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

Section 840: hospitals and healthcare

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

1. Description

This section is intended to cover the following types of hereditament:

a) NHS Hospitals

VOs will be familiar with these properties and they require no detailed description. They comprise a wide range of types and sizes, and normally contain buildings of various dates.

b) Ambulance Stations

These are normally purpose built but can be adapted from existing buildings. They normally resemble small depots.

c) Outpatient Clinics and Trust Health Centres

These normally provide treatment and/or diagnostic services to patients who have been referred by General Practitioners. They may resemble category (d) health centres below - but may alternatively be purpose built and sui generis.

Valuers concerned with surgeries and health centres as well as clinics and health centres occupied by health authorities and trusts should familiarise themselves with the RICS publication “The valuation of surgery premises used for medical or health services”. Valuation Information Paper 4

d) Surgeries and Health Centres occupied by general practitioners

These are normally in the occupation of general practitioners rather than Health Authorities and comprise a range of types from the adapted dwelling to the purpose built group practice health centre.

e) Nursing Homes, Maternity Homes, Convalescent Homes

This class of property ranges from converted dwelling houses to purpose built premises with all the facilities of a modern hospital. Nursing homes may be occupied by Health Authorities or privately by religious or other charitable organisations. They may be occupied for the care of the sick, the aged or the handicapped, or for the purposes of convalescence. They may be wholly domestic, composite, or wholly non-domestic.

f) Private Hospitals and Clinics

These include a variety of types of structure ranging from purpose built to adaptations of dwelling houses or of other institutional dwellings. Normally they will accommodate in-patients, although some private outpatient clinics are known to exist. Patients tend to be accommodated in single rooms and a high proportion of these may have private bathrooms/showers. Private hospitals tend to be significantly smaller than NHS Hospitals.

g) Private Eye Hospitals and Clinics

The advancement in technology and the introduction and development of new procedures over the past 20 years has permitted a considerable widening in the scope and purpose of eye surgery. In particular the cost of laser surgery to improve the vision of persons otherwise requiring the wearing of spectacles or contact lenses has reduced substantially. This in turn has led to a substantial increase in the numbers of companies offering this and other eye related procedures, both by way of specialist departments within general private hospitals or by way of dedicated clinics, some of which refer to themselves as hospitals. The advice is concerned with the assessment of hereditaments occupied as dedicated eye clinics

Some companies confine themselves to laser surgery and operate out of a number of relatively small specialist clinics throughout the UK, whereas others offer a full range of services which extend beyond laser surgery to include medical conditions such as glaucoma, cataracts and astigmatism. Some larger clinics will also offer cosmetic procedures designed to enhance the appearance of the eye. As referred to above some of the larger clinics (generally in excess of 1000m2 GIA) refer to themselves as hospitals, examples being the “The London Eye Hospital and “The Yorkshire Eye Hospital” although they do not normally contain patient beds as the procedures and initial recovery are of a duration which will generally allow patients to return home on the day that surgery is carried out.

2. Survey Requirements

a) NHS Hereditaments

In referencing NHS hereditaments the basis of measurement prescribed in the VO Code of Measuring Practice for Rating Purposes should be followed. In the case of specialised health service properties, surveys to GEA should be prepared in addition to any other prescribed basis, to ensure compatibility with existing records. For all properties valued using the contractors basis the surveys should be made to GIA

b) GPs Surgeries/Health Centres

The basis of measurement is NIA as defined in the VO Code of Measuring Practice for Rating Purposes. Surgeries in shopping parades should be zoned. For those specialised hereditaments which are valued using a contractor’s basis, the property should be measured to GIA.

c) Nursing Homes/Maternity Homes/Convalescent Homes

The basis of measurement for this class is GIA, as defined in the VO Code of Measuring Practice for Rating Purposes. It is however necessary to apportion the GIA in respect of non-domestic property within composite hereditaments.

d) Private Hospitals

The basis of measurement for this class is GIA, as defined in the VO Code of Measuring Practice for Rating Purposes.

There may still be a few hospitals not measured to GIA. In such cases re-surveys would be preferred but if resources are unavailable then estimates should be made from existing surveys. Guidance is given in RM Appendix 5:840:1 on the reconciliation of GEA to GIA.

e) Private Eye Hospitals and Clinics

For the majority of clinics and hospitals which fall to be assessed on the rentals basis measurement should be to NIA in accordance with the VOA Code of measuring practice, but where exceptionally the contractors method is employed measurement to GIA will be required

f) Plant and Machinery

Hospitals are likely to feature items of rateable plant and machinery such as the heating system, fire protection, cooling and ventilating equipment, lifts and standby generators, but since valuation will be by reference to costs which include these items, they should not be separately valued. Because the quality of these items of P & M vary considerably, it is nevertheless important to ensure that full details of such plants are recorded in order that they may be properly reflected in the valuation of the hereditament.

Air conditioning systems vary in terms of the range of facilities offered, their performance, and the degree of environmental control offered. A basic air conditioning system will usually incorporate facilities for heating, cooling and ventilating. More complex systems will also control humidity, monitor the through-flow of air, filter, purify and deodorise the re-circulated air, and offer localised control in different parts of the premises and even in different parts of an open plan floor. The following features should be noted: - type (eg VAV, fan coil etc) provision (eg cleaning, cooling, humidification) extent (note the areas served) and details of ducting.

Details of the heating system should include type of fuel, type of system (eg radiators, ducts, underfloor) and extent.

For lifts determine type (eg manual/automatic), goods/passenger, capacity, floors served.

If standby-generating plant is provided, referencers should note voltage, power, rpm and age.

3. Basis of Valuation

Hospitals and In-Patient Clinics

The Contractors Basis will normally be the principle method of valuation except where rental evidence exists. Guidance on the approach to the contractors basis is set out in Practice Notes 5:840:1 and 5:840:2 1995 (NHS) and 5:840:2 and 5:840:4 1995 (Private). Comparison cannot normally be made between NHS and private hospitals because of the following essential differences: -

  • Private hospitals require a predominance of single patient rooms often with a high proportion of private bathrooms.
  • NHS hospitals tend to be significantly larger than private hospitals.

For the avoidance of doubt, private hospitals, which did not fall into the National Co-ordination class because they lack an operating theatre and/or have less than 10 bed spaces, should nevertheless be valued in accordance with the guidance contained in the Practice Note, unless rental evidence is available. Where any hospitals resemble nursing homes, care should be taken to ensure that a value consistent with that class is adopted.

Ambulance Stations

It will normally be possible to value by reference to commercial properties which are rebus sic stantibus similar and for which rental evidence exists. Where no such comparison can be made the contractors basis should be used and guidance on the application of this basis is provided in Practice Note 5:840:1.

NHS and Private Out-Patient Clinics and Health Centres (not occupied by general practitioners)

Rental evidence may be available for certain private and NHS clinics. Other hereditaments may be rebus sic stantibus similar to GP health centres/surgeries and may be valued by reference to that class (see below). Where no such comparison can be made the Contractors Basis should be used and guidance on the application of this basis is provided in Practice Note 5:840:1 and 5:840:2:1995.

Surgeries and Health Centres occupied by general practitioners

Rental evidence is normally available and the rental/comparative method is the normal approach to valuation. VOs should ensure consistency with valuations prepared for the Doctors Rent and Rates Scheme. These properties should be valued by reference to PN 6: 2005

NB there is some over lap between GP Surgeries and health centres and trust Health Centres and clinics and this is outlined in PN2 and PN6 to this section and their appendices

Nursing Homes, Maternity Homes, Convalescent Homes

Many nursing homes are likely to be wholly or predominantly domestic, but those receiving short stay patients, and in particular maternity/convalescent homes, are likely to be composite or wholly non-domestic.

The valuation of this type of property will normally fall to be made on either the rental method or the contractors basis. A profits basis of valuation will not be applicable.

The rental method should be adopted wherever there is sufficient evidence to provide a basis of valuation. It will be necessary to carefully examine the value derived from this method of valuation in order to be satisfied that it reasonably represents the rental value of the property and that assessments derived from the rental and contractors basis methods are not inconsistent with one another.

Where the contractors basis of valuation is adopted, regard should be had to the provisions of section 4 part 3 of the Rating Manual. The VO Cost Guide provides advice on this class - see Section 6:170/1.

Private Eye Hospitals and Clinics

Eye clinic/hospital operators will generally take either existing or new buildings and adapt them as necessary to make them fit for purpose. Many of these buildings particularly those located within town centres or on business parks will be taken on lease and rental evidence relating to the occupation will be available. As a consequence this class of property should, in the main, be valued by reference to the rentals method either directly by reference to passing rent(adjusted as necessary for tenants improvements, rent date etc) or by way of comparison. Exceptionally where there is no rent passing and the building is in such a location and of such a nature that comparison cannot be drawn with rented property in the same mode or category of use elsewhere then the contractors method may be utilised. Further advice on the adoption of the contractors method is given below.

Contractors Method

Where , exceptionally, the contractors method is adopted regard should not be had to the guidance given in this practice note in relation to private hospitals. Reference should be made to the appropriate specialist in NSU in order to obtain guidance as to the costs to adopt and RM4 Section 7 for general advice and guidance on the application of the method.

The decapitalisation rate(decap rate) to be adopted within the valuation will differ according to the nature of the procedures carried out. In order to qualify for the lower decap rate the use must satisfy the provisions of “The Non –Domestic Rating (Miscellaneous Provisions (No 2) Amendment Regulations 1994 –SI1994” and in particular the definition of a healthcare hereditament set out in paragraph (6) -

.”healthcare hereditament” means a hereditament constructed or adapted wholly or mainly either—

a) for the reception or treatment of persons suffering from any illness, injury or infirmity; or

(b) as a maternity home, and used for such a purpose”

Laser eye surgery is mostly used to correct Myopia (Shortsightedness), it is a procedure that is not available on the NHS and is not considered to be an illness, injury or infirmity. Similarly cosmetic eye surgery used to enhance appearance is not treatment of an illness, injury or infirmity. Consequently the lower decap rate should not be employed when using the contractors method in the valuation of those clinics or hospitals where patients receiving laser eye or cosmetic surgery are in the majority. It is thought the majority of private eye clinics/hospitals will fall into this category although some may continue to concentrate on recognised medical conditions such as cataracts, glaucoma, optical nerve disorders, detached retinas etc and where these procedures are in the majority the application of the lower decap rate will be appropriate.

Further guidance can be obtained from the appropriate specialist in NSU.

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

4. Valuation Considerations

4.1 Decapitalisation rate in Contractor’s Basis Valuations

See Appendix 2 (5:840:2), Practice Note 3: 1990 and Practice Note 5: 1995 for details of the prescribed decapitalisation rates applicable to these hereditaments.

4.2 Exemption - Property used for the Disabled

4.2.1 Under Para 16 Sch 5 LGFA 1988, property used for the disabled, including parts of a hereditament wholly used for qualifying purposes, are exempt. Health Authorities have been requested to provide plans delineating areas which are believed to be used for qualifying purposes and brief notes of the uses to which those areas are put and the extent and frequency of any other use. To identify the scope for exemption, an inspection is required during which careful note should be taken of the nature and extent of any qualifying uses, and of the nature and frequency of any other uses of the same areas. VOs should ensure: * That any property which the Health Authority claims to be used for the disabled is in fact wholly used for qualifying purposes. * That exemption is extended to property used similarly which is not mentioned in any response already received from a Health Authority.

4.2.2 The Scope for Exemption

A hereditament is exempt if it is used wholly for any of the following purposes:- * the provision of facilities for training or keeping suitably occupied persons who are disabled or who have been suffering from illness, * The provision of welfare services for disabled persons, * The provision of facilities under Section 15 Disabled Persons (Employment) Act 1958, * The provision of a workshop or other facilities under Section 3(1) Disabled Persons (Employment) Act 1958.

4.2.3 Definitions

A person is “disabled” if:-

  • Blind, deaf or dumb,
  • Suffering from mental disorder of any description, or
  • Substantially or permanently handicapped by illness, injury, congenital deformity or any other disability prescribed for the purposes of Section 29(1) National Assistance Act 1948.

“Illness” has the meaning given in Section 128(1) National Health Service Act 1977.

“Welfare services for disabled persons” means services or facilities (by whomsoever provided) of a kind which a local authority has power to provide under Section 29 National Assistance Act 1948.

It is possible for property to qualify for exemption even though it is not physically used by the disabled, or ancillary to property that is so used. The pertinent test is whether the property is used for promoting the welfare of the disabled. However, a hereditament will only be exempt to the extent that the services and facilities for promoting the welfare of the disabled are of a kind that a local authority is empowered to provide by virtue of section 29(1) National Assistance Act 1948. Facilities in respect of which a local authority may NOT make arrangements under s.29 include the provision of the services required to be provided under the National Health Service Act 1977. Section 3(1) of the 1977 Act specifies the Secretary of State’s duty in this respect, which includes, inter alia, the provision of hospital and other accommodation, facilities for the prevention of illness and the care and after care of persons suffering from illness, and such other services as are required for the diagnosis and treatment of illness.

4.3 Unoccupied NHS Property

NHS bodies are not entitled to any special exemption from unoccupied property rate and enjoy only the same specific exemptions available to other ratepayers contained in the Non-Domestic Rating (Unoccupied Property) Regulations (SI 1989 No 2261).

There should be a prima facie assumption that mere vacation of premises has no affect on their RV. The only exception to this rule is where the property is of a specialised type for which no demand exists rebus sic stantibus, and where one or both of the following conditions apply:

  • if the premises were vacated on or before the AVD, have not subsequently been occupied, and are not being held for future occupation,
  • if occupancy ceases because of material changes of circumstances post AVD, eg the completion of alternative premises in the locality, which would have eliminated demand for the subject property at the AVD.

Where a or b apply and there is no demand for alternative uses for the hereditament as a whole, the unused property should be treated as of no value and should be excluded from costing. Where clinical space is unused for the purpose for which it was designed, and is used solely for storage, the relevant block or portion thereof should be costed as storage space, unless at AVD storage use was temporary and clinical use was to be resumed.

