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

Section 790: pleasure piers

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

1. Scope

This Instruction applies to all Pleasure Piers - These embrace all coastal piers occupied for entertainment, leisure and recreational purposes, but exclude piers, jetties etc. used solely as landing stages.

2. List Description and Special Category Code

List description: Pleasure Pier and Premises Primary Description Code: LX SCAT code: 213, suffix S

3. Responsible Teams

This is a specialist class of property, to be valued by Specialists in each Business Unit.

4. Co-ordination

The Class Co-ordination Team has overall responsibility for the co-ordination of this class. Contact details are in VP and CCT Members (P:\CEO1\Intranet\Reval 2017\VP & CCTs). The team is responsible for the approach, accuracy and consistency of valuations. The team will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. Caseworkers have a responsibility to:

  • follow the advice given at all times
  • not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team
  • seek advice from the co-ordination team before starting any new work

5.1 Rateability of Extra Parochial Parts

At common law the boundary of a parish on the seashore does not extend below low water mark.

Section 72(1) of the Local Government Act 1972 provides however, that:

“every accretion from the sea, whether natural or artificial, which prior to the Act did not form part of a parish shall henceforth be annexed to and incorporated with – a.in England, the parish or parishes which the accretion or part of the sea-shore adjoins, and b.in Wales, the community or communities which the accretion or part of the sea-shore adjoins, c.in proportion to the extent of the common boundary.”

Those parts of traditionally constructed piers extending below low water mark will not be rateable, unless: a.the pier has been brought within the parish by the Special Act authorising their erection,

or b.the local authority has extended its boundary by special Act.

The majority of pleasure piers are thought to fall within one or other of the two exceptions and will therefore be wholly rateable.

That part of a pier, consisting of a wooden deck resting on iron piles, lying beyond the low water mark has been held not to be an accretion from the sea (Blackpool Pier Company v Fylde Union 1877), although a stone jetty may well be depending on the particular facts. This was the case in R v Easington District Council, ex parte Seaham Harbour Dock Co. Ltd (1999) 1 L.G.L.R where a harbour (built of masonry) was considered an accretion under S.72 Local Government Act 1972.

5.2 Unit of Assessment

Questions may sometimes arise as to whether parts of pleasure piers are so let out as to be capable of separate assessment. Refer to Rating Manual Section 4 Section 2 - Occupation and the Hereditament - for guidance.

6. Survey Requirements

Pleasure Piers should be measured to net internal area (NIA) in accordance with the VOA Code of Measuring Practice for Rating Purposes.

The survey should include the following information:

  • A site plan showing the full extent of the property which could also include elements on the sea front, and the location of any concessions;
  • Details of access and parking;
  • Entry charges including details of any concessionary rates, yearly rates, free admissions;
  • Times and days of opening including details of any seasonal closures;
  • Details of any other facilities provided such as use for conferences, research facilities, head/regional offices;
  • If the occupation is by a charity details should be obtained of any trading company operating all or part of the property, e.g. shops and restaurants;
  • A brochure for the property.

7. Survey Capture

In all cases plans and surveys should be stored in the property folder of the Electronic Document Records Management (EDRM) system.

8. Valuation Approach

8.1.1. Rental

Rents, where available, may provide the best evidence of value but care should be taken to establish that the letting is open market at arm’s length. It is frequently the case that the Local Authority is the owner and the pier is let to a charity to operate the pier on the Local Authority’s behalf. In such instances the letting is rarely at open market value. The rent should be tested against a receipts and expenditure valuation if possible, and the resultant valuation expressed in terms of a percentage of gross receipts to facilitate comparison.

8.1.2. Receipts and Expenditure

In the absence of useful rental information VOs should carry out a full receipts and expenditure valuation, seeking detailed accounts for at least the three previous years. For guidance see RM Section 4 Section 6.

Valuations arrived at using a full R&E valuation should be analysed as a percentage of gross receipts to facilitate comparison with other pleasure piers where full accounts are not available - see 8.1.3 below.

8.1.3. Comparative Approach

In the absence of full accounts information the RV should be arrived at using a comparative valuation method applying a rental percentage to the estimated AVD Fair Maintainable Trade (FMT) having regard to the actual gross receipts (excluding VAT). It is likely that this will be the main method of valuation for this class and occupiers of piers are sent FOR VO6030 requesting receipts information.

