).

In cases where the valuation approach is not clearly identified before referencing, measurements should be taken on both the GIA and NIA standards.

6.3 External Development Works

Note should be made on inspection of the extent of any car parking areas (including the number of car spaces) and details of other external works. The site area should be recorded and comment made on file regarding whether the developed site is adequate or under or oversized for the building it serves. Any area used for purposes other than the museum (e.g. parkland, woodland, etc.), should be recorded and a note made regarding its significance to the occupation of the museum.

6.4 Other Information Required

Note should be made on inspection of any admission charges and of the number of admissions for the latest full year. The name of the administrative body responsible for the museum should also be recorded.

7. Survey Capture

7.1 The standard measurement should be Gross Internal Area (GIA), as defined in the Code of Measuring Practice for Rating Purposes. Separate areas for public access, archive storage, offices, laboratories, plant rooms etc. should be identified. Plant should be noted in the form of heating, air conditioning and fire suppressant systems. Green energy plant (photovoltaic panels, wind turbines etc) should also be noted.

7.2 Note should also be made on inspection of the extent of any car parking areas (including the number of car spaces) and details of other external works - car park barrier controls, CCTV, external lighting, paved and landscaped areas. The site area should be recorded and comment made on file regarding whether the developed site is adequate or under or over sized for the building it serves.

7.3 Record full details of plant and machinery which is concerned with temperature, fire humidity and security control.

8 .Valuation Approach

Choice of Valuation Method

8.1 Rental/Comparative Basis

The case of Imperial College of Science and Technology v Ebdon (VO) and Westminster City Council [1987] 1 EGLR 164 sets out a hierarchy of use of the three valuation methodologies. The basis of valuation will be the rental/comparative method where evidence exists. However this is very rare in this mode and category of use and where it does exist it should be established whether the evidence in question is truly at “arm’s length”. The VO should at all times have regard to the principles laid down by the Court of Appeal in the case of Garton v Hunter (VO) 1969 RA 11, and where rental evidence is available, its significance should be weighed.

In the absence of any significant rental evidence, and where the museum is capable of being occupied for a commercially viable profit, the receipts and expenditure basis is likely to be the appropriate method of valuation. The receipts and expenditure method of valuation (R&E) should not generally be used where profit is not the primary motive for occupation as is the case with most municipal type museums. However it can provide a useful check mechanism to confirm the result of the contractor’s basis is not excessive in instances where revenue subsidies or voluntary labour exist, the value of which, in accordance with Bluebell Railway v Ball (VO) [1984] RA 113, is to be taken into account in an R&E valuation.

The contractor’s basis is likely to be appropriate where there is no reliable rental evidence, the hereditament is not capable of operating at a commercially viable profit and the primary motives for occupation include the generation of socio-economic wealth, education, culture, preservation, and historical benefits for the public at large. Such “value” in rental terms to the hypothetical tenant in occupation cannot usually be assessed by reference to the R&E method (see R v School Board for London [1886] 17 QBD 738).

Where the hereditament, “rebus sic stantibus”, is capable of alternative use, and there is evidence of demand for such use, a value determined by comparison with rental values for such alternative uses should be considered. Such alternative use must be limited to the use of the hereditament in its existing physical condition with no account being taken of structural alterations which are not de- minimis. In applying the de-minimis rule the structural alterations must be considered as a whole and not individually.

8.2 Receipts and Expenditure Basis

No distinction is made between the public and private sector whenever the appropriate valuation method is R&E. However, where a museum provides socio-economic benefit it would be reflected in the accounts. Where accounts information is available, due regard should be had to adjustments which may be necessary to distinguish actual elements from what might reasonably be expected.

Some museums levy a charge and conceivably make a small operating surplus, but this is not the main motive for occupation and in cases such as these the use of an R&E method is usually inappropriate. Some of the types of museums listed are capable of being run in a commercially viable manner but it is in the nature of their occupation that any potential surplus is re-invested in the museum in improving facilities/collections rather than make a profit.

Where the R&E method is appropriate, it is preferable to obtain full accounts for at least three full years leading up to AVD. A full receipts and expenditure valuation should be undertaken in accordance with Rating Manual Section 4: Part 2. A percentage of receipts approach is acceptable where the museum is similar to a class of property where this method is used, e.g. historic properties or leisure attractions but should only be used after consultation with the appropriate Unit specialist representative on the Historic Properties Class Co-ordination Team.

Where the R&E method is appropriate, consideration should be given as to whether the property is more appropriately described as a Leisure Attraction and should rightly be transferred to and dealt with by leisure team specialists, in accordance with Rating Manual Section 6: Part 3: Section 1085.

8.3 Contractor’s Basis

In the absence of rental/comparable evidence, and when the museum is incapable of being occupied for profit, the contractor’s basis will be appropriate for those museums which provide a socio-economic or socio-cultural benefit. Building cost information is available in the VOA Cost Guide, but the caseworker should always examine actual cost data in the case of a comparatively modern hereditament when it is available. In the case of new hereditaments which fall to be assessed on the contractors basis a Form of Return VO6065 should be served on the occupier to obtain cost detail.

8.4 The Alternative Rent Approach

Difficulties can arise when the building itself is the attraction and the contents are inextricably linked to it (e.g. an historic residence). In these instances it’s not easy to envisage constructing a substitute building for the contractor’s basis like that envisaged in Dawkins v Leamington Spa, i.e. the building is incapable of being reproduced. However where there is clearly value to the hypothetical tenant in occupation this would usually produce a rent of significance under the rating hypothesis. Therefore when there is no general rental market in this mode and category of occupation, the hereditament is not run for profit and the contractor’s basis is inappropriate, one must consider how this “value” can be assessed.

The “alternative rent approach” was developed to cover this scenario and it’s use was endorsed by the Valuation Tribunal in respect of some museums in Bradford in the 2005 list. It works on the assumption that the hypothetical tenant will, at the very least, need premises in which to store the contents of the building securely. The specification of the building would also need to be sufficient to protect these items and give the option of display. Therefore two-times the local tone for storage value may be adopted in these instances.

It is stressed that this approach is a method of last resort and represents a fall-back position, only to be used for the scenario described above. Caseworkers should take advice from the relevant NSU Lead Specialist before adopting this approach.

8.5. Types of Museum and the Appropriate Valuation Method

a) Traditional Municipal Museums/Art Galleries

The contractor’s basis will be the appropriate valuation method, adjusted as necessary to exclude areas that are surplus to requirements, and giving full consideration to the effects of functional and physical obsolescence.

b) Open Air Museums/Industrial Heritage and Social History Museums

For this type of museum careful consideration should be given to any direct rental evidence but additions must be made for any subsequent improvements either by reference to rental levels or de-capitalised costs.

If capable of being run to make an operating surplus (see para 8.3 above), the receipts and expenditure method should be used. If after full reflection of grants/donations, and having regard to any subsidy in support of running costs (whether through voluntary labour or other means), there is the probability of a surplus capable of supporting rental payment, however small, then that will provide the appropriate valuation.

The contractor’s basis should be considered, only where buildings have been added recently. Where there is recent evidence of actual site acquisition costs (with or without relevant buildings) this should be used and any subsequent improvements valued in the usual way.

c) Historic Buildings with collections (Inc. Country House type Museums)

This type is distinguished from other ‘Historic Buildings’ by the presence of a collection; the purpose is both the preservation of the building and the display of this collection. Where a building is being preserved simply for the appreciation of the architecture, or the history of the building itself, this would fall into para g below.

Direct rental evidence, where it exists may be the best indication of value so long as it is at arm’s length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised. Any type of percentage adjustment will be highly subjective.

Because of the uniqueness of these properties it is unlikely that many comparative rents will be available.