Care should be taken to avoid double counting where unused space has been reflected in obsolescence allowances.

4.4 The Boundary Between Domestic and Non-Domestic Property

4.4.1 Identifying Domestic and Non Domestic property

Having eliminated from GIA the areas, which are exempt under LGFA 1988 Sch 5 paras 11 and 16, the value attributable to the non-domestic use within hospitals and health care hereditaments shall be found by excluding certain areas from GIA as follows:

Areas wholly used for domestic purposes shall be excluded from the GIA. These consist of: a. All wards and patient bedrooms normally used by patients who have no residence elsewhere, or for periods of more than 60 days by patients with homes elsewhere, or for terminal care patients. b. Ward sisters’ stations associated with wards falling within (a) above. c. Stores whether for drugs, dressings or cleaning materials which are ancillary to a ward or wards falling within (a) above, but not central stores, unless the hospital falls within (d) below. d. where all patients treated in the hospital fall within category (a) above, all stores and all ancillary offices, except those offices used exclusively for or in connection with treatment of patients, personnel administration, clinical research, or staff training. e. Permanent living accommodation for staff, (but not “on-call” accommodation). f. Day rooms, libraries, hobby rooms, wholly used by patients accommodated in wards/rooms falling within (a) (to the extent to which they are not exempt under Sch5 para 16). g. Kitchens and canteens, boiler houses, on-site laundries wholly serving patients accommodated in wards/rooms falling within (a) above and/or staff housed in accommodation within (e) above.

4.4.2 Visitors Accommodation

Some institutions provide accommodation for patients’ visitors. While in principle this should be regarded as non-domestic property, the de minimis rule should be applied so as to disregard any such non-domestic use where the hereditament is otherwise wholly domestic.

4.4.3 Patient accommodation within private acute care hospitals

All patient accommodation in private acute hospitals is likely to be short stay and may be treated as non-domestic.

4.4.4 Accommodation for the terminally ill - respite care

Accommodation in hospices and other institutions which is provided for terminally ill patients may be regarded as long stay, and therefore domestic, unless offering “respite” care, i.e. temporary provision for patients, giving relief to their permanent carers.

4.4.5 Valuation by reference to General Patterns of use

If the hereditament has been identified as comprising both domestic and non-domestic property, it is composite and should be valued on the basis of a notional distribution of uses. Since institutional hereditaments are not a bulk class, it is unlikely there will be sufficient information from other hereditaments on which to base a notional distribution of uses. Instead the objective should be to adopt the distribution of uses, which is the norm for the actual hereditament; minor fluctuations in the proportion of non-domestic to domestic use and its distribution within the hereditament may therefore be ignored.

4.4.6 LGFA 1988 (Sch 6 para 2(1)A) provides that the RV of a composite shall be the amount which would reasonably be attributable to the non-domestic use of the property. In the case of non-domestic property within composite hereditaments, this may be taken to be full value of that property.

4.4.7 Wards used partly for domestic purposes should be partly excluded from GIA. The wards falling within this category will be those normally used at 1/4/93 by certain patients who have no residence elsewhere, or for periods of more than 60 days by patients with homes elsewhere. The remainder of such wards will normally accommodate patients staying for periods of 60 days or less and will constitute non-domestic property. The area to be excluded from GIA will be found by applying to the total floor area of the ward the following fraction:

Usual number of long stay patients in ward

Usual total number of patients in ward

4.4.8 Accommodation described in (b) or (c) above, but serving a ward or wards falling within para 2 rather than 1(a), shall be excluded from GIA to the extent of the floor area of the accommodation multiplied by the fraction in para 2 above, having regard to all wards served.

4.4.9 Accommodation described in (f) and/or (g) above but used by, or for, both long and short stay patients shall be excluded from GIA to the extent of the total area of the accommodation multiplied by the following fraction:

Usual annual number of long stay patient days

Usual total annual number of patient days

4.4.10 Where all EFA within a block is to be excluded from GIA in accordance with 1(a)-(g) above, the whole block is to be excluded from valuation. Where only part of the EFA within the block is to be excluded in accordance with 1 to 4 above, the area excluded within the block should be the GIA of the block multiplied by the following fraction:

EFA of areas to be excluded

Total EFA of the block.

4.4.11 If it is impractical to calculate the total EFA of the block or floor, the area excluded should be increased by 20% to give a notional GIA reflecting shared access. Where it is more convenient to ascertain the non-domestic area within a “composite” building directly rather than by deducting the domestic area, the appropriate GIA may be found by adding 20% to the non-domestic EFA.

4.4.12 For the purpose of these provisions, GIA will be as defined in the RICS Code of Measuring Practice, and EFA will equate to NIA as defined in that code but including all bathrooms, sluices and WCs situated within wards, or used exclusively for the purposes of particular wards, and excluding all corridors providing access to any areas defined in paras 1 - 4 above, or to other parts of the hospital.

Practice note 1: 2017 - NHS hospitals

1. Market Appraisal

The has been a significant change in the quality of buildings concerned with health care provision since 2008/10, as recognised in the 2010 Practice Note by way of the individual consideration of the costs of those hospitals built after 1/4/2010.

This is manifest in the improvement in the quality of hospitals, both acute and non-acute, with the greater provision of single en-suite patient bedrooms to reduce the risk of infection and improve the dignity of patients. The changes in building regulations relating to energy conservation, the green agenda generally and the desire to provide accommodation which meets BREEAM excellent accreditation standards have also impacted upon both the quality and cost of hospital buildings.

As would be expected, the drive to be efficient as possible and make the most of limited resources has also driven changes to the NHS estate

In Wales, Health Boards that have more than one acute hospital within their geographical area are concentrating resources within one hospital to develop it to a standard commensurate with recognised regional excellence in a particular field. For example:

1.Rather than spread the budget for cardiac medicine across three hospitals it is now transferred to one and patients are expected to travel to their regional centre of excellence for cardiac care. 2. Maternity Units are likewise being transferred to one hospital to provide dedicated natal care, the other hospital’s maternity unit is then downgraded to a midwife led unit.

However, rather than create one “super-hospital”, these centres of excellence are shared with each hospital having their own field of excellence.

Conversely there have been two non-acute hospitals recently built in South Wales which have more in common with acute hospitals than community hospitals having regard to their size and facilities on offer. They don’t satisfy the description of acute but their costs will be far higher than those we traditionally regard as community.

Further changes have seen:

1.The closure of small traditional “cottage” hospitals with the in-patient care relocated into new Health Care Centres. These Centres house in-patient wards, GP surgeries, dentists etc. 2.In-patient care being transferred to private hospitals who sub-let space to the Health Board to provide a MIU (Minor Injuries Unit)

The provisions of the Health and Social Care Act 2008 and subsequent associated regulations have resulted in greater involvement of the private sector in NHS provision with some treatments and procedures now taking place in non NHS facilities.

2. Changes from the 2010 list practice note

a. Following legal advice provided by leading Counsel in September 2015, the VOA has changed its policy in respect of the treatment of composites in hospitals and health care hereditaments generally. Counsel advise that “treatment” falling within the definition below should be regarded as a non-domestic use of property:

“Treatment” means treatment in its normal sense and therefore includes, but is not limited to, any medical intervention, diagnostic care or observation undertaken by professional staff in hospitals, including doctors, nurses, midwives, therapists and psychologists, designed to improve or modify patients’ physical and/or mental abilities and social functions. This definition includes, but is not limited to nursing (which includes aiding convalescence), psychological interventions, physiotherapy and other sorts of therapy including habilitation and rehabilitation”

A period of 60 days remains a fair determinant of short-stay accommodation. Therefore for hospital ward space to qualify as domestic property within s66 of the Local Government Finance Act 1988 it will be necessary to establish that patient stays are in excess of 60 days while not receiving “treatment” within the definition for that period or more. This is thought to be extremely unlikely.

Consequently ward space and ancillary accommodation which was previously apportioned between domestic and non-domestic use should now be treated as solely non-domestic use and assessed accordingly.

The exception to this is the bedrooms/wards within some psychiatric hospitals where no treatment as defined takes place. In these circumstances the accommodation will continue to be treated as domestic and the hereditament as a whole as a composite property. The apportionment between domestic and non –domestic accommodation should then proceed in accordance with the guidance given in the section in the Rating Manual dealing with this class. Where there is doubt as to whether or not parts of a hospital should be treated as domestic accommodation guidance should be sought from the appropriate specialist in NSU.

The change in policy recognises the significant changes that have taken place in healthcare provision since the policy was first formulated some 25 years ago. The incidence of hospitals providing “care” as opposed to “treatment”, for example, the old style geriatric wards, is now thought to be very much a feature of the past.

Permanent staff accommodation (but not temporary accommodation provided for “on-call” staff or patients’ relatives) should continue to be treated as domestic accommodation and where this is present the hereditament is to be regarded as a composite property. However it is considered that the number of hospitals currently shown in the 2010 Rating List as composite will be significantly reduced in the 2017 Rating List.

The interpretation and application of exemption under paragraph 16 of Schedule 5 of LGFA remains unaltered and should continue to be applied in appropriate circumstances.

b. The costs to be applied at stage 1 of the contractors basis relate to the modern substitute and do not relate to the cost of replacing the actual building as was the approach adopted for the 2010 List. c) The age and obsolescence allowances applied at stage 2 now reflect all of the attributes and disadvantages of the actual hereditament in comparison with the modern substitute.

c. The Multi floor allowance has been dispensed with. Research and discussion with NHS staff indicate that subject to lift provision being adequate an allowance is not appropriate either on operational or cost grounds.

d. Multi-storey car parks are now to be cost and incorporated where they are present irrespective of location.

e. Although the requirement to ensure that the correct unit of assessment is identified and valued has not altered, the changing face of how hospitals are occupied and managed has resulted in more diverse occupation within NHS facilities. Reference should be made to RM Section 840 for further guidance.

f. References to cost adjustments relating to wards with over 30% long stay have been removed as are no longer relevant or appropriate

g. The grounds for possible end allowances at stage 5 of the contractors basis have been reviewed and amended.

3. Ratepayer discussions

No discussions have taken place with Hospital Trusts or their representatives

4. Method of valuation

4.1 Rentals Method

In the years preceding the AVD a number of small hospitals, normally forming part of comprehensive community hubs have been developed by 3rd party developers and leased to the Hospital Trust. Where such arrangements exist the lease and rent passing should be fully researched and where it can be demonstrated that the rent, adjusted as necessary, represents the value of the occupation to the occupier, the hospital should be assessed using the rentals method.

Other hospitals of similar age size and type in the locality may be assessed using the same method to the extent that comparability allows.

However it is expected that no rental evidence will exist to assist in the assessment of the majority of hospitals. With no profit motive in the majority of instances, the contractors basis should be applied in accordance with the following guidance.

4.2 The contractors basis

a) Stage 1

The costs to be applied to the GIA of the accommodation blocks within the hospital will depend upon the type of facility under consideration and the standard of construction. The costs and associated guidance notes are contained in Appendix 1 to this practice note.

The adjustments for location are detailed in the 2017 Cost Guide, along with contract size adjustments. The addition for external works is given in Appendix 2. Fees are to be added for in accordance with the 2017 Cost Guide.

The costs shown in this section are for ease of reference. In all cases where a cost guide code is shown this must be input into the NBS template, not the costs shown here. Where the cost guide code shows options, the costs shown in this practice note should be used to aid selection. Should the cost guide show different costs to those shown in a current version of this practice note, please refer to the Class Co-ordination Team (CCT).

b) Stage 2

The standard age and obsolescence allowances to be applied to the ERC of the individual blocks of permanent buildings are set out in Rating Manual: section 4 part 3: The Contractor’s Basis of Valuation: R2017 Practice Note: Stage 2 - Age and Obsolescence Allowances. Appendix 3 gives guidance on the application of the scale and details the allowances to be applied to temporary buildings

c) Stage 3

The value of the developed land and undeveloped land, apportioned in respect of the hospital hereditaments non- domestic use, shall be added in accordance with Appendix 4.

d) Stage 4

The lower statutory de-capitalisation rate shall be applied to the total of the ARC of the buildings and the adjusted land value to give an annual equivalent value.

e) Stage 5

Appropriate adjustments may be made to the annual equivalent value to take account of any disabilities or attributes not reflected in the previous 4 stages of the valuation to arrive at the rateable value. Guidance on the application of stage 5 allowances is contained in Appendix 5.

Valuation Spreadsheet

Contractors based valuations of NHS Hospitals are to be completed exclusively on the dedicated valuation spreadsheet held on the VOA Non- Bulk Server. The spreadsheet incorporates considerable functionality to assist the valuation process.