Ideally, local comparable evidence should be considered, referencing valuations of piers with similar facilities in similar locations along a stretch of coastline. Generally, however, this approach will necessitate ranking piers based on their facilities and locations, then properly reflecting the individual qualities and disabilities of a particular pier by assessing it at an appropriate position within the range.

See the relevant Practice Note for further guidance on percentages to be applied.

Rental values of any parts let and/or values of other nearby hereditaments occupied for similar purposes to some of the parts of the subject pier might also provide an indicator of value.

This is particularly relevant when dealing with piers that incorporate a theatre as the major revenue earner. In these cases it is necessary to co-ordinate with assessments on stand-alone theatres (Rating Manual section 6 part 3 - section 1050), taking care to reflect the seasonal nature and repairing liabilities of pier theatres.

8.2. Valuation Considerations

8.2.1. Repair

The possibility of a high repair and maintenance liability may have a significant effect on value, and accordingly the rent. This would be reflected in the sinking fund calculation for a receipts and expenditure valuation, or the percentage of gross receipts adopted. Regard should be had to the Rating (Valuation) Act 1999 and the assumption that the hereditament is in a state of reasonable repair, but excluding from this assumption any repairs that a reasonable landlord would consider uneconomic.

In considering any accounts it is essential that regard is had only to annual repairs expenditure and not to accrued repairs as there is a basic assumption that the premises are maintained in a state to command the rent. Thus any accrued repairs are not an element to be deducted within a receipts and expenditure analysis.

8.2.2. Licences, Let outs and Franchises

There is an increasing trend for occupiers to grant licences for concessions. Typically this would involve the cafeteria, ice cream sales or shop/fast food outlets. It is essential to establish who is in paramount control of the various parts of the property and to determine the extent of the hereditament.

Where the let out is a separate hereditament the rent or licence fee, etc, should not be included in the gross income to avoid double counting.

Where a concession remains part of the pier hereditament, rental or licence payments should be considered separately from the trading turnover of the pier. Concession income should be valued at a percentage within the range of 25% – 50% depending on the level of the occupier’s expenditure. This will be at the higher end where receipts involve the landlord in minimal expense, and at the lower end where the rateable occupier is responsible for all repairing liabilities, provision of services or significant non-rateable items. The resultant figure should then be added to the rateable value calculated on the receipts and expenditure basis for the main part of the hereditament.

9. Valuation Support

All valuations should be entered onto the Non-Bulk Server (NBS) under the relevant Scat Code.

Additional support is available through:

  • Survaid
  • Class Co-ordination Team for Leisure Attractions

Practice note 1: 2017 - Pleasure piers

1. Market Appraisal

Pleasure piers were first built during the early 19th century, becoming popular during the Victorian era of the mid to late 1800s. The earliest pier opening in 1814 was sited at Ryde, on the Isle of Wight. This is still operating. During the Victorian period, railways were expanding, the concept of leisure time was gathering momentum and mass tourism to the coastal resort towns was fashionable. Pleasure piers allowed holiday makers to promenade over and alongside the sea at all times.

The introduction of commercial flights in the 1950s onward and the advent of the package holiday subsequently changed the dynamics of holidays. Holiday-makers began to fly abroad, meaning many British seaside towns lost tourist trade.

As a result, many piers became unprofitable and fell into disrepair. From a peak of some 100 piers at the turn of the 19th Century there are now only approximately half left.

Preservation of the remaining piers has over recent years taken a higher profile with many, but not all piers being listed structures. The main problems to be overcome in preserving them are high maintenance costs and serious backlogs of accrued repairs caused by insufficient past income. Piers are also especially vulnerable to storm damage. To produce enough income to maintain a structure which is expensive there is a need to identify a present day niche market.

There are various avenues available for funding capital repairs such as Lottery funding, EU grant funding and Government Coastal Communities Funding. However running costs and, in particular, annual maintenance still require a sufficient income, which for many piers can be a challenge. Charitable status is one route to reducing costs, but in recent years, additional innovative approaches have become available. Hastings Pier for example is being funded by a Heritage Lottery Fund grant for the restoration project. Thereafter a Community Benefit Society, with charitable status, has been established to deal with the annual running of the pier company. Such status provides access to all the charitable reliefs but also allows trading to take place.