If capable of being run to make an operating surplus (see Para 8.3 above), the receipts and expenditure method should be used. Alternatively, the contractors’ basis may be used, as the hypothetical tenant wishing to display or at least store their collection would consider the cost of an alternative when formulating their rental bid for the property. If the subject property is particularly suitable for the purpose and/or the collection, the tenant may be prepared to increase his bid and the appropriate place to reflect this is at stage 5. However, in many cases, because the interest lies in the actual building itself with the collection in situ, the hypothetical tenant would not consider a modern substitute, and the contractor’s basis is not appropriate. An alternative approach, approved by the VTE in the Bradford Museums cases, is to assess the building on the basis of its minimum value for the purpose of storage of the artefacts. (See VTE website Decisions 2005 Rating List appeal reference 470514161196/244N05/1)

d) Museums of Ancient Ruins

Where the hereditament is unattended;

  • Entry is not regulated by any charge; and
  • There are no permanent staff on site; and
  • No facilities are provided for visitors, e.g. surfaced car parking, WCs, etc.

Then, there is no beneficial occupation and no hereditament and no entry falls to be made in the rating list

Where there is beneficial occupation: -

1.Direct rental evidence, where it exists may be the best indication of value so long as it is at arm’s length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised as any type of percentage adjustment will be highly subjective. Because of the uniqueness of this type of property it is unlikely that indirect rental or comparative evidence will be of assistance.

2.If capable of being run at an operating surplus the receipts and expenditure method should be employed.

3.Where an unimproved ancient /historic building is incapable of being occupied for profit a nil assessment would be appropriate. Further advice on this point is to be found in RM 5 Section 1000: Historic Properties. However where additional buildings have been erected for the display and interpretation of artefacts, to house visitor facilities, or for the permanent protection/weather screening of parts or all of the building or for research purposes the additional buildings should be valued using the contractor’s basis. The contractor’s basis should not however be applied to mere temporary structures enveloping excavations. It is possible that, due to position of the hereditament (e.g. basement area of commercial building), the simple substitute building may be of a considerably lower standard than the actual building on site.

e) Commercially Operated Leisure Attractions

Hereditaments in this class will be capable of being occupied for a commercial profit (see para 8.3) and the receipts and expenditure method is the appropriate valuation method to apply. It is more likely that such properties would be more appropriately described as ‘Leisure Attractions’.

f) Homes of Famous People

Direct rental evidence, where it exists may be the best indication of value so long as it is at arm’s length and accords with the rating hypothesis. If it requires adjustment for repair liability then caution should be exercised a percentage adjustment will be highly subjective and actual year-to-year costs would be a better indicator.

Where the property is of a type that is present elsewhere in the locality and rental information for other comparable houses (i.e. those open to the public) is available this may represent the best evidence of value subject to the caveats in para 8.2. However consideration should be given to uplifting the rental value to reflect the particular suitability of the premises given the prominence of the particular famous person concerned.

If comparable rental evidence is not available but the hereditament is capable of being run to make an operating surplus (see para 8.3), the receipts and expenditure method of valuation should be adopted.

Where the property also displays a collection, then it is reasonable to assume that the hypothetical tenant may consider the cost of constructing an alternative to house the collection when formulating their rental bid. However, in many cases, because the interest lies in the actual building itself with the collection in situ, the hypothetical tenant would not consider a modern substitute, hence the contractor’s valuation method is rarely appropriate. If used, a stage 5 addition may be appropriate to reflect the particular suitability of the property, given the prominence of the particular famous person concerned.

g) Historic Buildings without Collections

This category can be distinguished from the country house and the small, private museum by virtue of the fact that it is the building itself that is the exhibit. Direct rental evidence, where it exists may be the best indication of value so long as it is at arm’s length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised. Any type of percentage adjustment will be highly subjective.

Due to the diversity of this type of property, it is unlikely that local comparative rental evidence will be available. It is probable that it will be necessary to consider evidence from a wider regional or national pool particularly in respect of discreet types of property such as forts, lighthouses, mills, towers, etc. It is unlikely due to repair liability that these buildings would be commercially occupied for a profit. As the value lies in the actual building itself and the hypothetical tenant would not consider a modern substitute the contractors’ method is inappropriate.

h) Small Private Museums

Direct rental evidence, where it exists may be the best indication of value so long as it is at arm’s length and accords with the rating hypothesis. If it requires adjustment for repair liability then caution should be exercised. A percentage adjustment will be highly subjective.

Because of the individuality of these properties it is rare that any comparative rental evidence will be appropriate.

If rental/comparable evidence is not available but the hereditament is capable of being occupied for a commercial profit, the receipts and expenditure method of valuation should be adopted.

Where neither the rentals or R&E method applies, and it is reasonable to assume that the hypothetical tenant would consider the cost of constructing an alternative to house the collection when formulating their rental bid the contractor’s basis should be used. However, stage 5 additions may be appropriate to reflect the particular suitability of the property in relation to displaying the collection.

h) Museums which contribute to Economic Re-generation

These museums are deliberately sited in developing areas and thereby help to revitalise the surrounding area. To this end, they are likely to have benefited from capital grant-aid; they are also likely to be large/Iconic buildings. Examples are: The Museum of Science and Industry in Manchester, The Tate Gallery at St.Ives and the Royal Armouries Museum in Leeds. There will sometimes be admission charges.

Although they are not operated for commercial profit, they may achieve an operating surplus. They may or may not receive revenue grant. The appropriate method of valuation for this class of property is the contractor’s basis. Where new the actual construction costs should be employed in the valuation. Details of the amount and source of grants should also be ascertained at an early stage along with the structure and purpose of the body running the museum. Where it is known that due to changes in economic circumstances during the period from date of construction to antecedent valuation date the hypothetical tenant would not envisage a substitute building of such high specification then the costs given in the cost guide should be adopted in place of adjusted actual costs to eliminate over-elaborate specification.

A temporary stage 5 allowance maybe appropriate in areas of regeneration to reflect the ongoing redevelopment.

When valuing new hereditaments of this type, guidance should be sought from the CCT /NSU Specialist to ensure effective co-ordination.

8.6. Ability to Pay

See section 5 (C) above.

9. Valuation Support

Valuations should be completed on the appropriate spreadsheets held on the non-bulk server.

Practice note 1: 2017

1. Market Appraisal

Nationally visitor numbers continues to increase, however in line with public spending generally funding from Central Government is decreasing and local authorities are having to prioritise their spending accordingly. Consequently employed staff, hours of opening and number of exhibitions mounted have been reduced and more volunteers taken on.

To reduce overheads, many local authorities have created operational Trusts. This may affect the manner of operation and unit of assessment. The Museum Association’s report of July 2011 stated that 48% of local authorities surveyed are considering or have implemented a move to trust status.

The trusts often create a separate enterprise company responsible for any retail and/or commercial arms (e.g. the museum shop and/or café).

Notable new developments during the period include- Extension at the Tate Modern due for completion in 2016 New exhibition space & Visitor Centre at British Museum opened in 2014 Mary Rose Museum Portsmouth built and opened in 2014 The Commonwealth Institute in Kensington High Street is being refurbished and converted to become the new Design Museum due to open 2015/16 The Novium, Tower Street, Chichester, West Sussex PO19 1QH opened in July 2012 New museum Colchester Liverpool Museum 2011 Hepworth Wakefield 2013 Bedford refurbished with additions Leeds 2013.

2. Changes from the 2010 List Practice

The factors giving rise to the choice of method of valuation and application of the methods of valuation have not significantly changed from the 2010 Practice Note.

3. Ratepayer Discussions

No discussions have taken place with the Museums Association or other representative body. It is anticipated that a number of appeals to the Upper Tribunal will be heard prior to the compilation date of the 2017 Rating List and may impact upon the method of valuation, the determination of the unit of assessment and “corporate veil” issues. Further guidance will be issued as necessary.

4. Valuation Scheme

The selection of valuation method is a question of fact depending upon the particular attributes of the individual hereditament. It is for the case worker to use judgment to establish the most appropriate method given the guidance in the Rating Manual which must be read in full before a valuation is undertaken. Further guidance on the application of the contractors basis is given in section 4.1 below.

4.1. Contractors Basis of Valuation

a) Stage 1 Estimated Replacement Cost

i) Build Costs

The Estimated Replacement Cost (Stage 1) of the building(s) should be ascertained by applying the appropriate substitute building cost obtained from a consideration of Appendix 1 and the 2017 VOA Cost Guide (the Cost Guide) to the gross internal area (GIA). Areas within the building (s) that are not used at the antecedent valuation date and have no prospect of being used should be excluded from the GIA.