Practice note 1: 2017: NHS hospitals: appendix 1

Stage 1 Build Costs

Item Cost Guide Reference £/m2 Remarks
Acute Hospitals New  hospitals completed exclusively in the period 1/4/2010 to 1/4/2017 with a high proportion of en- suite single bed wards. Hospitals built and completed prior to 1/4/2010   98H001   N/A   £3436   £1753     See guidance notes below. Cost may not apply to hospitals completed post 1/4/2017
Community Hospitals excluding operating theatre New  hospitals completed exclusively in the period 1/4/2010 to 1/4/2017 with a high proportion of en- suite single bed wards. Hospitals built and completed prior to 1/4/2010   98H002 N/A   £2933 £1410   See guidance note (11) below. Cost may not apply to hospitals completed post 1/4/2017
Operating theatre within community hospitals 98H003 £2887 This is an additional sum to be added to the basic £/m2 applicable to the community hospital. It should be applied to the entire theatre suite including the recuperation ward not only the theatres themselves
Education and nurse training buildings 98H004 £1780 Not to be applied to post graduate facilities
Medium /high secure mental health units New  hospitals completed exclusively in the period 1/4/2010 to 1/4/2017 with a high proportion of en- suite single bed wards. Hospitals built and completed prior to 1/4/2010     98H005   N/A   £2933   £1410   See guidance notes below. Cost may not apply to hospitals completed post 1/4/2017
Temporary buildings- 98H006 £ 684  
Stores and other inferior buildings. (separate or distinct stores, plant rooms, workshops, offices of inferior construction and garages) 98H007 £ 505 Plant rooms are to be cost at the hospital main rate unless separate and distinct buildings. Energy centres and large boiler houses should be cost at the main rate whether a stand- alone building or not
EMS (Second World War emergency medical services) buildings 98H008 £ 421  
“Oxford and Best Buy”  buildings N/A   See guidance note 10 below
Other system buildings (e.g.”Yorkon”) 98H010 £3308 See guidance note 9 below
Multi-storey car parks   Basement car parks 98H011   98H012 £670/m2 or £15069 per space £786/m2 or £17669 per space      

Guidance Notes

  1. Definition of Acute Hospital

There is no official definition within the NHS of an Acute Hospital. Typically a hospital coming within this description provides a wide range of specialist care and treatment for patients that may include routine, complex and life saving surgery and specialist diagnostic procedures and treatment. Although some consultations and treatments may be undertaken on an outpatient basis, an Acute Hospital will usually have a significant inpatient resource for observation, treatment and recovery. Acute Hospitals may also be teaching or university hospitals reflecting the opportunities they afford to provide medical training in general and specialist areas.

The distinguishing features of these hospitals usually include:

  • Major operating theatres, full A&E, ICU & HDU facilities.
  • Of significant importance within the Trust.
  • Substantial general wards.

In most instances the status of a hospital will have been established in the 2005 List and is unlikely to have changed. In cases of doubt caseworkers should in the first instance refer to their Technical Advisers for further guidance.

2) Minor operation rooms /suites within non-acute hospitals which do not vary significantly as regards quality/specification from the remainder of the hospital, should be cost at the standard rather than operating theatre level. Where an operating theatre is of a standard commensurate with that expected in an acute hospital, the operating theatre cost should be applied to the area of the entire theatre suite.

3) Minor Out Buildings such as meter houses, bottle stores, small (i.e. less than 26 sq ms) sheds and stores etc. should not be cost, as they are included within the external works addition. All other buildings should be cost as main buildings

4) Day surgery and minor operations units are rarely “free standing” and normally form part of a larger hospital in which case they would be cost on the appropriate scale.

5) Link blocks and subways that contain no areas that are used for any purpose other than for passage between adjoining blocks should be left out of the costing exercise. This omission is justified because their presence is dictated by the absence of a uniform design and denotes an attempt to reduce the drawbacks of dispersal that would not have arisen if the hospital had been designed as an integral whole. Exceptionally the GIA of link blocks or subways should be included where they are original components of a unified design.

6) Where plant rooms are located within the main envelope of the hospital building and the GIA of the floor space used for that purpose exceeds 10% of the total GIA of the hospital building, consideration should be given to the exclusion of the excess GIA from the valuation. Such an approach will only be appropriate where it is clear that the excess floor space is surplus to the current requirements of the hospital.

7) New hospitals completed after 1/4/2017 are to be cost having regard to actual build costs

8) Where an existing hospital built prior to 1/4/2010 is extended it is for the case worker to exercise judgement as to the appropriate cost to apply to that extension. Where for example the addition comprises a large new standalone facility then it would be appropriate to apply the higher post 1/4/2010 cost. However if a minor extension then it would be appropriate to apply the cost as applied to the existing facility.

9) The cost applied to a “Yorkon” and other systems buildings should not exceed the cost which would be applied to the building had it been of traditional construction i.e. In the case of community and psychiatric hospitals the cost applied should not exceed £2,933.

10) Where a building is of Oxford or Best Buy systems built construction an allowance from the appropriate cost for the type of hospital concerned as given in the table above shall be made as follows

Pre 1960 -16.5%
1960-1964 -16.5%
1965-1969 -16.5%
1970-1974 -16.5%
1975-1980 -10%
1981 onwards -27.5%

11) Some community hospitals built post 1/4/2010 provide a significant number of facilities previously associated only with acute hospitals and are distinguished from acute hospitals only by scale. These hospitals should also be valued using the acute hospital costs.

Practice note 1: 2017 - NHS hospitals appendix 2

External Works

The following additions are to be made to the location adjusted building costs in respect of external works.

% Town centre or island site with 90% or greater building ratio, typically with 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 staff parking, external lighting and landscaping with limited general parking within the hereditament and boundary fencing.
7.5% As above, but typically with 25%to 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.

Guidance Notes

1.Building ratio for this purpose should be taken to be aggregate total GIA (including domestic property within a composite hereditament) expressed as a percentage of total developed land area (excluding any surplus, unnecessary or unwanted land). Some hospitals that suffer from a fragmented layout including a number of minor low-rise buildings may have relatively low site ratios. This may result in artificially high additions for external works. In such circumstances a specific additional allowance will be required at Stage 5 of the valuation in order to eliminate the cost of any external features not required in a modern rationally planned substitute.

  1. Where car-parking provision is below the standard stipulated above as typical for the building plot ratio the above percentages may be abated but to no less than the next lowest figure. Where parking provision is improved, without altering the building plot ratio, the percentages may be increased but to no more than the next highest figure.

Practice note 1: 2017: NHS hospitals: appendix 3

Age and Obsolescence Allowances

The age and obsolescence allowances to be applied to the individual building blocks after addition for external works and fees are dependent upon the nature of the building (i.e. permanent, temporary or specified system built). For the avoidance of doubt the age of the building is to be taken as the date the building was completed. NB This is a change from the 2010 instructions so care should be taken to ensure the correct year is entered on the NBS.

The standard age related scale in respect of permanent buildings is set out in Rating Manual: section 4 part 7 The Contractor’s Basis of Valuation: R2017 Practice Note: Stage 2 - Age and Obsolescence Allowances.

Temporary Buildings

Year of Building Completion % Age and Obsolescence Allowance Year of Building Completion % Age and Obsolescence Allowance Year of Building Completion % Age and Obsolescence Allowance
2016 1.5 2002 22.5 1988 43.5
2015 3.0 2001 24.0 1987 45.0
2014 4.5 2000 25.5 1986 46.5
2013 6.0 1999 27.0 1985 48.0
2012 7.5 1998 28.5 1984 49.5
2011 9.0 1997 30.0 1983 51.0
2010 10.5 1996 31.5 1982 52.5
2009 12.0 1995 33.0 1981 54.0
2008 13.5 1994 34.5 1980 55.5
2007 15.0 1993 36.0 1979 57.0
2006 16.5 1992 37.5 1978 58.5
2005 18.0 1991 39.0 Pre 1978 60.0
2004 19.5 1990 40.5    
2003 21.0 1989 42.0    

Systems Buildings

For “Oxford” or “Best Buy” system-built structures, the allowances given above may be increased; by a further 10% where the block was built before 1992, and by up to a further 7.5% where the block was built 1992-2002. Any other systems built structures should be treated as permanent buildings unless accelerated age and obsolescence is apparent and proven.

Guidance Notes

Guidance Notes to the Application of Age and Obsolescence Allowances to both Permanent and Temporary Buildings

  1. There may be exceptional cases e.g. substantially un-modernised pre-1960 buildings, or buildings pending redevelopment, where an allowance in excess of 50% would be justified.

When considering if a building falls into the category of “substantially un-modernised” regard should be had to the following-

The hypothetical tenant is deemed to have maintained the hereditament in good order not only to command the original rent but to enable it to provide modern healthcare; to do this pre-1960 buildings will be expected to have had an upgraded electrical supply, replacement floor coverings and sanitary fittings during their life-cycle. As these are the minimum expectations, the presence of any of these works carried out more than 15/20 years earlier can be disregarded in determining if the building is substantially un-modernised as can work carried out to ensure compliance with all Fire and Health & Safety regulations.

To qualify for an age/obsolescence allowance in excess of 50% it is expected that the building will predominantly have the following: * original roof covering * original windows * original internal layout * original ceiling height, with no suspended ceilings * no air conditioning or air circulation system

  1. Where a block built before 1988 has been the subject of a high level of modernisation or refurbishment after 1 April 2002, the age and obsolescence allowance should be reduced. A more significant reduction in this allowance may be warranted where a very major scheme has been undertaken such as the external re-cladding of a 1960s building. Essentially these are matters of judgement informed by a site inspection.

  2. Special treatment may be warranted where a hospital was designed during an age range prior to that in which it is completed.

  3. Care should be taken to avoid double counting between this stage and stages 1 and 5, particularly in respect of fragmentation/dispersal/poor layout. Where these problems are found within blocks, and are caused by bad internal design, they should normally be regarded as reflected in the age-related costs set out in para 1.1.1 although particular problems evidenced by difficult communications between departments within the block may justify consideration for a further allowance at stage 5.

  4. For buildings where there is specific evidence of functional redundancy beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where, for example, modern health and safety, fire or building regulations preclude or limit the original purpose of the building.

  5. Extensions are to be given the allowance appropriate to their age unless of a lower specification than would be expected of a building of that age in which case the allowance should be increased to a level appropriate to reflect the specification of the building.

  6. It may be necessary to consider increasing the level of allowance where a hospital was designed many years prior to completion.

  7. The allowance maybe increased by up to 20% for single storey and 25% for multi-storey pre 1959 built community hospitals where the building is sub-divided internally into relatively small rooms. (For the avoidance of doubt, as an example, an allowance of 20% would be increased to 24% for single storey and 25% for multi-storey buildings)

Practice note 1: 2017: NHS hospitals: appendix 4

Developed Land Values

The value of the developed land, apportioned where appropriate in respect of its non-domestic/exempt use shall be taken to be the following percentages of the aggregate of the ARC of all buildings and external works:

Geographic Area in which hospital is located Acute Hospitals Non-acute hospitals & mental health units /psychiatric hospitals
  Post1/4/2010 Pre1/4/2010 Post 1/4/2010 Pre 1/4/2010
Central London N 10.00%     20.00% 12.00% 25.00%
Central London S   4.80%       9.50%   5.50% 11.75%
GLNW   8.00%     15.50% 10.00% 15.5%
GLSW   4.50%       9.00%   5.50%  9.00%
GLNE   6.00%      11.00%   7.00% 11.00%
GLSE   4.25%       8.00%   4.75%   8.00%
North East   0.75%       1.45%   0.85%   1.75%
North West   1.25%       2.40%   1.45%   2.90%
Yorkshire & Humberside   1.15%       2.20%   1.35%   2.70%
East Midlands   1.20%       2.30%   1.40%   2.80%
West Midlands   1.50%       2.80%   1.80%   3.50%
East of England   1.90%       3.60%   2.30%   4.50%
South East   2.50%       5.00%   3.20%   6.00%
South West   1.20%       2.30%   1.45%   2.80%
North Wales   0.75%       1.45%    0.85%   1.75%
South Wales   1.15%       2.20%   1.35%   2.70%
Cardiff   1.55%       2.85%   1.80%   3.60%

Guidance Note

The definition of the geographic areas referred to above is as per the 2017 Practice Note relating to land values.

Undeveloped Land Value

Where present apply amenity land values as given in the 2017 Practice Note relating to land values.

Practice note 1: 2017: NHS hospitals: appendix 5

Stage 5 End Allowances

Problems associated with dispersal of blocks within a hereditament, piecemeal development and lack of integrated design should be addressed at this stage. The allowance to be made in respect of these features should not normally exceed 15%.

End allowances will always be a subjective judgement to be made by the caseworker dealing with a particular case. Only they will have inspected the hospital and be familiar with any disadvantages it may suffer. When making these judgements, caseworkers may wish to bear in mind the following factors which are considered to be amongst the most relevant:

  • The total number of buildings on site.

  • The percentage of total floor area contained within any reasonably well designed central core building.

  • Superfluity may need to be reflected where it can be identified

  • General layout of the site from an operational viewpoint.

  • Quality and convenience of links between buildings.

  • General arrangement and degree of dispersal of the buildings.

  • The site slopes noticeably.

  • There is a wide mix of ages of buildings (this can make maintenance and servicing more difficult).

  • A particular cost arises solely due to fragmentation and dispersal eg. the cost of operating an in-site bus service due to the fragmented and/or steeply sloping nature of the site.

  • Location may be relevant but only in fairly rare cases eg. where access is particularly poor or where security problems or other specific nuisances arise due to the particular locality in which the hospital is located and where those nuisances might not be expected to arise elsewhere within the catchment area that the hospital serves.

  • Duplicated reception areas, and ancillaries, caused by dispersal (but bearing in mind that centralised reception areas are not a feature of larger hospitals, and that separate receptions for individual departments may be operationally required).

It should be noted that:

  • It is not necessarily considered to be a disadvantage to have distinct single separate blocks for mental health units, EMI, paediatric care, maternity, workshops/boiler house/storage provided that where appropriate, these have good quality links with relevant blocks eg. paediatric wards with operating theatres.

  • The presence of a number of dispersed small, low value ancillary buildings (e.g. Nissen huts) should have little impact on the overall percentage end allowance.

It is considered that the following factors, when considered in isolation, will not usually warrant any end allowance:

A hospital that is constructed on a gently sloping site.

  • Where a hospital is “as designed”, where all buildings are linked and are of a similar age.
  • For large acute hospitals, piecemeal development up to 10 separate buildings (more extensive piecemeal development would however be likely to warrant an end allowance).

It should be emphasised that the above factors would only fail to attract an end allowance where they are present in isolation. A combination of any of the above factors may well warrant an end allowance.

Practice note 2: 2017: Private hospitals

1. Market Appraisal

No great change to the main stream private healthcare market which continues to be dominated by the main providers, HCA, BMI, Spire (formed in 2007 out the sale of BUPA hospitals), Ramsey & Nuffield. So much so that the Competition and Markets Authority has reported that some hospitals within London face being sold off by HCA and BMI. Private healthcare market investigation Competition and Markets Authority case - GOV.UK.