It is not unusual for there to be a mix of occupation types on the pier. There could be in hand income, concession income and let out income. These need to be identified in order to correctly identify the boundaries of the hereditament and unit or units of assessment.

Care needs to be exercised to ensure that the financial operation of the pier is fully understood to ensure that all sources of income are correctly identified and treated as appropriate.

2. Changes from the last practice note

There are no changes from the broad principles followed for the 2010 Rating Lists and the approach therefore is the same.

3. Ratepayer discussions

None at present.

4. Valuation scheme

Valuation guidance on this class for 2017 is contained within Rating Manual section 6 part 3 - section 1085 : Leisure Attractions: Practice Note 1 : 2017.

Practice note 1: 2010: Pleasure piers

1. Co-ordination Arrangements

This is an SRU Class. Responsibility for ensuring effective co-ordination lies with the SRUs. For further information see Rating Manual section 6 part 1.

The R2005 Special category Code 213 should be used. As an SRU Class the appropriate suffix letter should be S.

2. Valuation Guidance

Valuation guidance on these classes for 2010 is contained within Rating Manual section 6 part 3 - section 1085 : Practice Note 1 2010 : Leisure Attractions.

This property is valued using the non-bulk server. The manual can be accessed here.

3. IT support

The development a new facility on the Non Bulk Server (NBS) should enable input of factual data to achieve valuations that follow the recommended approach for pleasure piers. All valuations should be entered onto the NBS under the relevant Scat Code.

Practice note 1: 2005: Pleasure piers

1. Co-ordination Arrangements

This is an SRU Class. Responsibility for ensuring effective co-ordination lies with the SRUs. For further information see Rating Manual section 6 part 1.

The R2005 Special category Code 213 should be used. As an SRU Class the appropriate suffix letter should be S.

2. 2005 List Valuation Approach

In the absence of rental information, or full accounts, pleasure piers should be valued on the comparative approach, by reference to a percentage of gross receipts, net of VAT, with concession income being valued separately.

2.1 Gross Receipts

The adopted gross receipts should be that which would have been agreed between the parties as at 1 April 2003, looking forward and taking into account perceived trends, risks and uncertainties at that date. Care should be taken in considering an abnormal years trade, due to weather or other local circumstances. It should be noted that the quantum of some expenditure may have altered substantially over the 5 year period since 1 April 1998 – particularly public liability insurance, which has more than doubled in some cases.

Where no receipts figures are available as at AVD, then a judgement should be made having regard to historic turnover figures available, coupled with analysis of movement in gross receipts between the same years and AVD of other pleasure piers and similar attractions. It is thought that overall, increases in receipts over the 5 year period since 1 April 1998 have been quite modest. Due to the incidence of foot and mouth disease in many rural areas, visitor attractions in coastal resorts (including pleasure piers) experienced increased visitor numbers in 2001.

3. Valuation

It is expected that the percentage adopted for the majority of pleasure piers will fall within the range of 5 - 7% of the gross receipts. This is towards the bottom end of the scale adopted for tourist attractions (see Rating Manual section 6 part 3 - section 1085), due to the high repairing liability, which is the norm for this class of property.

If, however, it is considered that the pier has minimal repairing liabilities, and is trading successfully, then, in the absence of rental evidence or full accounts, a yield of up to 10% may be appropriate.

As any rental income from concessions provides the operator with a much higher level of profitability it should not be treated in the same way as the gross receipts. Concession income should be valued in the range of 25 - 50%. A decision within this range to be based at the higher end where receipt of this income involves the landlord in minimal expense, and at the lower end where the landlord is providing services, significant non-rateable items, or is responsible for all repairing liabilities. [See paragraph 5.3 in the main Rating Manual section.]

In order to more easily compare like with like, the valuation should typically be expressed:

Gross Receipts (Exc. Concessions) £1.25m @ 6% = £75,000
Concession income £20,000 @ 30% = £ 6,000
RV £81,000