Where evidence at the AVD suggests that the hypothetical tenant would not envisage the construction of a substitute museum, collections of artefacts would still require storage. In such circumstances it is appropriate to envisage a substitute storage building cost using the appropriate rate given in the Cost Guide.

When considering actual costs no account is to be taken of the receipt by the actual occupier of grant aid.

(See Allen (VO) v English Sports Council/Sports Council Trust Company and Rating Manual - Volume 4 - Section 7: Appendix 2)

ii) External Works

An addition for external works will be made in the case of museums and art galleries in accordance with the guidance in Appendix 2.

iii) Contract Size Adjustment

To be applied in accordance with the Cost Guide.

iv) Location factors

To be applied in accordance with the guidance contained in the Cost Guide.

v) Fees

Guidance on the amount to be added for fees is provided in the Cost Guide. The fee addition should have regard to the nature of the building under consideration. Many museums will attract the premium addition of 4%.

b) Stage 2 Age and Obsolescence (A&O) Allowances

Age and obsolescence allowances should be applied in accordance with the appropriate scale in the Rating Manual Volume 4 Section 7. Where a museum has been the subject of a scheme of refurbishment then the allowance should be amended to reflect the improvements particularly where internal remodelling has taken place to enhance the functional aspects of the museum. Where a museum is of a particularly poor quality of construction and has not been subsequently improved additional allowances can be given subject to a maximum allowance for A & O of 65%. This may be appropriate for some 1960/70’s buildings but is expected to be the exception rather than the norm. Before giving additional allowances approval should be obtained from the appropriate NSU specialist.

c) Stage 3 Land Value

Land value should be arrived at by having regard to values prevailing in the locality, in accordance with Rating Manual Vol 4: Section 7. A reduction of up to 20% from the prevailing land use value may be appropriate to reflect the mode and category of use, but this should not be made where there is evidence of land being acquired for museum use at the full value for the prevailing use in the area.

Assistance on the level of value to apply can be found in the P Drive at CEO1/NSU/2017 Land Values.

Many municipal museums are located centrally in part to demonstrate ‘civic pride’ and it is unlikely that the hypothetical tenant would realistically envisage relocating to a fringe urban site. However some privately occupied museums may be centrally located as a consequence of historical decisions or accidental circumstances and where it is reasonable to suppose that the hypothetical tenant would consider a fringe site land value appropriate to such fringe locations should be adopted.

Where the site area is considered excessive for the current requirements of the museum, a lower site area, should be adopted. Extensive garden and play areas etc. should be added as undeveloped/amenity land. In all other cases the actual site area should be valued.

d) Stage 4 De-capitalisation Rate

The Adjusted Replacement Cost (ARC) of the hereditament shall be de-capitalised to an annual equivalent by taking the prescribed rate. Museums and art galleries should not be considered as “wholly or mainly” educational within the meaning of The Non-Domestic Rating (Miscellaneous Provisions) (No. 2) Regulations 1989 (as amended) As such they should attract the higher de-capitalisation rate.

e) Stage 5 End Adjustments (“Stand Back and Look”)

Any advantage or disadvantage, which might affect the value of the occupation of the hereditament as a whole should be reflected at this stage. An adjustment under this head should not duplicate adjustments made elsewhere. Only in the very exceptional circumstances outlined in RM 4 Section 7 Appendix 2 should any account be taken of grant funding.

Specific End Adjustment

Buildings with a flat roof are to receive an end allowance.

a.£80m2 ARC of the footprint of the flat roof for buildings constructed up to and including 2004. b.£60m2 ARC of the footprint of the flat roof for buildings constructed after 2004.

Where a building has varying roof types a reasonable apportionment should be made to arrive at the allowance.

What is flat as opposed to a pitched roof will generally be self-evident. In instances where an allowance is sought for pitched roofing caseworkers should seek advice from the National Specialist Unit before proceeding.

4.2 Receipts and Expenditure Basis

Where the R&E method may be considered more appropriate, reference should be made to the main Rating Manual section.

4.3 IT Support

Where the Contractor’s basis is appropriate the standard generic contractor’s spreadsheet (museums and art galleries) within the Non-Bulk Server (NBS) should be used. For properties valued by way of the R &E method the generic R&E spreadsheet on the NBS should be used.

Appendix 1: Building Costs

Description Actual Substitute for Cost Guide Reference Cost(£/m2)
High Quality Museums Modern State of the art, including Millennium Projects, ‘Trophy Architecture’ etc. National Museums and Galleries such as V&A, British Museum, Tate 63500A From £3530 to £4120
Medium Quality Simpler local authority and private museums. Purpose built Victorian museums, local authority or private 63500D From £2650 to £3529
Basic Quality Unlikely to find a recent example 1950’s – 1970’s local authority museums, conversions of domestic or commercial premises to museum use where display areas are likely to be restricted in size 63500E To £2649
High Quality Storage Secure, air conditioned storage facilities As actual 63500G £2200
Bulk Storage Modern aircraft hangars, automotive or rail storage Former RAF aircraft hangars, bus garages, engine sheds etc. 63500J £520
Basic Storage Storage of robust items such as agricultural machinery, archaeological or mineralogical items, maintenance huts etc. Former barns, granaries, Nissen huts etc. 63500L £310

The application of the above costs should be considered having regard to the further guidance below-

Museums and Art Galleries occupy buildings of a wide physical diversity, but the demands of their collections will indicate the likely quality of a building which would provide a suitable substitute for the existing. In general, the more recently a museum was constructed, the more likely that appropriate adjustment of its actual building costs will approach those of the substitute.

Case workers should feel free to adopt a range of costs where the museum provides a wide variety of building types within the hereditament, but a cost level should be applied to a whole building rather than its constituent parts (i.e. if there are various uses within a building, the mix should be related to a price which would be appropriate to the whole if reconstructed). Also any space which is clearly surplus to requirements due to adaptation from a different use should be excluded from the modern simple substitute to be cost, as should any areas unused due to Fire Regulations, Health and Safety requirements etc.

High Quality Museums

It should be expected that recent projects built to the highest standards (e.g. Imperial War Museum North, Lowry etc.) will be cost at the top of the range Similarly National Museums and anything else where the replacement building would be of the highest quality (e.g. V&A, Science Museum, Tate Britain) will be cost at the same price with appropriate allowance for obsolescence.

Most Art Galleries will fall within this bracket due to the need to provide sufficient viewing space, lighting conditions etc. as well as secure climate controlled housing for the paintings.

At the lower end of the bracket will be the more basic museum types, steel frame with profiled metal sheeting is typical, mostly open space internally except for administrative areas.

Only those museums built on or after 01 April 2015 should be based on actual costs adjusted to AVD.

Medium Quality Museums

The most recognisable type within this bracket will be the Victorian museums within large towns, often close to or part of a substantial town hall. They should be cost at the higher end of the range. Smaller towns will have similar, but less grand, museums of this type and these will be cost towards the lower end of the range. Few non-purpose built museums will fall in this bracket unless the conversion works indicate that substantial improvements have been made to accommodate the change of use to a museum.

Low Quality Museums

It is unlikely that a modern example will be found for this level of value. The range will however accommodate museums converted from houses or commercial premises, particularly where the size of the galleries is restricted by the physical construction of the original property. The poorest purpose built museums will also fall in this category and are likely to be those built since the last war and before the 1970’s fuel crisis, probably of reinforced concrete, with flat roofs and poor insulation. The appropriate level of value within the range will depend on the size of the galleries and how readily they can accommodate modern museum display techniques.

High Quality Storage

The best buildings, which may come close to archive specification, may well also have climate control and will be well insulated. In some instances there may be public viewing, but it will not be the primary use for the building, and internal finishes will be to a lower standard than the above categories.

Medium Quality Storage

Includes primarily those buildings used to store large artefacts, where both overall size and height are paramount, but the artefacts are not so temperature/humidity sensitive. Typical of the range will be modern hangars or warehousing at the top end, to the wartime hangars of the most basic construction at the bottom. It is still possible that there is some public viewing within these buildings.