  • 80% of private hospital patients have medical insurance, usually through AXA, BUPA, PRU Health or Aviva.

  • In addition to insurance backed patients there is a significant income stream from NHS patients which has shown steady growth over the past decade and accounts for in excess of a quarter of revenues. Possible reasons - In 2007 independent hospitals were included in the “Choose and Book” scheme open to NHS patients. The Health & Social Care Act 2012 brought about significant changes.

  • In 2013 the Health & Social Care Act (2012) came into force and resulted in a huge change of the NHS structure. Primary Care Trusts were abolished and Clinical Commissioning Groups established to deliver the national health service. See BMA - Understanding the NHS reforms. The Act removed the limit on private profits being earned by NHS Trusts. Thus we are likely to see an increase in private wings on NHS sites and an increase in services provided by the private sector.

Significant New builds

  • Circle Holdings Plc have developed two new sites since the previous AVD, at Bath and Reading. The Circle Bath hospital opened February 2010 (circa 6300m2) and the larger (circa 10,000m2) Circle Reading hospital opened August 2013. The latter has 5 operating theatres, 30 patient beds and diagnostic imaging.

  • Kent Institute of Medicine & Surgery, Maidstone, ME14 5TF – New independent hospital built on seven acre site (former farmland) opened April 2014. Circa 16,300m2 and includes 5 operating theatres, 72 inpatient beds, 20 day care beds, 7 ITU & HDU beds, full diagnostic imaging suites, serviced offices, post graduate education and conference centre.

Specialist Care Private Hospitals

  • These range from purpose built hospital to small converted dwellings dealing with specialist care centres providing behavioural and mental health services to various sectors of the population. Over the last few years there have been a consolidation in this sector with a number of mergers and acquisitions such that the leading providers now occupy multiple hospitals and specialist care homes cares.

2. Changes from the 2010 list practice note

a) Following legal advice provided by leading Counsel in September 2015, the VOA has changed its policy in respect of the treatment of composites in hospitals and health care hereditaments generally. Counsel advise that “treatment” falling within the definition below should be regarded as a non-domestic use of property:

“Treatment” means treatment in its normal sense and therefore includes, but is not limited to, any medical intervention, diagnostic care or observation undertaken by professional staff in hospitals, including doctors, nurses, midwives, therapists and psychologists, designed to improve or modify patients’ physical and/or mental abilities and social functions. This definition includes, but is not limited to nursing (which includes aiding convalescence), psychological interventions, physiotherapy and other sorts of therapy including habilitation and rehabilitation”

A period of 60 days remains a fair determinant of short-stay accommodation. Therefore for hospital ward space to qualify as domestic property within s66 of the Local Government Finance Act 1988 it will be necessary to establish that patient stays are in excess of 60 days while not receiving “treatment” within the definition for that period or more. This is thought to be extremely unlikely.

Consequently ward space and ancillary accommodation which was previously apportioned between domestic and non-domestic use should now be treated as solely non-domestic use and assessed accordingly.

The exception to this is the bedrooms/wards within some psychiatric hospitals where no treatment as defined takes place. In these circumstances the accommodation will continue to be treated as domestic and the hereditament as a whole as a composite property. The apportionment between domestic and non –domestic accommodation should then proceed in accordance with the guidance given in the section in the Rating Manual dealing with this class . Where there is doubt as to whether or not parts of a hospital should be treated as domestic accommodation guidance should be sought from the appropriate specialist in NSU.

The change in policy recognises the significant changes that have taken place in healthcare provision since the policy was first formulated some 25 years ago. The incidence of hospitals providing “care” as opposed to “treatment”, for example the old style geriatric wards, is now thought to be very much a feature of the past.

Permanent staff accommodation (but not temporary accommodation provided for “on-call” staff or patients’ relatives) should continue to be treated as domestic accommodation and where this is present the hereditament is to be regarded as a composite property. However it is considered that the number of hospitals currently shown in the 2010 Rating List as composite will be significantly reduced in the 2017 Rating List.

The interpretation and application of exemption under paragraph 16 of Schedule 5 of LGFA remains unaltered and should continue to be applied in appropriate circumstances.

b) The costs to be applied at stage 1 of the contractors basis relate to the modern substitute and do not relate to the cost of replacing the actual building as was the approach adopted for the 2010 List.

c) The age and obsolescence allowances applied at stage 2 now reflect all of the attributes and disadvantages of the actual hereditament in comparison with the modern substitute.

d) The Multi floor allowance has been dispensed with. Research and discussion with staff indicate that subject to lift provision being adequate an allowance is not appropriate either on operational or cost grounds.

e) Multi-storey car parks are now to be cost and incorporated where they are present irrespective of location.

f) The grounds for possible end allowances at stage 5 of the contractors basis have been reviewed and amended as necessary.

3. Ratepayer Discussions

No discussions have taken place with individuals or bodies which occupy private hospitals or their appointed representatives.

4. Method of Valuation

a) Rentals Method

In the years preceding the AVD a number of smaller specialised facilities have been built to treat both private patients and referred NHS patients sometimes within the confines of NHS hospitals. Some of these facilities have been developed by 3rd party developers and leased to the provider. Where such arrangements exist the lease and rent passing should be fully researched and where it can be demonstrated that the rent, adjusted as necessary, represents the value of the occupation to the occupier, the hospital should be assessed using the rentals method. Other hospitals of similar age size and type in the locality may be assessed using the same method to the extent that comparability allows.

Eye hospitals and clinics should be assessed in accordance with the dedicated section of the Rating Manual.

Rental evidence of a broader nature including that relating to larger private hospitals may exist in central London and should be fully investigated and applied where appropriate.

However it is expected that no rental evidence will exist to assist in the assessment of the majority of hospitals where the Contractors basis should be applied in accordance with the following guidance.

b) The Contractors Basis

a) Stage 1

The costs to be applied to the GIA of the accommodation blocks within the hospital will depend upon the type of facility under consideration and the standard of construction. The costs and associated guidance notes are contained in Appendix 1 to this practice note. The adjustments for location are detailed in the 2017 Cost Guide, along with contract size adjustments. The addition for external works is given in Appendix 2. Fees are to be added for in accordance with the 2017 Cost Guide.

The costs shown in this section are for ease of reference. In all cases where a cost guide code is shown this must be input into the NBS template, not the costs shown here. Where the cost guide code shows options, the costs shown in this practice note should be used to aid selection. Should the cost guide show different costs to those shown in a current version of this practice note, please refer to the Class Co-ordination Team (CCT).

b) Stage 2

The standard age and obsolescence allowances to be applied to the ERC of the individual blocks of permanent buildings are set out in Rating Manual: section 4 part 3 The Contractor’s Basis of Valuation: R2017 Practice Note: Stage 2 - Age and Obsolescence Allowances. Appendix 3 gives guidance on the application of the scale and details the allowances to be applied to temporary buildings.

c) Stage 3

The value of the developed land and undeveloped land, apportioned in respect of the hospital hereditaments non- domestic use, shall be added in accordance with Appendix 4.

d) Stage 4

The lower statutory de-capitalisation rate shall be applied to the total of the ARC of the buildings and the adjusted land value to give an annual equivalent value.

e) Stage 5

Appropriate adjustments may be made to the annual equivalent value to take account of any disabilities or attributes not reflected in the previous 4 stages of the valuation to arrive at the rateable value. Guidance on the application of stage 5 allowances is contained in Appendix 5.

Valuation Spreadsheet

Contractors based valuations of Private Hospitals are to be completed exclusively on the dedicated valuation spreadsheet held on the VOA Non- Bulk Server. The spreadsheet incorporates considerable functionality to assist the valuation process.

Appendix 1

Build Costs

The costs to be applied to the GIA of the accommodation blocks forming the hereditament are as follows-

Description Cost Guide Reference Cost £/m2 Remarks
Acute Hospitals New hospitals completed exclusively in the period 1/4/2010 to 1/4/2017 98H101 £3166 See guidance notes below. Cost may not apply to hospitals completed post 1/4/2017
Hospitals built and completed prior to 1/4/2010 N/A £1664  
Psychiatric Care Hospitals New hospitals completed exclusively in the period 1/4/2010 to 1/4/2017 98H102 £2933 See guidance notes below. Cost may not apply to hospitals completed post 1/4/2017
Hospitals built and completed prior to 1/4/2010 N/A £1498  
Other Hospitals (lacking operating theatres, HDU and X-Ray suites) New hospitals completed exclusively in the period 1/4/2010 to 1/4/2017 98H103 £2696 See guidance notes below. Cost may not apply to hospitals completed post 1/4/2017
Hospitals built and completed prior to 1/4/2010 N/A £1498  
Temporary Buildings 98H104 £684  
Stores and Other Inferior Buildings 98H105 £505  
Other System Buildings (e.g.”Yorkon”) 98H106 £3308 See guidance note 9 below.
Multi-storey car parks 98H107 £670  
Basement car parks 98H108 £786  

Guidance Notes

1) Definition of Acute Hospital. Typically a hospital coming within this description provides a wide range of specialist care and treatment for patients that may include routine, complex and life saving surgery and specialist diagnostic procedures and treatment. Although some consultations and treatments may be undertaken on an outpatient basis, an Acute Hospital will usually have a significant inpatient resource for observation, treatment and recovery.

The distinguishing features of these hospitals usually include:

  • Major operating theatres, ICU & HDU facilities.
  • Substantial general wards.

In most instances the status of a hospital will have been established in the 2005 List and is unlikely to have changed. In cases of doubt caseworkers should in the first instance refer to their Technical Advisers for further guidance.

2) Minor Outbuildings such as meter houses, bottle stores, small (i.e. less than 26 sq m) sheds and stores etc. should not be cost, as they are included within the external works addition. All other buildings should be cost as main buildings.

3) Day surgery and minor operations units are rarely “free standing” and normally form part of a larger hospital in which case they would be cost on the appropriate scale.

4) Link blocks and subways that contain no areas that are used for any purpose other than for passage between adjoining blocks should be left out of the costing exercise. This omission is justified because their presence is dictated by the absence of a uniform design and denotes an attempt to reduce the drawbacks of dispersal that would not have arisen if the hospital had been designed as an integral whole. Exceptionally the GIA of link blocks or subways should be included where they are original components of a unified design.

5) Where plant rooms are located within the main envelope of the hospital building and the GIA of the floor space used for that purpose exceeds 10% of the total GIA of the hospital building, consideration should be given to the exclusion of the excess GIA from the valuation. Such an approach will only be appropriate where it is clear that the excess floor space is surplus to the current requirements of the hospital.

6) New hospitals completed after 1/4/2017 are to be cost having regard to actual build costs.

7) Where an existing hospital built prior to 1/4/2010 is extended then it is for the case worker to exercise judgement as to the appropriate cost to apply to that extension. Where for example the addition comprises a large new standalone facility then it would be appropriate to apply the higher post 1/4/2010 cost. However if a minor extension then it would be appropriate to apply the cost as applied to the existing facility.

8) The cost applied to a “Yorkon” and other systems buildings should not exceed the cost which would be applied to the building had it been of traditional construction i.e. In the case of community and psychiatric hospitals the cost applied should not exceed £2696/£2,933.

Appendix 2

External Works

The following additions are to be made to the location adjusted building costs in respect of external works.

2% Town centre or island site with 90% or greater building ratio, typically with 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 staff parking, external lighting and landscaping with limited general parking within the hereditament and boundary fencing.
7.5% As above, but typically with 25%to 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.

Guidance Notes

1) Building ratio for this purpose should be taken to be aggregate total GIA (including domestic property within a composite hereditament) expressed as a percentage of total developed land area (excluding any surplus, unnecessary or unwanted land). Some hospitals that suffer from a fragmented layout including a number of minor low-rise buildings may have relatively low site ratios. This may result in artificially high additions for external works. In such circumstances a specific additional allowance will be required at Stage 5 of the valuation in order to eliminate the cost of any external features not required in a modern rationally planned substitute.

2) Where car-parking provision is below the standard stipulated above as typical for the building plot ratio the above percentages may be abated but to no less than the next lowest figure. Where parking provision is improved, without altering the building plot ratio, the percentages may be increased to but no more than the next highest figure.

Appendix 3

Age and Obsolescence Allowances

The age and obsolescence allowances to be applied to the individual building blocks after addition for external works and Fees are dependent upon the nature of the building (i.e. permanent, temporary or specified system built). For the avoidance of doubt the age of the building is to be taken as the date the building was completed. NB This is a change from the 2010 instructions so care should be taken to ensure the correct year is entered on the NBS.

The standard age related scale in respect of permanent buildings is set out in Rating Manual: Section 4 part 3: The Contractor’s Basis of Valuation: R2017 Practice Note: Stage 2 - Age and Obsolescence Allowances.

Temporary Buildings

Year of Building Completion % Age and Obsolescence Allowance Year of Building Completion % Age and Obsolescence Allowance Year of Building Completion % Age and Obsolescence Allowance
2016 1.5 2002 22.5 1988 43.5
2015 3.0 2001 24.0 1987 45.0
2014 4.5 2000 25.5 1986 46.5
2013 6.0 1999 27.0 1985 48.0
2012 7.5 1998 28.5 1984 49.5
2011 9.0 1997 30.0 1983 51.0
2010 10.5 1996 31.5 1982 52.5
2009 12.0 1995 33.0 1981 54.0
2008 13.5 1994 34.5 1980 55.5
2007 15.0 1993 36.0 1979 57.0
2006 16.5 1992 37.5 1978 58.5
2005 18.0 1991 39.0 Pre 1978 60.0
2004 19.5 1990 40.5    
2003 21.0 1989 42.0    

Systems Buildings

Systems built structures should be treated as permanent buildings unless accelerated age and obsolescence is apparent and proven.