Basic Storage

At the lowest end will be Nissen Huts or small barns, often still with earth floors, which may be open on one side. These types are likely to be restricted in both height and overall size, thus limiting the size of collection items to tools, smaller agricultural machinery, single cars etc. Public viewing may be limited by access, and the building itself is quite likely to form part of the collection (e.g. open air museums).

Appendix 2: Addition for External Works

An addition for external works will be made in the case of museums and art galleries within the range of 2.0% - 12.5%. The following percentages would typically apply but are not intended to be prescriptive.

% Addition Building ratio*/description
2% Town centre or island site typically with n 90% or greater building ratio, no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament.
2.5% As above, but typically with an 80% to 90% building ratio, limited parking, external lighting and landscaping and some boundary fencing.
5% Site typically with 50%/75% building ratio, some landscaping around buildings, secure boundary fencing, adequate parking, external lighting and landscaping with limited general parking within the hereditament and boundary fencing.
7.5% As above, but typically with 25%/50% building ratio, landscaping around buildings, secure boundary fencing, external lighting, adequate parking within the hereditament which falls short of full requirements.
12.5% Site typically with about 25% building ratio, landscaping around buildings, secure boundary fencing, external lighting and adequate parking within the hereditament for all staff and other users.

Practice note 1: 2010

1. Co-ordination Arrangements.

Responsibility for this class now lies solely with SRU’s and they are responsible for ensuring effective co-ordination. For further information see Rating Manual Volume 2: Section 1: Practice Note 1: 2010.

The 2010 Special Category Codes for Museums and Art Galleries are 195 for Contractors Basis (Team 4) and 196 for Non-Contractors Basis (Team 2). The appropriate suffix letter is ‘S’.

2. The Choice of Valuation Method.

The selection of valuation method is a question of fact depending upon the particular attributes of the individual hereditament. It is for the valuer to use judgment to establish the most appropriate method given the following guidance: -

2.1 Direct Rental Evidence.

Rental evidence for Museums and Art Galleries is known to be scarce, however where it exists for a particular hereditament and the rent passing accords with the rating hypothesis without the need for too much adjustment, then it may form the most reliable evidence of value. Details of all rents that fall into this category should be forwarded to CEO- Rating Civics Team to enable the compilation of a database of evidence.

2.2 Comparable Rentals.

Use of the comparable rentals method depends upon the availability of rental evidence from properties in the same mode or category of occupation and the suitability of the hereditament within the physical restriction of the rebus sic stantibus rule.

In reality, it is expected that only former shops, offices, industrials and the like, that are being used as museums with the most minor of adaptations will fall to be valued under this method. However, evidence of offices converted from dwellinghouses should not be relied upon to indicate values for dwellinghouses used as museums or art galleries.

2.3 Receipts & Expenditure (R&E) Method.

Before adopting this method, care must be taken to ensure that the property is clearly being run with the intention of making a commercial level of profit. Some museums levy a charge and conceivably make a small operating surplus, but clearly this is not the main motive for occupation and in cases such as these the use of an R&E method is usually inappropriate. Some of the types of museums below are capable of being run in a commercially viable manner but it is in the nature of their occupation that any potential surplus is re-invested in the museum in improving facilities/collections rather than make a profit.

Where the R&E method is appropriate, it is preferable to obtain full accounts for at least three full years leading up to AVD. A full receipts and expenditure valuation should be undertaken in accordance with Rating Manual Section 4 Part 2. A percentage of receipts approach is acceptable where the museum is similar to a class of property where this method is used, e.g. historic properties or leisure attractions.

Where the R&E method is appropriate, consideration should be given as to whether the property is more appropriately described as a Leisure Attraction and should rightly be transferred to and dealt with by Team 2, in accordance with Rating Manual Section 6 Part 3: Section 1085.

2.4 Contractor’s Basis.

Where no appropriate rental evidence exists and the motive for occupation is not one of profit, then the appropriate method of valuation is the Contractor’s Basis unless the occupier is an individual or charitable Trust with a limited ability to pay a notional rent (see section 5 below), or the hereditament is of a type which is not capable of being reproduced (as in the case of agent ruins, homes of famous people, and many instances of historic buildings and industrial heritage/social history museums).

3. The Appropriate Valuation Basis.

3.1 Traditional Municipal Museums/Art Galleries

The contractor’s basis will be the appropriate valuation basis, having full regard to any areas that are surplus to requirements, and giving full consideration to the effects of functional and physical obsolescence of buildings that are listed.

If occupied by a charitable trust, regard should be had to ability to pay (see section 5 below.)

3.2 Open Air Museums/Industrial Heritage and Social History Museums

For this type of museum careful consideration should be given to any direct rental evidence that may exist but additions must be made for any subsequent improvements either by reference to rental levels or decapitalised costs.

If capable of being run to make an operating surplus (see para 2.3 above), the receipts and expenditure method should be used. If after full reflection of grants/donations, and having regard to any subsidisation of running costs (whether through voluntary labour or other means), there is the probability of a surplus capable of supporting rental payment, however small, then that will provide the appropriate valuation (see section 5 below).

The contractor’s basis should be considered, only where buildings have been added recently, although regard should be had to grant funding. Where there is recent evidence of actual site (with or without relevant buildings) acquisition costs this should be used and any subsequent improvements valued in the usual way.

If occupied by a charitable trust, regard should be had to ability to pay (see section 5 below).

3.3 Historic Buildings with collections (Inc. Country House type Museums)

This type is distinguished from other ‘Historic Buildings’ by the presence of a collection; the purpose is both the preservation of the building and the display of this collection. Where a building is being preserved simply for the appreciation of the architecture, or the history of the building itself, this would fall into para 3.7 below.

Direct rental evidence, where it exists may be the best indication of value so long as it is at arm’s length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised. Any type of percentage adjustment will be highly subjective.

Because of the uniqueness of these properties it is unlikely that many comparative rents will be available.

If capable of being run to make an operating surplus (see Para 2.3 above), the receipts and expenditure method should be used.

Alternatively, the contractors’ basis may be used, as the hypothetical tenant wishing to display or at least store their collection would consider the cost of an alternative when formulating their rental bid for the property. If the subject property is particularly suitable for the purpose and/or the collection, the tenant may be prepared to increase his bid and the appropriate place to reflect this is at stage 5. However, in many cases, because the interest lies in the actual building itself with the collection in situ, the hypothetical tenant would not consider a modern substitute, and therefore the contractor’s basis is not appropriate, and the hereditament should be considered on the same basis as for those in 3.7 below.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.4 Museums of Ancient Ruins

Where the hereditament is unattended; * Entry is not regulated by any charge; and * There are no permanent staff on site; and * No facilities provide accommodation for visitors, e.g. surfaced car parking, WCs, etc. Then, there is no beneficial occupation.

Where there is beneficial occupation: - a. Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised as any type of percentage adjustment will be highly subjective. Because of the uniqueness of these properties it is unlikely that many comparative rents will be appropriate b. If capable of being run to make an operating surplus (see Para 2.3 above), the receipts and expenditure method should be used. c. Where an unimproved hereditament is incapable of being occupied for profit a nil assessment would be appropriate. Further advice on this point is to be found in RM 5 Section 1000: Historic Properties paragraph 6, and Appendix 1, Section B. However where buildings have been erected for display of finds, interpretation, visitor facilities, permanent protection and research these should be valued on the Contractor’s Basis. The Contractor’s Basis should not however be applied to mere temporary structures enveloping excavations. It is possible that, due to position of the hereditament (e.g. basement area of commercial building), the simple substitute building may be of considerably lower standard than the actual building on site. d. If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.5 Commercially Operated Leisure Attractions

Hereditaments in this class will be capable of being occupied for a commercial profit (see para 2.3) and the receipts and expenditure basis is the appropriate method of valuation to apply.

It is more likely that such properties would be more appropriately described as ‘Leisure Attractions’.

3.6 Homes of Famous People

Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised as any type of percentage adjustment will be highly subjective and actual year-to-year costs would be a better indicator.