Guidance Notes

1) There may be exceptional cases e.g. substantially un-modernised pre-1960 buildings, or buildings pending redevelopment, where an allowance in excess of 50% would be justified.

When considering if a building falls into the category of “substantially un-modernised” regard should be had to the following-

The hypothetical tenant is deemed to have maintained the hereditament in good order not only to command the original rent but to enable it to provide modern healthcare; to do this pre-1960 buildings will be expected to have had an upgraded electrical supply, replacement floor coverings and sanitary fittings during their life-cycle. As these are the minimum expectations, the presence of any of these works carried out more than 15/20 years earlier can be disregarded in determining if the building is substantially un-modernised as can work carried out to ensure compliance with all Fire and Health & Safety regulations.

To qualify for an age/obsolescence allowance in excess of 50% it is expected that the building will predominantly have the following:

  • original roof covering

  • original windows

  • original internal layout

  • original ceiling height, with no suspended ceilings

  • no air conditioning or air circulation system

2) Where a block built before 1988 has been the subject of a high level of modernisation or refurbishment after 1 April 2002, the age and obsolescence allowance should be reduced. A more significant reduction in this allowance may be warranted where a very major scheme has been undertaken such as the external re-cladding of a 1960s building. Essentially these are matters of judgement informed by a site inspection.

3) Special treatment may be warranted where a hospital was designed during an age range prior to that in which it is completed.

4) Care should be taken to avoid double counting between this Stage and Stages 1 and 5, particularly in respect of fragmentation/dispersal/poor layout. Where these problems are found within blocks, and are caused by bad internal design, they should normally be regarded as reflected in the age-related costs set out in para 1.1.1 although particular problems evidenced by difficult communications between departments within the block may justify consideration for a further allowance at stage 5.

5) For buildings where there is specific evidence of functional redundancy and/or physical disrepair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where, for example, modern health and safety, fire or building regulations preclude or limit the original purpose of the building.

6) Extensions are to be given the allowance appropriate to their age unless of a lower specification than would be expected of a building of that age in which case the allowance should be increased to a level appropriate to reflect the specification of the building.

7) It may be necessary to consider increasing the level of allowance where a hospital was designed many years prior to completion.

Appendix 4

Developed Land Values Developed Land Values

The value of the developed land, apportioned where appropriate in respect of its non-domestic/exempt use shall be taken to be the following percentages of the aggregate of the ARC of all buildings and external works:

Geographic Area in which hospital is located Acute Hospitals Non- Acute Hospitals Psychiatric Hospitals
  Post 1/4/2010 Pre 1/4/2010 Post 1/4/2010 Pre 1/4/2010 Post 1/4/2010 Pre 1/4/2010
Central London N Apply residential and values less 20% as stated in the 2017 Land Value Practice Note
Central London S Apply residential and values less 20% as stated in the 2017 Land Value Practice Note
Greater London NW Apply residential and values less 20% as stated in the 2017 Land Value Practice Note
Greater London SW Apply residential and values less 20% as stated in the 2017 Land Value Practice Note
Greater London NE Apply residential and values less 20% as stated in the 2017 Land Value Practice Note
Greater London SE Apply residential and values less 20% as stated in the 2017 Land Value Practice Note
North East 2.75 % 5.25% 3.00% 5.50% 2.75 % 5.50%
North West 6.00% 11.00% 6.50% 11.50% 6.00% 11.50%
Yorkshire & Humberside 5.25% 9.50% 5.75% 10.00% 5.25% 10.00%
East Midlands 2.75% 5.25% 3.00% 5.50% 2.75% 5.50%
West Midlands 5.00% 9.25% 5.50% 9.75% 5.00% 9.75%
East of England 9.50% 17.50% 10.25% 18.00% 9.50% 18.00%
South East 9.25% 17.00% 9.75% 17.25% 9.25% 17.25%
South West 6.50% 12.00% 7.00% 12.5% 6.50% 12.5%
North Wales 4.25% 7.75% 4.75% 8.25% 4.25% 8.25%
South Wales 5.50% 10.00% 6.00% 10.50% 5.50% 10.50%
Cardiff 13.50% 25.00% 14.50% 26.50% 13.50% 26.50%

Guidance Note

The definition of the geographic areas referred to above is as per the 2017 Practice Note relating to land values.

Undeveloped Land Values

Undeveloped land will consist of amenity land other than that for the immediate landscaping of buildings. Land which is in excess of that required for amenity use should be ignored. The areas of car parks and roadways are not to be treated as undeveloped land. Where present apply amenity land values as given in the 2017 Practice Note relating to land values.

Appendix 5

Stage 5 End allowances

Where a hospital is particularly poorly located, either by way of access or the general environment in which it is sited it may be appropriate to incorporate a stage 5 allowance within the valuation. Examples would be hospitals with access through an industrial estate or poor housing development or those located on the sites of NHS Hospitals where the NHS facility is itself located in an area where a private facility would not normally be sited. Similarly an allowance maybe appropriate where it can be demonstrated that a hospital is so remote from the main road network or areas of population that it has a bearing on the ability of the hospital to attract patients.

Likewise problems associated with dispersal of blocks within a hereditament, piecemeal development and lack of integrated design should be addressed at this stage. The allowance to be made in respect of these features should not normally exceed 10%. Allowances conceded during negotiations on the 2010 List should normally be maintained into the 2017 List where the circumstances justifying the concession can clearly still be seen to apply, subject to the comments below.

Over the past two decades there has been a considerable rise in the use of day care surgery and the average length of stay in hospital following many other procedures has fallen. These factors impact in two ways on the valuation of private hospitals.

Firstly previous measures used for measuring the performance of private hospitals occupancy of bed spaces at midnight may no longer be an accurate yardstick of performance, since a bed may be used by more than one patient during the day, yet generating no overnight stays.

Secondly these two factors have impacted on the likely design of new hospitals, in that it is likely that a lower proportion of ward space required in new hospitals, than in existing hospitals built during the rapid expansion of the sector in the 1980s or earlier. This point is accepted and is therefore reflected in the higher age and obsolescence rates for buildings constructed prior to 1995. It follows that hospitals constructed in 1995 or later are likely to be of a design reflecting modern requirements.

Both these points should be taken into account when considering end allowances.

Overall the performance of a particular hospital will need to be judged over at least a 12-month period so as to eliminate the disproportionate effect of holiday periods where the private sector is normally quiet.

It is not considered a disadvantage to the efficient operation of the hospital for it to be located within a multi-storey building. Only where the lift provision is demonstrably inadequate should an allowance be applied.

Practice note 3: 2017: Primary care centres (health centres) and doctors surgeries

1. Market Appraisal

Successive Governments since the 1960’s have provided financial assistance to GP’s to encourage the development of better quality, better equipped premises to enable more front line services to be delivered away from hospital. Although there are still some smaller single General Practice (GP) surgeries in converted dwelling houses, the trend has been towards the construction of large purpose-built GP surgeries or health centres that provide a wide range of services. These may include one or more GP practice, dentistry, midwifery, psychiatric services, treatment areas for minor surgical procedures, administration offices and a pharmacy.

Evident in recent years has been the integration of GP surgeries with other community activities such as libraries, leisure centres and other local authority functions. In April 2014 Lloyds Bank published its Healthcare Confidence Index seeking the views of the primary care sector. Key notes include the prediction that 90% of GP’s envisage that mergers of practices will be a dominant feature of the next 5 years. Some predictions are for a fall from 8500 to 3000 practices within 10 years. As practices merge the trend for larger premises to replace existing ones is expected to continue. There may not however be a direct correlation as some existing premises may be retained but downgraded to a ‘branch’ surgery.

Substantial investment is planned over the next few years to enhance local provision of services, particularly to the elderly, with an aim to see a measurable reduction in hospital admissions in the over 75 age group.

The delivery of planned changes in health provision is a central element of the Health and Social Care Act 2012 which introduced significant changes to the structure of the NHS. As of 1 April 2013, primary care trusts and strategic health authorities ceased to exist, and have been replaced with a new infrastructure of commissioners and support units. Clinical commissioning groups (CCGs) and NHS England have taken on commissioning responsibilities, with public health commissioning being transferred to local government. Across England, 211 CCGs are responsible for £65bn of the £95bn NHS commissioning budget (2014 figures). The aim was to transfer responsibility for commissioning decisions to GPs at a local level to improve healthcare services for their patients. CCG boards are predominantly made up of GP members, along with at least one member from secondary care, nursing and the general public.

All GP practices must be members of the CCG in their geographical area. Services commissioned by the CCGs include planned hospital care, rehabilitative care, emergency care, community health and mental health.

The former PCT real estate functions now come under the umbrella of NHS Property Services Ltd which is a limited company wholly owned by the Secretary of State for Health. The company was created to take that part of primary care trust and strategic health authority estate not transferring to National Health Service providers on 1 April 2013. NHS Property Services Ltd has one of the biggest property portfolios in Europe, worth an estimated £3 billion (2014 figures). Their role is to manage, maintain and improve NHS properties and facilities, working in partnership with the NHS. NHS England’s remit includes a responsibility for business rate issues in respect of GP surgeries and Health Centre’s.

2. Changes from the 2010 practice note

There have been no substantial changes to the approach to valuation as is contained in the 2010 Practice Note following the decision of the Upper Tribunal (Lands Chamber) in Gallagher(VO) v (1) Drs M G Read & Partners(2) Dr J Poyser & Partners.

However the following changes have been introduced.

  • The Multi floor allowance has been dispensed with. Research and discussion with NHS staff indicate that subject to lift provision being adequate an allowance is not appropriate either on operational or cost grounds.

  • The specific allowance for “Inferior facing brickwork” has been dispensed with. This is reflected in the age and obsolescence scales to the extent that it occurs.

  • The specific minimum allowances for surgeries/health centres built during the period 1960-1980 have been dispensed with but provision has been made within the age and obsolescence scales for an additional allowance for buildings erected during this period where appropriate.

3. Ratepayer Discussions

No discussions with NHS Property services or their representatives have taken place.

4. Valuation Scheme

4.1 The method of valuation employed will be determined by the reliability of the rental evidence available in respect of the type of Primary Care Centre or Drs Surgery under consideration.

4.2 Rentals Basis

i.GP surgeries and primary care centres converted from buildings previously used for other purposes(e.g. residential/office) should generally be assessed on a rentals basis subject to their being sufficient rental evidence by way of lettings to other D1 users in the locality (e.g. dentists, chiropractors ,vets ,private medical practitioners etc. ) to formulate an opinion of value. Where in a particular locality there is a dearth of evidence relating to D1 use but evidence from other nearby localities suggests a relationship with office levels of value then that same relationship can be applied in the locality in question to derive a basis of valuation.

ii. Following the Upper Tribunal decision in Gallagher (VO) v Dr M Read & Partners & Dr J Poyser & Partners (RA/31/2012), rents derived from the Doctors’ Rent and Rates Scheme ‘Current Market Rent’, whether on converted or purpose built GP Surgeries, are unreliable for rating valuation purposes as they do not accord with the rating hypothesis. This includes lease rents on GP Surgeries, lease rents on Primary Care Health Centres and lease rents on other healthcare uses in shared premises where it is evident that they too are affected by the DRRS.

iii. Rents relating to LIFT building are of no assistance.

iv. Some highly specialised hereditaments such as kidney dialysis centres can be leasehold and subject to significant rents. Such rents should be investigated further to assess their reliability and the weight to be placed upon them. In these instances, care should be taken to ensure that any rental information is investigated to remove non-rateable elements. These elements may form a substantial part of the rent.

v. There is evidence of an increasing involvement within the primary care sector of the NHSof private sector providers. Such providers may occupy premises akin to purpose built NHS surgeries and clinics and where leased the providers may pay a market rent. Full details of the rent and lease are to be obtained by way of FOR and notified to the appropriate specialist in NSU. In these circumstances consideration should be given to applying the rental method of valuation.

4.3 The Contractors Basis

The costs shown in this section are for ease of reference. In all cases where a cost guide code is shown it is this that which must be input into the NBS template, not the costs shown here. Where the cost guide code shows options, the costs shown in this practice note should be used to aid selection. Should the cost guide show different costs to those shown in a current version of this practice note, please refer to the CCT.

4.3.1 Stage 1 -Estimated Replacement Cost

(i) Building Costs

With the exception of areas that are not used at the AVD and have no prospect of being used, the actual GIA of the surgery/health centre should be used to calculate the Estimated Replacement Cost (Stage 1) of the hereditament in accordance with Appendix A(i). Allowances for certain types of construction associated with some older surgery/health centre designs are detailed in Appendix A (ii).

(ii) External Works

The cost of external works is to be added in accordance with Appendix B.

(iii) Location factors

Location factors should be applied in accordance with the 2017 VOA Cost Guide.

(iv)Contract size Adjustment

An adjustment for contract size is to be made to the building cost in accordance with the 2017 VOA Cost Guide.

(v) Professional Fees and Charges

Professional fees and charges are to be added for in accordance with the guidance given in the 2017 Cost Guide.