Where the property is of a type that exists in the locality and comparable rental information for other houses open to the public is available this may be appropriate subject to para 2.2, however consideration should be given to uplifting the rental value to reflect the particular suitability of the premises given the prominence of the particular famous person concerned.

If comparable rental evidence is not available but the hereditament is capable of being run to make an operating surplus (see section 2.3), the receipts and expenditure method of valuation should be adopted.

Where the property also displays a collection, then it is reasonable to assume that the hypothetical tenant may consider the cost of constructing an alternative to house the collection when formulating their rental bid. However, in many cases, because the interest lies in the actual building itself with the collection in situ, the hypothetical tenant would not consider a modern substitute, hence the contractor’s test may be used only rarely. If used, a stage 5 additions may be appropriate to reflect the particular suitability of the property, given the prominence of the particular famous person concerned.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.7 Historic Buildings Without collections

This category requires clarification. It can be distinguished from the Country House (3.3) and the Small, Private (3.8) museum by virtue of the fact that it is the building itself that is the exhibit.

Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised. Any type of percentage adjustment will be highly subjective.

Due to the diversity of this type of property, it is unlikely that much local comparative rental evidence will be available. It is suggested therefore that it may be necessary to consider evidence across a wider area and that cross SRU scales should be established for particular types of property such as Forts, Lighthouses, Mills, Towers, etc. It is unlikely due to repair liability that these buildings would be commercially occupied for a profit. And because the interest lies in the actual building itself, the hypothetical tenant would not consider a modern substitute; therefore the contractors’ method is inappropriate.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.8 Small, Private Museums

Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised. Any type of percentage adjustment will be highly subjective.

Because of the individuality of these properties it is rare that any comparative rental evidence will be appropriate.

If rental/comparable evidence is not available but the hereditament is capable of being occupied for a commercial profit (see 2.3), the receipts and expenditure method of valuation should be adopted.

Where neither the rentals or R&E method applies, and it is reasonable to assume that the hypothetical tenant would consider the cost of constructing an alternative to house the collection when formulating their rental bid the contractor’s basis should be used. However, stage 5 additions may be appropriate to reflect the particular suitability of the property in relation to displaying the collection.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.9 Museums, which contribute to Economic Regeneration

These museums are deliberately sited in developing areas and thereby help to revitalise the surrounding area. To this end, they are likely to have benefited from capital grant-aid; they are also likely to be large buildings. Examples are: The Museum of Science and Industry in Manchester, The Tate Gallery at St.Ives and the Royal Armouries Museum in Leeds. There will sometimes be admission charges.

Although they are not operated for commercial profit, they may achieve an operating surplus. They may or may not receive revenue grant. The appropriate method of valuation for this class of property is the contractor’s basis, based on the actual construction costs. Details of the amount and source of grants should also be ascertained at an early stage along with the structure and purpose of the body running the museum. It will be necessary to establish whether the grants were vital for the scheme to go ahead. The effects of grant should be considered in accordance with Rating Manual Section 4: Part 3 - Appendix 2 and appropriate allowances made at stage 5.

One alternative method for cross checking the valuation, is to estimate the GIA of a substitute building on the basis that grant would not have been available and then apply the indicative costs given later in this practice note to the contractors test basis. The valuation produced should eliminate any over specification or fanciful design; it will then be necessary to consider stage 5 allowances for Pioneering/Location contributing to regeneration. The resultant valuation should be similar to that derived from the actual costs adjusted for grant.

For revaluation purposes, it will be necessary to continue the allowance for grant where actual costs, whether current or projected, have been used. This is because the actual buildings tend to be larger and of more complex design than they would have been had the grant not been available and therefore it is still pertinent to reflect this. It may be that because of the passage of time, it is no longer appropriate to use actual costs and in such cases the preferred method is to estimate the GIA of the equivalent substitute building and cost it by reference to the figures given later in this practice note. In such circumstances, as the cost will no longer reflect excessive size and design, it will not be appropriate to allow for grant. Careful consideration should be given to stage 5 allowances to reflect any disadvantages that may persist.

When valuing new hereditaments of this type, guidance should be sought from the lead valuer or the CEO Specialist to ensure effective co-ordination.

4. Valuation on Contractors Basis

4.1 Stage 1 – Estimated Replacement Cost

With the exception of areas that are patently not used and have no prospect of being used, the GIA of the museum should be used to calculate the Estimated Replacement Cost (Stage 1) of the building by applying the most appropriate substitute building cost in accordance with the table in Appendix 1.

Where there is no evidence that a substitute museum would be constructed, as a very minimum, collections would need to be stored. This table also gives guidance as to storage rates that may apply when considering the substitute for non-purpose built museums.

External Works.

An addition for external works will be made in the case of museums and art galleries within the range of 2.5% - 10%. The following percentages would typically apply but are not intended to be prescriptive.

Description Addition
A site with almost 100% site coverage, will typically apply to town or 2.5%
A small site with possibly 2-3 car parking spaces for staff/disabled access, minimal amount of landscaping 5 %
A typical site with adequate car parking and sufficient landscaping considering the scale of the museum. 7.5%
An expansive site, with large amounts of parking and landscaping. The site itself will effectively form an amenity to the museum with recreational areas 10%
Contract Size & Location Adjustments.

Contract size adjustments should be made, and location factors applied in respect of this class in accordance with standard scales in the cost guide.

Fees

General guidance on the amount to be added for fees is provided in the R2010 Cost Guide.

For Museums and Art Galleries a range of 13% to 15% will be appropriate.

The lower end of this range will apply to most basic types, increasing with complexity up to the Millennium and modern “state of the art” types.

4.2 Stage 2 – Age & Obsolescence

The standard age-related allowances scale should be applied in most circumstances. However, in the case of buildings that have been significantly refurbished a lower allowance may be applicable, particularly where the works undertaken have enabled internal re-modelling to improve the functional aspects of the museum.

The standard age-related allowances scale can be found in the R2010 Cost Guide

The same age related allowance scale applied to the buildings should also be applied to the external works.

4.3 Stage 3 - Land Value

Land value should be arrived at by having regard to values prevailing in the locality, in accordance with Rating Manual Vol 4: Section 7. A reduction of up to 20% from the prevailing land use value may be appropriate to reflect the mode and category of use, but this need not be made where there is evidence of land being acquired at the full value for the prevailing use in the area.

With regard to most municipal museums, these are ‘civic pride’ buildings and it is unlikely that the hypothetical tenant would realistically envisage relocating to a fringe urban site. However with privately occupied museums, where it is reasonable to suppose that the hypothetical tenant would consider a fringe site it may well be appropriate to adopt such a site value as the lower cost alternative.

Where the site is excessive in size, reasonable assumptions should be made to arrive at an appropriate substitute, and consideration given as to whether gardens, play areas etc. should be added as undeveloped land. Where a site area is restricted in size only the actual area should be valued, but to avoid double counting, regard should be had to this when considering whether a further allowance at stage 5 is appropriate.

4.4 Stage 4 - Decapitalisation Rate

The Adjusted Replacement Cost (ARC) of the hereditament shall be decapitalised to an annual equivalent by taking the prescribed rate.

4.5 Stage 5 – End Adjustments

Any advantage or disadvantage, which might affect the value of the occupation of the hereditament as a whole should be reflected at this stage. An adjustment under this head should not duplicate adjustments made elsewhere.

Where the property has been grant funded allowances should be made to reflect the effect of the grant in accordance with Rating Manual Vol. 4 Section 7 Appendix 2.

5. Ability to pay

Where the actual occupier is the only likely hypothetical tenant, the resources of that occupier must be taken into account (Tomlinson (VO) v City of Plymouth and Plymouth Argyle Football Co Ltd (1160 6 RRC 173)). In such cases the actual occupier’s ability to pay rent, as measured by the income available to them (including donations) and their operating costs, having regard to their use of any voluntary help, may limit RV. “Ability to Pay” should only be regarded as relevant by VOs where: a. The actual occupier is the only likely tenant, and has very limited resources, and; b. There is no reason to suppose that the actual occupier would be prepared to cross-subsidise the costs of occupation of the hereditament by other resources (e.g. income derived from statutory revenue raising powers, revenue grants, donations etc).

Effectively therefore “Ability to Pay” of Public Bodies should not be regarded as a constraint on valuation. In the case of Museums & Art Galleries it will normally need to be considered only in the context of private occupiers, and more particularly Charities.

However the structure of Charitable Trusts must be considered. Recently many of these trusts have been established by Local Authorities. Where the LA is standing behind the Trust and financially supporting it, ‘ability to pay’ will not be an issue and the museum should be valued in the usual way.

6. IT. Support.

Where the Contractor’s basis is appropriate the standard generic Contractor’s Spreadsheet within the Non-Bulk Server (NBS) should be used. For properties valued by Team 2 the generic R&E spreadsheet on the NBS should be used.

Practice note 1: 2010: Appendix 1

Appendix 1 indicative building costs

Description Actual Substitute for Price
High Quality Museums Modern State of the art, including Millennium Projects, ‘Trophy Architecture’ etc. National Museums and Galleries such as V&A, British Museum, Tate £1900 - £2500
Medium Quality Simpler local authority and private Museums. Purpose built Victorian museums, local authority or private £1250 - £1900
Basic Quality Unlikely to find a recent example 1950’s – 1970’s local authority museums, conversions of domestic or commercial premises to museum use where display areas are likely to be restricted in size £900 - £1250
High Quality Storage Secure, air conditioned storage facilities As actual £1100 - £1600
Bulk Storage Modern aircraft hangars, automotive or rail storage Former RAF aircraft hangars, bus garages, engine sheds etc. £575 - £1100
Basic Storage Storage of robust items such as agricultural machinery, archaeological or mineralogical items, maintenance huts etc. Former barns, granaries, Nissen huts etc. £325 - £575

Practice note 1: 2010: Appendix 2 – Guidance on appropriate build cost levels where the Contractor’s Basis method of valuation is used

The Practice Note and Appendix 1 provide the basic framework for these valuations and this Appendix is intended to provide more detailed guidance on the appropriate replacement building cost once the valuer has decided that a Contractor’s Basis valuation is appropriate.

Museums and Art Galleries occupy buildings of a wide physical diversity, but the demands of their collections will indicate the likely quality of a building which would provide a suitable substitute for the existing. In general, the more recently a museum was constructed, the more likely that appropriate adjustment of its actual building costs will approach those of the substitute.

Valuers should feel free to adopt a range of costs where the museum provides a wide variety of building types within the hereditament, but a cost level should be applied to a whole building rather than its constituent parts. (i.e. If there are various uses within a building, the mix should be related to a price which would be appropriate to the whole if reconstructed.) Also any space which is clearly surplus to requirements due to adaptation from a different use should be excluded from the modern simple substitute to be costed, as should any areas unused due to Fire Regulations, Health and Safety requirements etc.

High Quality Museums

It should be expected that recent projects built to the highest standards (E.g. Imperial War Museum North, Lowry etc.) will be costed at £2,000 per m2. Similarly National Museums and anything else where the replacement building would be of the highest quality (e.g. V&A, Science Museum, Tate Britain) will be costed at the same price with appropriate allowance for obsolescence.

Most Art Galleries will fall within this bracket due to the need to provide sufficient viewing space, lighting conditions etc. as well as secure climate controlled housing for the paintings.

At the lower end of the bracket will be the more basic museum types, steel frame with profiled metal sheeting is typical, mostly open space internally except for administrative areas.

Only those museums built on or after 01 April 2003 should be based on actual costs adjusted to AVD.

Medium Quality Museums

The most recognisable type within this bracket will be the Victorian museums within large towns, often close to or part of a substantial town hall. They should be costed at the higher end of the range. Smaller towns will have similar, but less grand, museums of this type and these will be costed towards the lower end of the range. Few non-purpose built museums will fall in this bracket unless the conversion works indicate that substantial improvements have been made to accommodate the change of use to a museum.

Low Quality Museums

It is unlikely that a modern example will be found for this level of value. The range will however accommodate museums converted from houses or commercial premises, particularly where the size of the galleries is restricted by the physical construction of the original property. The poorest purpose built museums will also fall in this category and are likely to be those built since the last war and before the 1970’s fuel crisis, probably of reinforced concrete, with flat roofs and poor insulation. The appropriate level of value within the range will depend on the size of the galleries and how readily they can accommodate modern museum display techniques.

High Quality Storage

The best buildings, which may come close to archive specification, may well also have climate control and will be well insulated. In some instances there may be public viewing, but it will not be the primary use for the building, and internal finishes will be to a lower standard than the above categories.

Medium Quality Storage

Includes primarily those buildings used to store large artefacts, where both overall size and height are paramount, but the artefacts are not so temperature/humidity sensitive. Typical of the range will be modern hangars or warehousing at the top end, to the wartime hangars of the most basic construction at the bottom. It is still possible that there is some public viewing within these buildings.

Basic Storage

At the lowest end will be Nissen Huts or small barns, often still with earth floors, which may be open on one side. These types are likely to be restricted in both height and overall size, thus limiting the size of collection items to tools, smaller agricultural machinery, single cars etc. Public viewing may be limited by access, and the building itself is quite likely to form part of the collection (e.g. open air museums)

Practice note 1: 2005

1. Co-ordination Arrangements.

Responsibility for this class now lies solely with SRU’s and they are responsible for ensuring effective co-ordination.

The 2005 Special Category Codes for Museums and Art Galleries are 196 for Contractors Basis and 195 for Non-Contractors Basis. The Appropriate suffix letter is ‘S’.

2. The Choice of Valuation Method.

The selection of valuation method is a question of fact depending upon the particular attributes of the individual hereditament. It is for the valuer to use judgment to establish the most appropriate method given the following guidance:-

2.1 Direct Rental Evidence.

Rental Evidence of Museums and Art Galleries is known to be scarce, however where it exists for a particular hereditament and the rent passing accords with the rating hypothesis without the need for too much adjustment, then it may form the most reliable evidence of value. Details of all rents that fall into this category should be forwarded to CEO- Rating and marked F.A.O. Stephen Corpe to enable the compilation of a database of evidence.

2.2 Comparable Rentals.

Use of the comparable rentals method depends upon the availability of rental evidence from properties in the same mode or category of occupation and the suitability of the hereditament within the physical restriction of the rebus sic stantibus rule.

In reality, it is expected that only former shops, offices, industrials and the like, that are being used as museums with the most minor of adaptations will fall to be valued under this method. However, evidence of offices converted from dwellinghouses should not be relied upon to indicate values for dwellinghouses used as museums or art galleries.

2.3 Receipts & Expenditure (R&E) Method.

Before adopting this method, care must be taken to ensure that the property is clearly being run with the intention of making a commercial level of profit. Some museums levy a charge and conceivably make a small operating surplus, but clearly this is not the main motive for occupation and in cases such as these the use of a profits based method is inappropriate.

Where the R&E method is appropriate, it is preferable to obtain full accounts for at least three full years leading up to AVD. A full receipts and expenditure valuation should be undertaken in accordance with Rating Manual Vol 4 : Section 6. For the avoidance of doubt, due to the diversity of ways in which museums operate, percentage of receipts is not an appropriate method of valuation for this class.

Where the R&E method is appropriate, consideration should be given as to whether the property is more appropriately described as a Tourist Attraction and should rightly be transferred to and dealt with by Team 2, in accordance with Rating Manual Vol 5: Section 1085.

2.4 Contractors Basis.

Where no appropriate rental evidence exists and the motive for occupation is not one of profit, then the appropriate method of valuation is the Contractors Basis.

3. The Appropriate Valuation Basis.

3.1 Traditional Municipal Museums/Art Galleries

The contractor’s basis will be the appropriate valuation basis, having full regard to any areas that are surplus to requirements, and giving full consideration to the effects of functional and

physical obsolescence of buildings that are listed.

If occupied by a charitable trust, regard should be had to ability to pay (see section 5 below.)