4.2 Stage 2 –Age and Obsolescence

Adjustments for age and obsolescence should be made in accordance with the scales contained in the Rating Manual.

a.In the case of buildings that have been significantly refurbished a lower allowance than that indicated solely by reference to the building’s age in the scale may be applicable, particularly where the works undertaken have enabled internal re-modelling to improve the functional aspects of the surgery/health centre.

b.Generally the allowance for age and obsolescence in regard to permanent buildings should not exceed 50%, however exceptionally where a building erected in the period 1960 to 1980 has not been refurbished to any significant extent and remains largely as built an additional allowance of up to 15%maybe applied. This does not apply to those buildings of a temporary nature or those to which a 27.5% construction allowance is appropriate.

c.For buildings where there is specific evidence of functional redundancy and/or physical repair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where for example modern health and safety, fire or building regulations preclude or limit the original purpose of the building. Care should then be taken to not then duplicate this at stage 5. For the benefit of doubt an allowance under this heading and that under 4.2(b) above are mutually exclusive.

d.The scale is not intended to be rigidly age-based and allows for some flexibility in selection of allowance having regard to variations in the functional utility and physical condition of buildings of particular ages. This flexibility is limited to the use of a notional age (for this purpose only) of up to 5 years either side of the year of completion.

e.In all cases the actual age of the building is to be recorded for the purposes of determining the appropriate age and obsolescence allowance. When refurbishment has taken place the allowance and not the buildings age should be over written.

f. The age and obsolescence allowance applied to the buildings should also be applied to the external works (averaged as necessary). The spreadsheet in the Non Bulk server application will automatically do this.

g. Exceptionally where a primary care centre was designed many years before completion consideration may be given to adopting a greater age and obsolescence allowance than would be normally appropriate. However it is considered such occurrences will be very rare.

h. Where an allowance has been given by reference to Appendix A(ii) (for light framework buildings) or the building is temporary and priced according the age and obsolescence allowance as obtained from the scale maybe increased by a further 10% where the block was built before 1985 and by a further 7.5% where the block was built 1995-2000.

4.3 Stage 3-Land Value

The value of the developed land should be added in accordance with Appendix C.

4.4 Stage 4- De-capitalisation rate

Generally the lower statutory de-capitalisation rate should be applied when valuing GP Surgery’s and health centres. However there are exceptions to this generality and reference should be made to the Rating Manual section relevant to this class for further guidance(previously Appendix 2 to the 2010 practice note).

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 last stage. An adjustment under this head should not duplicate adjustments made elsewhere. Most buildings will not warrant further allowances at this stage and where allowances are appropriate, it is expected that they should not normally exceed 15%.

Specific End Adjustments

Permanent buildings with a flat roof are to receive an end allowance. The allowance is not to be applied to temporary buildings, stores workshops and garages and buildings having a 27.5% construction 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.

Heating Allowance

Oil, LP Gas or Electric Central Heating

Where the property has oil, LPG fired central heating or electrical heating, an end allowance of 5% shall be applied to the valuation.

Appendix A(i) Building Costs

Permanent Surgery/Health Centre Buildings      
Size Size  £/m2 Cost Guide Reference
Type A-Small, basic GP Surgery with no ancillary support facilities and generally under 500m2  Up to 500m2 £2188 98H301
Type B- Surgeries and Medical Centres with consulting rooms but limited associated ancillary support facilities/services (may have a minor operations room and may consist of 2 or more practices-normally subject to separate  assessment)  501 to 1000m2 Over 1000m2 £1936 £1881 98H302 98H302
Medical centres with consulting rooms, minor operation and possibly operating facilities and a range of ancillary facilities/services often with community health support presence. May consist of several assessments  Generally over 2500m2 £2455 98H304
       
Temporary Surgery/ Health Centre Buildings  All Size  £684 98H006 
Separate Stores, Workshops and Garages  All  Sizes  £505  98H007

Guidance Note

The size bands as given above are for guidance only, particularly in regard to Types B and C and it is for the case worker, having regard to the function of and the facilities contained within the surgery/medical to exercise judgement before adopting the appropriate cost.

Appendix A (ii) Allowances for Inferior Construction

Construction Type Allowance
1) Buildings with a significant wall area made up of continuous, storey height, non-structural infill cladding panels (usually incorporating windows). (These panels are typically found in conjunction with gable walls of brick/block construction). 10%
2) As above but where such infill cladding panels are not continuous. Up to 10% dependent upon the extent of the panels.
3) Surgeries and health centres which incorporate excessive height and circulation space or poor circulation arrangements. Surgeries/health centres of this nature are generally typified by a higher central general purpose/circulatory space often with clerestory windows, surrounded by lower consulting and ancillary rooms around the perimeter. Such surgeries/health centres will normally but not exclusively date from pre 1939. 5%

Appendix A (ii) Allowances for Inferior Construction (continued)

Construction Type Allowance
Light structural steel or timber frame buildings with flat roof and very little or no brickwork to walls, typically substantially pre-fabricated and assembled on site (to include system built buildings)

27.5%

(This allowance is not to be compounded with allowances (1) to (3) above, nor should a flat roof allowance be applied)

Appendix B Additions for External Works

External Works

The following additions are to be made to the location adjusted building costs in respect of external works

2% Town centre or island site with 90% or greater building ratio, typically with 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 staff parking, external lighting and landscaping with limited general parking within the hereditament and boundary fencing.
7.5% As above, but typically with 25%to 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.

Appendix C Land Value Additions</H3>

Location  Percentage Addition (TYPE A&B) Percentage Addition (TYPE C)
North East  3.50% 2.75%
North West  7.75% 6.00%
Yorkshire and Humberside 6.50 % 5.00%
East Midlands 3.50 % 2.75%
West Midlands 6.25 % 4.75%
South East 11.50 % 9.00%
South West 8.25 % 6.50%
East of England 12.00 % 9.50%
South Wales 6.75 % 5.25%
North Wales 5.25 % 4.00%
Cardiff 17.00 % 13.00%
Greater London NW 12.00 % 9.25%
Greater London NE 17.50 % 14.00%
Greater London SW 29.00 % 23.00%
Greater London SE 22.00 % 17.00%
Central London N 39.00 % 31.00%
Central London S 14.75 % 11.50%

The locations referred to above are defined within 2017 the practice note relating to land values.

Practice note: 2010: The valuation for rating of NHS hospitals

The contents of this practice note (with the exception of land value additions in London, Hampshire and parts of Dorset) have been discussed and agreed with representatives of NHS England. It is expected that all parties to an appeal relating to property occupied by NHS England (or NHS Property services) will apply the practice note as drafted. Any queries relating to the interpretation and implementation of the practice note should be referred to the appropriate specialist in NSU.

Occupiers/ratepayers other than NHS England are not bound by this agreement. However the content of the practice note is to be applied to hereditaments in the occupation of all ratepayers within this class. Where difficulties arise the NSU specialist is to be advised.

1. Co-ordination Arrangement

Primary Care Centres are a generalist class.

The Special Category Code should be according to the method of valuation: Contractors’ basis – Scat 436

Rentals basis – Scat 437

As a generalist Class the appropriate suffix letter should be G in both cases. All Contractors’ basis valuations must be completed on the Non Bulk Server.

2. Method of Valuation.

These hereditaments span a range of types and sizes and include what have commonly been known as “health centres”, but which are now termed “primary care centres”, as well as individual GP practice premises.

This Practice Note should be followed for the purposes of compiling and maintaining the 2010 Rating Lists.

A. The Rentals Basis

GP surgeries and primary care centres converted from buildings previously used for other purposes(e.g. residential/office) should generally be assessed on a rentals basis subject to their being sufficient rental evidence by way of lettings to other D1 users in the locality (e.g. dentists, chiropractors ,vets and private medical practitioners etc. ) to formulate an opinion of value

Following the Upper Tribunal decision in Gallagher (VO) v Dr M Read & Partners & Dr J Poyser & Partners (RA/31/2012), rents derived from the Doctors’ Rent and Rates Scheme ‘Current Market Rent’, whether on converted or purpose built GP Surgeries, are unreliable for rating valuation purposes as they do not accord with the rating hypothesis. This includes lease rents on GP Surgeries, lease rents on Primary Care Health Centres and lease rents on other healthcare uses in shared premises where it is evident that they too are affected by the DRRS Rents relating to LIFT building are of no assistance.

Some highly specialised hereditaments such as kidney dialysis centres can be leasehold and subject to significant rents. Such rents should be investigated further to assess their reliability and the weight to be placed upon them In these instances, care should be taken to ensure that any rental information is investigated to remove non-rateable elements. These elements may form a substantial part of the rent.

B. Contractors Basis

This section is intended to apply to purpose built NHS primary health care centres and GP surgeries. Exceptionally where it is considered that rental evidence on purpose built surgeries which is not derived or affected by the DRRS is available within the locality the relevant NSU advisor should be consulted before proceeding. It will also apply to substantially redeveloped premises including Health Centres converted from other specialist buildings.

Specialist facilities such as diagnostic centres may require special consideration if the standard of construction or provision of rateable services differs substantially from a typical Primary Care Centre.

Stage 1

1.1 Building Costs - permanent buildings

Pre 2007 2007 onwards,
GIA m2 £ /m2 GIA £ /m2 GIA
450 973 1083
600 928 1030
1000 909 1011
2000 896 997

No contract size adjustment is to be made.

£/m2 figures are to be interpolated for intermediate GIAs.

1.2 For Pre 2008 blocks of temporary construction a cost of £500per m2GIA (before external works, contract size allowance and fees) should be adopted. Whilst for those constructed from 2008 onwards a cost of £650 per m2 GIA (on the same basis) should be adopted. No further allowance for flat roof construction should be made. Where the building is unheated the cost of £500 or £650 should be reduced by 12.5%.

1.3 For all separate stores, workshops, and garages (but not other buildings) a cost of £480 per m2GIA (before external works, contract size allowance and fees) should be adopted regardless of age.

1.4 Link blocks and subways that contain no areas that are used for any purpose other than for passage between adjoining blocks should be left out of the costing exercise. This omission is justified because their presence is dictated by the absence of a uniform design and denotes an attempt to reduce the drawbacks of dispersal, which would not have arisen if the primary care centre had been designed as an integral whole. Exceptionally the GIA of link blocks or subways should be included where they are original components of a unified design.

1.5 Location Allowances

The location factors contained in Appendix 1 should be applied to the above costs.

1.6 External Works

The following additions should be made to the ERC of all buildings (after adjustment for location):

Suggested % addition Description
Min 1%-2.5% For Primary Care Centres with 2 or more main floors on Town centre or island sites with minimal visible external works.
4%-5% Town centre or island site, typically with no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament.
5%-8.5% As above, but typically with very limited staff parking and landscaping, and with some boundary fencing.
8.5%-14% Site typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and very limited general parking within the hereditament.
14%-17.5% As above, but typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which falls short of full requirements.
17.5%-20% Site typically with extensive landscaping around buildings, secure boundary fencing and adequate parking within the hereditament for staff and all other users.

Where hereditaments do not fit exactly into one of the above categories it will be necessary for case workers to exercise further judgment.

Where hereditaments do not fit exactly into one of the above categories it will be necessary for case workers to exercise further judgment.

1.7 Professional Fees and Charges

Sums up to £500,000 13%

£500,000 to £2,000,000 11% (min fee £65,000)

Sums over £2,000,000 9% (min fee £220,000)

In each case the percentage addition will be made after location adjustment and the addition of the cost of associated external works.

1.8 Allowances for Inferior Construction

A percentage allowance will be made where buildings of a given age exhibit the stated type of construction. This allowance will be deducted from the aggregate ERC derived from the table at 1.1, following the addition of externals and fees.

These allowances should not be made in the case of temporary buildings and stores etc. priced according to para.1.2 and 1.3.

Appropriate allowances are as follows (allowances may not be aggregated between tables):

Either:

Table 1.8.1(a)

Construction type
Allowance

Buildings with a significant wall area made up of Continuous, storey height, non-structural infill cladding panels (usually incorporating windows). (These panels are typically found in conjunction with gable walls of brick/block construction).

10%

As above but where such infill cladding panels are not continuous

Up to 10% depending on the extent of such panels

Flat roof

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

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

The allowance is subject to a cap at 15%.

Buildings of a “pre second world war school” type* exhibiting excessive height and circulation space or poor circulation arrangements. * “pre second world war school” type is typified by a higher central general purpose/circulatory space often with clerestory windows, surrounded by lower consulting and ancillary rooms around the perimeterand may be constructed post 1945.

5% Inferior Facing Brickwork

5% In the case of buildings constructed between 1945 and1959 suffering from inferior facing brickwork, any allowance that may be warranted should be dealt with at Stage 2. OR: Table 1.8.1 (b) Minimum allowances Year

Construction Type
Minimum percentage allowance

1960-64

Any

5% minimum

1965-74

Any

10% minimum

1975-80

Any

5% minimum

The specific allowances mentioned at Para 1.8.1 (a) and (b) above, if appropriate, are to count against the minima in table 1.8.1 (c). For example: i) A building built between 1965 and 1974, with areas as in the example above in para 1.8.1a has a flat roof allowance of 9.2%, but the minimum allowance is 10%. 10% would apply. ii) A building built between 1975 and 1980, with areas as in the example above in para 1.8.1a has a flat roof allowance of 9.2%, but the minimum allowance is 5%. 9.2% would apply. iii) A building built between 1960 and 1964, which has none of the features mentioned in para 1.8.1, will attract only the minimum allowance of 5%.

1.9 Other Allowances

Oil, Gas or Electric Central Heating

Where the property has oil, LPG fired central heating or electrical heating, an end allowance of 5% shall be applied to the valuation

Stage 2 2.1.1 Obsolescence allowances Obsolescence allowances shall be made after additions for external works, fees and any allowance under para 1.8 (allowances for inferior construction), in accordance with the following age-related scale/footnotes. The age to be adopted is one year prior to the date of building completion: Year

% Allowance
Year
% Allowance

2010

0

1984

21

2009

0.5

1983

22

2008

1

1982

23

2007

1.5

1981

24

2006

2

1980

25

2005

2.5

1979

26

2004

3

1978

27

2003

3.5

1977

28

2002

4

1976

29

2001

4.5

1975

30

2000

5

1974

31

1999

6

1973

32

1998

7

1972

33

1997

8

1971

34

1996

9

1970

35

1995

10

1969

36

1994

11

1968

37

1993

12

1967

38

1992

13

1966

39

1991

14

1965

40

1990

15

1964

41

1989

16

1963

42

1988

17

1962

43

1987

18

1961

44

1986

19

1960

45

1985

20

Pre 1960

45-50

2.1.2 The scale is not intended to be rigidly age-based and allows for some flexibility in selection of allowance having regard to variations in the functional utility and physical condition of buildings of particular ages. This flexibility is limited to the use of a notional age (for this purpose only) of up to 5 years either side of the year of completion. The internal communication problems of tall buildings are however dealt with at para 2.2 below. 2.1.3 In the case of refurbished buildings a notional age between the date of refurbishment and the date of original construction may be used in order to derive an appropriate age and obsolescence allowance. 2.1.4 For buildings where there is specific evidence of functional redundancy and/or physical repair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where for example modern health and safety, fir or building regulations preclude or limit the original purpose of the building. Care should then be taken to not then duplicate this at stage 5. There may be exceptional cases e.g exceptionally un-modernised pre-1955 buildings or redundant buildings where an allowance is in excess of 50% may be justified. Where a purpose built surgery/primary care centre has been subject to modernisation and refurbishment then a lower age and obsolescence allowance should be applied than that indicated by the age related scale above. The allowance adopted in these circumstances is a matter for judgement based on the degree to which the premises are upgraded Special treatment may also be necessary where a primary care centre was designed many years before completion (possibly warranting treatment in an earlier age group). 2.1.5 Where an allowance has been given under table 1.8.1 (b) above (for light framework buildings) or the building is temporary (and priced according to 1.2 and1.3) the maximum allowance given in para 2.1.1 above may be increased; by a further 10% where the block was built before 1980 and by a further 7.5% where the block was built 1980-1995. 2.1.6 The deduction of the appropriate allowances from aggregate costs will give the ARC. 2.2 Multi-floor Allowances The following deductions should be made from Adjusted Replacement Costs for Primary Care Centres with 2 main floors or more on the assumption that lift provision is adequate. These deductions should be made after the age-based obsolescence allowance has been applied. Buildings with 2 main floors or less

0%

Buildings up to 7th floor

10% overall

Buildings with 8th floor and above

15% (10% overall below 8th floor) Where, a two storey building has no lifts an allowance of 10% on the first floor may be warranted. For buildings of three storeys and above, where lifts are inadequate to serve the actual use that is being made, a further allowance may be warranted. This must be justified on the facts of particular cases, and is recognised as not normally necessary. Further advice to relating to this topic will be issued separately as an appendix. Stage 3 3.1 Developed Land Value The following percentages are recommended to be applied to the results of stages 1 and 2 to arrive at the appropriate land value: Location

Central London

Inner London

Outer London

M 25 belt (see (d) below)

Land Value Addition

29%

19%

14.5%

12%

Rest of South East (see (e) below)

6.5%

Rest of England & Wales

4.75% For the purposes of the above table:

  • The M25 Belt should be taken to be the whole county of Surrey, plus Windsor & Maidenhead, Slough, Wokingham, Bracknell Forest, South Bucks, Chiltern, Wycombe, Reading, Oxford (City), Cambridge (City), Dacorum, Three Rivers, Watford, St Alban’s, Hertsmere, Welwyn/Hatfield, E Herts, Broxbourne, Epping Forest, Brentwood, and Sevenoaks
  • b The Rest of South East consists of those parts of the counties of Kent, East Sussex, West Sussex, Hants (exc Isle of Wight), Berks, Bucks, Oxon, Herts, Beds, and Essex,( to the extent that they exclude the BAs listed as in the M25 belt), plus Bournemouth, Poole and Christchurch NB.
  • The percentages additions in relation to land values in London have not been agreed. In the event of difficulties in agreeing the additions as above caseworkers should contact NSU for advice.
  • It is not intended that there should be abrupt changes in the approach to site values between the above locational groupings, and shading of these percentages may need to be applied close to their boundaries.
  • The inclusion of Hampshire, Bournemouth, Poole and Christchurch within the definition of SE England is not agreed. Cases of difficulty should be referred to the appropriate specialist in NSU STAGE 4 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. Guidance as to whether the upper or lower rate is appropriate can be found in Appendix 2 of this practice note STAGE 5 5. End Adjustments At this stage the valuer should consider whether any adjustment should be made to the stage 4 figure to reflect considerations which would affect the hereditament as a whole, such as piecemeal development, lack of integrated design, or a location which is isolated from the primary care centres catchment population, but which have not been accounted for at other stages. The maximum allowance under this heading would not normally exceed 10%.

Appendix 1 Location Adjustments Yorkshire and Humberside region Humberside

Including East Yorkshire, Holderness, Kingston on Hull, North Lincs, N E Lincs, Boothferry and Beverley

0.94

North Yorkshire

0.98

South Yorkshire

0.96

West Yorkshire

0.94 East Midlands Region Derbyshire

0.93

Leicestershire 

Includes Rutland

0.93

Lincolnshire

0.92

Northamptonshire 

0.98

Nottinghamshire 

0.92 East Anglia Region Cambridgeshire

0.99

Norfolk

0.93

Suffolk

0.95 South East Region (Excluding London) Bedfordshire

Includes Luton

1.04

Essex

1.05

Hertfordshire

1.09

Kent

1.07

Surrey

1.12

East Sussex

1.08

West Sussex

1.07

Berkshire

1.07

Buckinghamshire

1.05

Hampshire

1.03

Isle of Wight

1.04

Oxfordshire

1.01 Greater London Barnet

1.12

Bexley

1.14

Brent

1.14

Bromley

1.11

Camden

1.26

City of London

1.20

City of Westminster

1.26

Croydon

1.15

Ealing

1.15

Enfield

1.09

Greenwich

1.15

Hackney

1.19

Hammersmith & Fulham

1.22

Haringey

1.20

Harrow

1.10

Havering

1.02

Hillingdon

1.10

Hounslow

1.09

Islington

1.20

Kensington & Chelsea

1.27

Kingston Upon Thames

1.17

Lambeth

1.20

Lewisham

1.11

Merton

1.16

Newham

1.08

Redbridge

1.07

Richmond Upon Thames

1.14

Southwark

1.20

Sutton

1.12

Tower Hamlets

1.18

Waltham Forest

1.10

Wandsworth

1.20 South Western Region Avon

Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire.

1.03

Cornwall

1.01

Devon

1.00

Dorset

1.03

Gloucestershire

1.03

Somerset

1.00

Wiltshire

1.02 West Midlands Region Hereford &Worcester

0.93

Shropshire

0.92

Staffordshire

0.90

Warwickshire

0.95

West Midlands

0.93 North West Region Cheshire

0.90

Greater Manchester

0.91

Lancashire

0.90

Islington

1.20

Kensington & Chelsea

1.27

Kingston Upon Thames

1.17

Lambeth

1.20

Lewisham

1.11

Merton

1.16

Newham

1.08

Redbridge

1.07

Richmond Upon Thames

1.14

Southwark

1.20

Sutton

1.12

Tower Hamlets

1.18

Waltham Forest

1.10

Wandsworth

1.20 South Western Region Avon

Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire.

1.03

Cornwall

1.01

Devon

1.00

Dorset

1.03

Gloucestershire

1.03

Somerset

1.00

Wiltshire

1.02 West Midlands Region Hereford &Worcester 0.93 Shropshire 0.92 Staffordshire 0.90 Warwickshire 0.95 West Midlands 0.93 North West Region Cheshire 0.90 Greater Manchester 0.91 Lancashire 0.90 Merseyside 0.91 Wales Clywd 0.93 Dyfed 0.99 Gwent 0.97 Gwynedd 0.95 Mid Glamorgan 0.97 Powys 0.96 South Glamorgan 0.98 West Glamorgan 0.95 Islands Isle of Man, Isles of Scilly and Channel Islands
1.22

Practice note 2: 2010: The valuation of primary care centres

The contents of this practice note (with the exception of land value additions in London, Hampshire and parts of Dorset) have been discussed and agreed with representatives of NHS England. It is expected that all parties to an appeal relating to property occupied by NHS England (or NHS Property services) will apply the practice note as drafted. Any queries relating to the interpretation and implementation of the practice note should be referred to the appropriate specialist in NSU.

Occupiers/ratepayers other than NHS England are not bound by this agreement. However the content of the practice note is to be applied to hereditaments in the occupation of all ratepayers within this class. Where difficulties arise the NSU specialist is to be advised.

1. Co-ordination Arrangement

Primary Care Centres are a generalist class.

The Special Category Code should be according to the method of valuation:

Contractors’ basis – Scat 436

Rentals basis – Scat 437

As a generalist Class the appropriate suffix letter should be G in both cases.

All Contractors’ basis valuations must be completed on the Non Bulk Server.

2. Method of Valuation

These hereditaments span a range of types and sizes and include what have commonly been known as “health centres”, but which are now termed “primary care centres”, as well as individual GP practice premises.

This Practice Note should be followed for the purposes of compiling and maintaining the 2010 Rating Lists.

A. The Rentals Basis

GP surgeries and primary care centres converted from buildings previously used for other purposes(e.g. residential/office) should generally be assessed on a rentals basis subject to their being sufficient rental evidence by way of lettings to other D1 users in the locality (e.g. dentists, chiropractors ,vets and private medical practitioners etc. ) to formulate an opinion of value.

Following the Upper Tribunal decision in Gallagher (VO) v Dr M Read & Partners & Dr J Poyser & Partners (RA/31/2012), rents derived from the Doctors’ Rent and Rates Scheme ‘Current Market Rent’, whether on converted or purpose built GP Surgeries, are unreliable for rating valuation purposes as they do not accord with the rating hypothesis. This includes lease rents on GP Surgeries, lease rents on Primary Care Health Centres and lease rents on other healthcare uses in shared premises where it is evident that they too are affected by the DRRS Rents relating to LIFT building are of no assistance.

Some highly specialised hereditaments such as kidney dialysis centres can be leasehold and subject to significant rents. Such rents should be investigated further to assess their reliability and the weight to be placed upon them In these instances, care should be taken to ensure that any rental information is investigated to remove non-rateable elements. These elements may form a substantial part of the rent.

B. Contractors Basis

This section is intended to apply to purpose built NHS primary health care centres and GP surgeries. Exceptionally where it is considered that rental evidence on purpose built surgeries which is not derived or affected by the DRRS is available within the locality the relevant NSU advisor should be consulted before proceeding. It will also apply to substantially redeveloped premises including Health Centres converted from other specialist buildings.

Specialist facilities such as diagnostic centres may require special consideration if the standard of construction or provision of rateable services differs substantially from a typical Primary Care Centre.

STAGE 1

1.1. Building Costs - permanent buildings

Pre 2007 2007 onwards,
GIA m2 £ /m2 GIA £ /m2 GIA
450 973 1083
600 928 1030
1000 909 1011
2000 896 997
No contract size adjustment is to be made.

£/m2 figures are to be interpolated for intermediate GIAs.

1.2 For Pre 2008 blocks of temporary construction a cost of £500per m2GIA (before external works, contract size allowance and fees) should be adopted. Whilst for those constructed from 2008 onwards a cost of £650 per m2 GIA (on the same basis) should be adopted. No further allowance for flat roof construction should be made. Where the building is unheated the cost of £500 or £650 should be reduced by 12.5%.

1.3 For all separate stores, workshops, and garages (but not other buildings) a cost of £480 per m2GIA (before external works, contract size allowance and fees) should be adopted regardless of age.

1.4 Link blocks and subways that contain no areas that are used for any purpose other than for passage between adjoining blocks should be left out of the costing exercise. This omission is justified because their presence is dictated by the absence of a uniform design and denotes an attempt to reduce the drawbacks of dispersal, which would not have arisen if the primary care centre had been designed as an integral whole. Exceptionally the GIA of link blocks or subways should be included where they are original components of a unified design.

1.5 Location Allowances

The location factors contained in Appendix 1 should be applied to the above costs.

1.6 External Works

The following additions should be made to the ERC of all buildings (after adjustment for location):

Suggested % addition Description
Min 1%-2.5% For Primary Care Centres with 2 or more main floors on Town centre or island sites with minimal visible external works.
4%-5% Town centre or island site, typically with no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament.
5%-8.5% As above, but typically with very limited staff parking and landscaping, and with some boundary fencing.
8.5%-14% Site typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and very limited general parking within the hereditament.
14%-17.5% As above, but typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which falls short of full requirements.
17.5%-20% Site typically with extensive landscaping around buildings, secure boundary fencing and adequate parking within the hereditament for staff and all other users.

Where hereditaments do not fit exactly into one of the above categories it will be necessary for case workers to exercise further judgment.

1.7 Professional Fees and Charges

Sums up to £500,000 13%

£500,000 to £2,000,000 11% (min fee £65,000)

Sums over £2,000,000 9% (min fee £220,000)

In each case the percentage addition will be made after location adjustment and the addition of the cost of associated external works.

1.8 Allowances for Inferior Construction

A percentage allowance will be made where buildings of a given age exhibit the stated type of construction. This allowance will be deducted from the aggregate ERC derived from the table at 1.1, following the addition of externals and fees.

These allowances should not be made in the case of temporary buildings and stores etc. priced according to para.1.2 and 1.3.

Appropriate allowances are as follows (allowances may not be aggregated between tables):

Either:
Table 1.8.1(a)
Construction type Allowance
Buildings with a significant wall area made up of Continuous, storey height, non-structural infill cladding panels (usually incorporating windows). (These panels are typically found in conjunction with gable walls of brick/block construction). 10%
As above but where such infill cladding panels are not continuous Up to 10% depending on the extent of such panels
Flat roof
What is flat as opposed to a pitched roof will generally be self-evident. Flat roofing allowances should be applied to all types of flat roof. In instances where an allowance is sought for pitched roofing caseworkers should seek advice from the National Specialist Unit before proceeding. Where a building has varying roof types a reasonable apportionment should be made to arrive at the 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. The allowance is subject to a cap at 15%.
Buildings of a "pre second world war school" type* exhibiting excessive height and circulation space or poor circulation arrangements. *pre second world war school” type is typified by a higher central general purpose/circulatory space often with clerestory windows, surrounded by lower consulting and ancillary rooms around the perimeterand may be constructed post 1945. 5%
Inferior Facing Brickwork 5%

In the case of buildings constructed between 1945 and1959 suffering from inferior facing brickwork, any allowance that may be warranted should be dealt with at Stage 2.