3.2 Open Air Museums/Industrial Heritage and Social History Museums

For this type of museum careful consideration should be given to any direct rental evidence that may exist but additions must be made for any subsequent improvements either by reference to rental levels or decapitalised costs.

If capable of being occupied for a commercial profit (see para 2.3 above), the receipts and expenditure method should be used.

Otherwise, the contractor’s basis should be considered. Where there is recent evidence of actual site (with or without relevant buildings) acquisition costs this should be used and any subsequent improvements valued in the usual way.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.3 Historic Buildings with collections (Inc. Country House type Museums)

This type is distinguished from other ‘Historic Buildings’ by the presence of a collection; the purpose is both the preservation of the building and the display of this collection. Where a building is being preserved simply for the appreciation of the architecture or the history of the building itself this would fall into para 3.7 below.

Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised. Any type of percentage adjustment will be highly subjective.

Because of the uniqueness of these properties it is unlikely that many comparative rents will be available.

If capable of being occupied for a commercial profit (see Para 2.3 above), the receipts and expenditure method should be used.

Alternatively, the contractors’ basis may be used, as the hypothetical tenant wishing to display or at least store their collection would consider the cost of an alternative when formulating their rental bid for the property. If the subject property is particularly suitable for the purpose and/or the collection, the tenant may be prepared to increase his bid and the appropriate place to reflect this is at stage 5.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.4 Museums of Ancient Ruins

Where the hereditament is unattended;

  • entry is not regulated by any charge; and
  • there are no permanent staff on site; and
  • no facilities provide accommodation for visitors, eg. Surfaced Car Parking, WCs, etc.

then, there is no beneficial occupation.

Where there is beneficial occupation :

a. Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised as any type of percentage adjustment will be highly subjective. Because of the uniqueness of these properties it is unlikely that many comparative rents will be appropriate b. If capable of being occupied for a commercial profit (see Para 2.3 above), the receipts and expenditure method should be used. c. Where an unimproved hereditament is incapable of being occupied for profit a nil assessment would be appropriate. However where buildings have been erected for display of finds, interpretation, visitor facilities, permanent protection and research these should be valued on the Contractor’s Basis. The Contract’s Basis should not however be applied to mere temporary structures enveloping excavations. It is possible that, due to position of the hereditament (e.g.basement area of commercial building), the simple substitute building may be of considerably lower standard than the actual building on site. d. If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.5 Commercially Operated Tourist Attractions

Hereditaments in this class will be capable of being occupied for a commercial profit (see para 2.3) and the receipts and expenditure basis is the appropriate method of valuation to apply.

It is more likely that such properties are not Team 4 hereditaments and would be more appropriately described as ‘Tourist Attractions’ and dealt with by Team 2.

3.6 Homes of Famous People

Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised as any type of percentage adjustment will be highly subjective and actual year-to-year costs would be a better indicator.

Where the property is of a type that exists in the locality and comparable rental information for other houses open to the public is available this may be appropriate subject to para 2.2, however consideration should be given to uplifting the rental value to reflect the particular suitability of the premises given the prominence of the particular famous person concerned.

If comparable rental evidence is not available but the hereditament is capable of being occupied for commercial profit (see section 2.3), the receipts and expenditure method of valuation should be adopted.

Where the property also displays a collection, then it is reasonable to assume that the hypothetical tenant would consider the cost of constructing an alternative to house the collection when formulating their rental bid. Hence the contractors test may be used. However, a stage 5 addition may be appropriate to reflect the particular suitability of the property, given the prominence of the particular famous person concerned.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.7 Historic Buildings Without collections

This category requires clarification. It can be distinguished from the Country House (3.3) and the Small, Private (3.8) museum by virtue of the fact that it is the building itself that is the exhibit.

Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised. Any type of percentage adjustment will be highly subjective.

Due to the diversity of this type of property, it is unlikely that much local comparative rental evidence will be available. It is suggested therefore that it may be necessary to consider evidence across a wider area and that cross SRU scales should be established for particular types of property such as Forts, Lighthouses, Mills, Towers, etc. It is unlikely due to repair liability that these buildings would be commercially occupied for a profit. And because the interest lies in the actual building itself, the hypothetical tenant would not consider a modern substitute; therefore the contractors’ method is inappropriate.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.8 Small, Private Museums

Direct rental evidence, where it exists may be the best indication of value so long as it is at arms length and accords with the rating hypothesis. If it requires adjustment for repair liability then great caution should be exercised. Any type of percentage adjustment will be highly subjective.

Because of the individuality of these properties it is rare that any comparative rental evidence will be appropriate.

If rental/comparable evidence is not available but the hereditament is capable of being occupied for a commercial profit (see 2.3), the receipts and expenditure method of valuation should be adopted.

Where neither the rentals or profit method applies, and it is reasonable to assume that the hypothetical tenant would consider the cost of constructing an alternative to house the collection when formulating their rental bid. Hence the contractors basis should be used. However, a stage 5 additions may be appropriate to reflect the particular suitability of the property in relation to displaying the collection.

If occupied by a charitable trust, regard should be had to ability to pay see section 5 below.

3.9 Museums, which contribute to Economic Regeneration

These museums are deliberately sited in developing areas and thereby help to revitalise the surrounding area. To this end, they are likely to have benefited from capital grant-aid; they are also likely to be large buildings. Examples are: The Museum of Science and Industry in Manchester, The Tate Gallery at St.Ives and the Royal Armouries Museum in Leeds. There will usually be admission charges. Although they are not operated for commercial profit, they may achieve a gross operating surplus. They may or may not receive revenue grant.

The appropriate method of valuation for this class of property is the contractors basis, based on the actual construction costs. Details of the amount and source of grants should also be ascertained at an early stage along with the structure and purpose of the body running the museum. It will be necessary to establish whether the grants were vital for the scheme to go ahead. The effects of grant should be considered in accordance with Rating Manual Volume 4 : Section 7 - Appendix 2 and appropriate allowances made at stage 5.

One alternative method for cross checking the valuation, is to estimate the GIA of a substitute building on the basis that grant would not have been available and then apply the indicative costs given later in this practice note to the contractors test basis. The valuation produced should eliminate any over specification or fanciful design; it will then be necessary to consider stage 5 allowances for Pioneering/Location contributing to regeneration. The resultant valuation should be similar to that derived from the actual costs adjusted for grant.

For revaluation purposes, it will be necessary to continue the allowance for grant where actual costs, whether current or projected, have been used. This is because the actual buildings tend to be larger and of more complex design than they would have been had the grant not been available and therefore it is still pertinent to reflect this. It may be that because of the passage of time, it is no longer appropriate to use actual costs and in such cases the preferred method is to estimate the GIA of the equivalent substitute building and cost it by reference to the figures given later in this practice note. In such circumstances, as the cost will no longer reflect excessive size and design, it will not be appropriate to allow for grant. Careful consideration should be given to stage 5 allowances to reflect any disadvantages that may persist.

When valuing new hereditaments of this type, guidance should be sought from the lead valuer or the CEO Specialist to ensure effective co-ordination.

4. Valuation on Contractors Basis

4.1 Stage 1 – Estimated Replacement Cost

With the exception of areas that are patently not used and have no prospect of being used, the GIA of the museum should be used to calculate the Estimated Replacement Cost (Stage 1) of the building by applying the most appropriate substitute building cost in accordance with the table in Appendix 1.

Where there is no evidence that a substitute museum would be constructed, as a very minimum, collections would need to be stored. This table also gives guidance as to storage rates that may apply when considering the substitute for non-purpose built museums;

External Works.

An addition for external works will be made in the case of museums and art galleries within the range of 2.5% - 10%. The following percentages would typically apply but are not intended to be prescriptive;

Description Addition
A site with almost 100% site coverage, will typically apply to town or city centre sites with minimal external works. 2.5%
A small site with possibly 2-3 car parking spaces for staff/disabled access, minimal amount of landscaping. 5 %
A typical site with adequate car parking and sufficient landscaping considering the scale of the museum. 7.5%
An expansive site, with large amounts of parking and landscaping. The site itself will effectively form an amenity to the museum with recreational areas. 10%
Contract Size & Location Adjustments

Contract size adjustments should be made, and location factors applied in respect of this class in accordance with standard scales in the cost guide.

Fees

General guidance on the amount to be added for fees is provided in the R2005 Cost Guide.

For Museums and Art Galleries a range of 13% to 15% will be appropriate. The lower end of this range will apply to most basic types, increasing with complexity up to the Millennium and modern “state of the art” types.

5.2 Stage 2 – Age & Obsolescence

The standard age-related allowances scale should be applied in most circumstances. However, in the case of buildings that have been significantly refurbished a lower allowance may be applicable, particularly where the works undertaken have enabled internal re-modelling to improve the functional aspects of the museum.

The standard age-related allowances scale can be found in the R2005 Cost Guide

The same age related allowance scale applied to the buildings should also be applied to the external works.

5.3 Stage 3 - Land Value

Land value should be arrived at by having regard to values prevailing in the locality, in accordance with Rating Manual Volt 4: Section 7. A reduction of up to 20% from the prevailing land use value may be appropriate to reflect the mode and category of use, but this need not be made where there is evidence of land being acquired at the full value for the prevailing use in the area.

With regard to most municipal museums, these are ‘civic pride’ buildings and it is unlikely that the hypothetical tenant would realistically envisage relocating to a fringe urban site. However with privately occupied museums, where it is reasonable to suppose that the hypothetical tenant would consider a fringe site it may well be appropriate to adopt such a site value as the lower cost alternative.

Where the site is excessive in size, reasonable assumptions should be made to arrive at an appropriate substitute, and consideration given as to whether gardens, play areas etc. should be added as undeveloped land. Where a site area is restricted in size only the actual area should be valued, but to avoid double counting, regard should be had to this when considering whether a further allowance at stage 5 is appropriate.

5.4 Stage 4 - Decapitalisation Rate

The Adjusted Replacement Cost (ARC) of the hereditament shall be decapitalised to an annual equivalent by taking the prescribed rate.

5.5 Stage 5 – End Adjustments

Any advantage or disadvantage, which might affect the value of the occupation of the hereditament as a whole should be reflected at this stage. An adjustment under this head should not duplicate adjustments made elsewhere.

Where the property has been grant funded allowances should be made to reflect the effect of the grant in accordance with Rating Manual Vol. 4 Section 7 Appendix 2.

5. Ability to pay

Where the actual occupier is the only likely hypothetical tenant, the resources of that occupier must be taken into account (Tomlinson (VO) v City of Plymouth and Plymouth Argyle Football Co Ltd (1160 6 RRC 173)). In such cases the actual occupier’s ability to pay rent, as measured by the income available to them (including donations) and their operating costs, having regard to their use of any voluntary help, may limit RV. “Ability to Pay” should only be regarded as relevant by VOs where: a. the actual occupier is the only likely tenant, and has very limited resources, and; b. there is no reason to suppose that the actual occupier would be prepared to cross-subsidise the costs of occupation of the hereditament by other resources (eg. income derived from statutory revenue raising powers, revenue grants, donations etc).

Effectively therefore “Ability to Pay” of Public Bodies should not be regarded as a constraint on valuation. In the case of Museums & Art Galleries it will normally need to be considered only in the context of private occupiers, and more particularly Charities.

However the structure of Charitable Trusts must be considered. Recently many of these trusts have been established by Local Authorities. Where the LA is standing behind the Trust and financially supporting it, ‘ability to pay’ will not be an issue and the museum should be valued in the usual way.

6. I.T. Support.

Where the Contractors basis is appropriate the standard generic Contractors Spreadsheet should be used. A master copy of which is located in the R-Drive. All such valuations will be downloaded into the new non-bulk server see IA’s 100903 & 140503 for further details.

Practice note 1: 2005: Appendix 1: Indicative building costs

Description Actual Substitute For Price
High Quality Museums Modern State of the art, including Millennium Projects, ‘Trophy Architecture’ etc. National Museums such as V&A, major university museums if not on university basis e.g. Ashmolean, Fitzwilliam £1500 - £2000
Medium Quality Simpler local authority and private Museums. Purpose built Victorian museums, local authority or private £1000 - £1500
Basic Quality Unlikely to find a recent example 1950’s – 1970’s local authority museums, conversions of domestic or commercial premises to museum use where display areas are likely to be restricted in size £700 - £1000
High Quality Storage Secure, air conditioned storage facilities As actual £850 - £1250
Bulk Storage Modern aircraft hangars, automotive or rail storage Former RAF aircraft hangars, bus garages, engine sheds etc. £450 - £850
Basic Storage Storage of robust items such as agricultural machinery, archaeological or mineralogical items, maintenance huts etc. Former barns, granaries, Nissen huts etc. £250 - £450

Practice note 1: 2005: Appendix 2: Guidance on appropriate build cost levels where the Contractor’s Basis method of valuation is used

The Practice Note and Appendix 1 provide the basic framework for these valuations and this Appendix is intended to provide more detailed guidance on the appropriate replacement building cost once the valuer has decided that a Contractor’s Basis valuation is appropriate.

Museums and Art Galleries occupy buildings of a wide physical diversity, but the demands of their collections will indicate the likely quality of a building which would provide a suitable substitute for the existing. In general, the more recently a museum was constructed, the more likely that appropriate adjustment of its actual building costs will approach those of the substitute.

Valuers should feel free to adopt a range of costs where the museum provides a wide variety of building types within the hereditament, but a cost level should be applied to a whole building rather than its constituent parts. (i.e. If there are various uses within a building, the mix should be related to a price which would be appropriate to the whole if reconstructed.) Also any space which is clearly surplus to requirements due to adaptation from a different use should be excluded from the modern simple substitute to be costed, as should any areas unused due to Fire Regulations, Health and Safety requirements etc.

High Quality Museums

It should be expected that recent projects built to the highest standards (E.g. Imperial War Museum North, Lowry etc.) will be costed at £2,000 per m2. Similarly National Museums and anything else where the replacement building would be of the highest quality (e.g. V&A, Science Museum, Tate Britain) will be costed at the same price with appropriate allowance for obsolescence.

Most Art Galleries will fall within this bracket due to the need to provide sufficient viewing space, lighting conditions etc. as well as secure climate controlled housing for the paintings.

At the lower end of the bracket will be the more basic museum types, steel frame with profiled metal sheeting is typical, mostly open space internally except for administrative areas.

Only those museums built on or after 01 April 2003 should be based on actual costs adjusted to AVD.

Medium Quality Museums

The most recognisable type within this bracket will be the Victorian museums within large towns, often close to or part of a substantial town hall. They should be costed at the higher end of the range. Smaller towns will have similar, but less grand, museums of this type and these will be costed towards the lower end of the range. Few non-purpose built museums will fall in this bracket unless the conversion works indicate that substantial improvements have been made to accommodate the change of use to a museum.

Low Quality Museums

It is unlikely that a modern example will be found for this level of value. The range will however accommodate museums converted from houses or commercial premises, particularly where the size of the galleries is restricted by the physical construction of the original property. The poorest purpose built museums will also fall in this category and are likely to be those built since the last war and before the 1970’s fuel crisis, probably of reinforced concrete, with flat roofs and poor insulation. The appropriate level of value within the range will depend on the size of the galleries and how readily they can accommodate modern museum display techniques.

High Quality Storage

The best buildings, which may come close to archive specification, may well also have climate control and will be well insulated. In some instances there may be public viewing, but it will not be the primary use for the building, and internal finishes will be to a lower standard than the above categories.

Medium Quality Storage

Includes primarily those buildings used to store large artefacts, where both overall size and height are paramount, but the artefacts are not so temperature/humidity sensitive. Typical of the range will be modern hangars or warehousing at the top end, to the wartime hangars of the most basic construction at the bottom. It is still possible that there is some public viewing within these buildings.

Basic Storage

At the lowest end will be Nissen Huts or small barns, often still with earth floors, which may be open on one side. These types are likely to be restricted in both height and overall size, thus limiting the size of collection items to tools, smaller agricultural machinery, single cars etc. Public viewing may be limited by access, and the building itself is quite likely to form part of the collection (e.g. open air museums)