OR:
Table 1.8.1 (b)
Construction type Allowance
Light structural steel or timber frame buildings with flat roof and very little or no brickwork to walls, typically substantially pre-fabricated and assembled on site (to include system built buildings) 27.5%
OR:
Table 1.8.1(c)

Minimum allowances

Year Construction Type Minimum percentage allowance
1960-64 Any 5% minimum
1965-74 Any 10% minimum
1975-80 Any 5% minimum

The specific allowances mentioned at Para 1.8.1 (a) and (b) above, if appropriate, are to count against the minima in table 1.8.1 (c).

For example:

i.A building built between 1965 and 1974, with areas as in the example above in para 1.8.1a has a flat roof allowance of 9.2%, but the minimum allowance is 10%. 10% would apply.

ii.A building built between 1975 and 1980, with areas as in the example above in para 1.8.1a has a flat roof allowance of 9.2%, but the minimum allowance is 5%. 9.2% would apply.

iii.A building built between 1960 and 1964, which has none of the features mentioned in para 1.8.1, will attract only the minimum allowance of 5%.

1.9 Other Allowances

Oil, Gas or Electric Central Heating Where the property has oil, LPG fired central heating or electrical heating, an end allowance of 5% shall be applied to the valuation

STAGE 2

2.1.1 Obsolescence allowances

Obsolescence allowances shall be made after additions for external works, fees and any allowance under para 1.8 (allowances for inferior construction), in accordance with the following age-related scale/footnotes. The age to be adopted is one year prior to the date of building completion:

Year % Allowance Year % Allowance
2010 0 1984 21
2009 0.5 1983 22
2008 1 1982 23
2007 1.5 1981 24
2006 2 1980 25
2005 2.5 1979 26
2004 3 1978 27
2003 3.5 1977 28
2002 4 1976 29
2001 4.5 1975 30
2000 5 1974 31
1999 6 1973 32
1998 7 1972 33
1997 8 1971 34
1996 9 1970 35
1995 10 1969 36
1994 11 1968 37
1993 12 1967 38
1992 13 1966 39
1991 14 1965 40
1990 15 1964 41
1989 16 1963 42
1988 17 1962 43
1987 18 1961 44
1986 19 1960 45
1985 20 Pre 1960 45-50

2.1.2 The scale is not intended to be rigidly age-based and allows for some flexibility in selection of allowance having regard to variations in the functional utility and physical condition of buildings of particular ages. This flexibility is limited to the use of a notional age (for this purpose only) of up to 5 years either side of the year of completion. The internal communication problems of tall buildings are however dealt with at para 2.2 below.

2.1.3 In the case of refurbished buildings a notional age between the date of refurbishment and the date of original construction may be used in order to derive an appropriate age and obsolescence allowance.

2.1.4 For buildings where there is specific evidence of functional redundancy and/or physical repair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where for example modern health and safety, fir or building regulations preclude or limit the original purpose of the building. Care should then be taken to not then duplicate this at stage 5.

There may be exceptional cases e.g exceptionally un-modernised pre-1955 buildings or redundant buildings where an allowance is in excess of 50% may be justified.

Where a purpose built surgery/primary care centre has been subject to modernisation and refurbishment then a lower age and obsolescence allowance should be applied than that indicated by the age related scale above. The allowance adopted in these circumstances is a matter for judgement based on the degree to which the premises are upgraded.

Special treatment may also be necessary where a primary care centre was designed many years before completion (possibly warranting treatment in an earlier age group).

2.1.5 Where an allowance has been given under table 1.8.1 (b) above (for light framework buildings) or the building is temporary (and priced according to 1.2 and1.3) the maximum allowance given in para 2.1.1 above may be increased; by a further 10% where the block was built before 1980 and by a further 7.5% where the block was built 1980-1995.

2.1.6 The deduction of the appropriate allowances from aggregate costs will give the ARC.

2.2 Multi-floor Allowances

The following deductions should be made from Adjusted Replacement Costs for Primary Care Centres with 2 main floors or more on the assumption that lift provision is adequate. These deductions should be made after the age-based obsolescence allowance has been applied.

Buildings with 2 main floors or less 0%
Buildings up to 7th floor 10% overall
Buildings with 8th floor and above 15% (10% overall below 8th floor)

Where, a two storey building has no lifts an allowance of 10% on the first floor may be warranted.

For buildings of three storeys and above, where lifts are inadequate to serve the actual use that is being made, a further allowance may be warranted.

This must be justified on the facts of particular cases, and is recognised as not normally necessary.

Further advice to relating to this topic will be issued separately as an appendix.

STAGE 3

3.1 Developed Land Value

The following percentages are recommended to be applied to the results of Stages 1 and 2 to arrive at the appropriate land value:

Location Land Value Addition
Central London 29%
Inner London 19%
Outer London 14.5%
M 25 belt (see (d) below) 12%
Rest of South East (see (e) below) 6.5%
Rest of England and Wales 4.75%

For the purposes of the above table: a. The m25 Belt should be taken to be the whole county of Surrey, plus Windsor & Maidenhead, Slough, Wokingham, Bracknell Forest, South Bucks, Chiltern, Wycombe, Reading, Oxford (City), Cambridge (City), Dacorum, Three Rivers, Watford, St Alban’s, Hertsmere, Welwyn/Hatfield, E Herts, Broxbourne, Epping Forest, Brentwood, and Sevenoaks b. The Rest of South East consists of those parts of the counties of Kent, East Sussex, West Sussex, Hants (exc Isle of Wight), Berks, Bucks, Oxon, Herts, Beds, and Essex,( to the extent that they exclude the BAs listed as in the m25 belt), plus Bournemouth, Poole and Christchurch

NB.

a.The percentages additions in relation to land values in London have not been agreed. In the event of difficulties in agreeing the additions as above caseworkers should contact NSU for advice.

b.It is not intended that there should be abrupt changes in the approach to site values between the above locational groupings, and shading of these percentages may need to be applied close to their boundaries.

c.The inclusion of Hampshire, Bournemouth, Poole and Christchurch within the definition of SE England is not agreed. Cases of difficulty should be referred to the appropriate specialist in NSU.

STAGE 4

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. Guidance as to whether the upper or lower rate is appropriate can be found in Appendix 2 of this practice note.

STAGE 5

5. End Adjustments

At this stage the valuer should consider whether any adjustment should be made to the stage 4 figure to reflect considerations which would affect the hereditament as a whole, such as piecemeal development, lack of integrated design, or a location which is isolated from the primary care centres catchment population, but which have not been accounted for at other stages. The maximum allowance under this heading would not normally exceed 10%.

Appendix 1

Location adjustments

YORKSHIRE AND HUMBERSIDE REGION
Humberside Including East Yorkshire, Holderness, Kingston on Hull, North Lincs, N E Lincs, Boothferry and Beverley 0.94
North Yorkshire 0.98
South Yorkshire 0.96
West Yorkshire 0.94

EAST MIDLANDS REGION

Derbyshire 0.93
Leicestershire Includes Rutland 0.93
Lincolnshire 0.92
Northamptonshire 0.98
Nottinghamshire 0.92

EAST ANGLIA REGION

Cambridgeshire 0.99
Norfolk 0.93
Suffolk 0.95

SOUTH EAST REGION (EXCLUDING LONDON)

Bedfordshire Includes Luton 1.04
Essex 1.05
Hertfordshire 1.09
Kent 1.07
Surrey 1.12
East Sussex 1.08
West Sussex 1.07
Berkshire 1.07
Buckinghamshire 1.05
Hampshire 1.03
Isle of Wight 1.04
Oxfordshire 1.01

GREATER LONDON

Barking & Dagenham 1.07
Barnet 1.12
Bexley 1.14
Brent 1.14
Bromley 1.11
Camden 1.26
City of London 1.20
City of Westminster 1.26
Croydon 1.15
Ealing 1.15
Enfield 1.09
Greenwich 1.15
Hackney 1.19
Hammersmith & Fulham 1.22
Haringey 1.20
Harrow 1.10
Havering 1.02
Hillingdon 1.10
Hounslow 1.09
Islington 1.20
Kensington & Chelsea 1.27
Kingston Upon Thames 1.17
Lambeth 1.20
Lewisham 1.11
Merton 1.16
Newham 1.08
Redbridge 1.07
Richmond Upon Thames 1.14
Southwark 1.20
Sutton 1.12
Tower Hamlets 1.18
Waltham Forest 1.10
Wandsworth 1.20

SOUTH WESTERN REGION

Avon Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire. 1.03
Cornwall 1.01
Devon 1.00
Dorset 1.03
Gloucestershire 1.03
Somerset 1.00
Wiltshire 1.02

WEST MIDLANDS REGION

Hereford &Worcester 0.93
Shropshire 0.92
Staffordshire 0.90
Warwickshire 0.95
West Midlands 0.93

NORTH WEST REGION

Cheshire 0.90
Greater Manchester 0.91
Lancashire 0.90
Islington 1.20
Kensington & Chelsea 1.27
Kingston Upon Thames 1.17
Lambeth 1.20
Lewisham 1.11
Merton 1.16
Newham 1.08
Redbridge 1.07
Richmond Upon Thames 1.14
Southwark 1.20
Sutton 1.12
Tower Hamlets 1.18
Waltham Forest 1.10
Wandsworth 1.20

SOUTH WESTERN REGION

Avon Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire. 1.03
Cornwall 1.01
Devon 1.00
Dorset 1.03
Gloucestershire 1.03
Somerset 1.00
Wiltshire 1.02

WEST MIDLANDS REGION

Hereford &Worcester 0.93
Shropshire 0.92
Staffordshire 0.90
Warwickshire 0.95
West Midlands 0.93

NORTH WEST REGION

Cheshire 0.90
Greater Manchester 0.91
Lancashire 0.90
Merseyside 0.91

WALES

Clywd 0.93
Dyfed 0.99
Gwent 0.97
Gwynedd 0.95
Mid Glamorgan 0.97
Powys 0.96
South Glamorgan 0.98
West Glamorgan 0.95

ISLANDS

Isle of Man, Isles of Scilly and Channel Islands 1.22

Practice note 2: 2010: Appendix 1: Method of valuation flowchart to be considered for new primary care assessments

Click here to see the Method of Valuation Flowchart.

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

Practice note 2: 2010: Appendix 2: Primary care centres decapitalisation rate

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

1. Practice for 2005 & later Rating Lists

It is considered that following the widening of the definition of primary care hereditament for 1995 Rating Lists it is not correct to consider any areas as “partial treatment” areas, as generally they are used overwhelmingly for the reception or treatment of “persons suffering from any illness, injury or infirmity”.

A revised and simplified scheme has thus been drawn up for the classification of primary care centre activities for use in cases where it appears that a significant amount of floor area within a primary care centre is used for activities not involving the “reception or treatment of persons suffering from any illness, injury or infirmity” (i.e. uses not listed below as being Category A uses).

2. Classification of Primary Care Centre activities

Activities within a primary care centre can be divided into three categories (as defined below);

a. Those that are overwhelmingly used for reception or treatment of persons suffering from any illness, injury or infirmity; b. Those which are not so used and; c. Ancillary uses shared between categories.

Where the floor area used for category (a) exceeds the floor area used for category (b) the primary care centre should be treated as a “primary care hereditament” and the lower decapitalisation rate used.

Below are listed the types of accommodation which are considered to fall into these categories A, B and C:

Category A

Areas that are overwhelmingly used for reception or treatment of persons suffering from any illness, injury or infirmity;

This category will include:

  • General Practitioner (GP) or Health Authority (HA) consulting and examination rooms;
  • GP patient records/computer rooms;
  • Practice Managers Offices;
  • Common rooms for use of Doctor’s surgery only;
  • HA Therapy rooms;
  • GP Treatment and/or minor operations rooms;
  • Dental Surgeries;
  • Dental Lab;
  • Chiropody/Podiatry rooms;
  • Reception/waiting areas that only serve full treatment use areas;
  • Other rooms wholly used for, reception/treatment, or therapy;
  • Areas wholly ancillary to areas falling within this classification.

For the avoidance of doubt, main reception/waiting areas would not fall within this category, but would come within the ancillary group.

Category B

Those areas that are not used for reception or treatment of persons suffering from any illness, injury or infirmity.

This category will include;

  • HA Offices;
  • HA Health Education Rooms;
  • District/School Nurse, Midwives and Health visitor’s Office*;
  • Speech Therapist’s Office*;
  • Family Planning Clinic;
  • Well Baby and Woman Clinic;
  • Reception/waiting areas that only serve category B areas.

*Where these offices are used as a base for external work rather than work within the primary care centre or for “Reception or Treatment” within the relevant definition.

Category C

Ancillary uses shared between categories.

This category will include;

  • Reception and waiting areas common to a number of occupiers and which do not fall under category A;
  • Corridors;
  • Toilets;
  • Common rooms for use of whole centre;
  • Stores;
  • Boiler rooms;
  • Caretaker’s office/store.

NB It is of course accepted that the above lists are by no means exhaustive.

3. Shared ancillary areas in multi building hereditaments

Where a category C shared ancillary use (such as reception area) only serves some of the buildings in this type of hereditament, its floor area should be apportioned pro rata between the category A and B uses within the buildings served.

Where a category C use serves all buildings within a multi building hereditament, its floor area can be treated similarly to a single building hereditament.

4. Areas with a known pattern of uses

Some areas may be earmarked to be used on specific days for a use falling within one category, and for the remainder of the time for a use falling within another category. For example a room might be used on half a day per week for treatment of ulcers (category A use), and for the rest of the time as a well woman clinic (category B use). In these instances the floor space should be apportioned between the two categories of use according to the proportion of usage time allocated to each of them (in the above example, and on the basis of a 5 day working week for the primary care centre, 1/10th to category A and the remaining 9/10ths to category B).

5. Important Note

Having decided on the appropriate Decap rate it is important if using the Generic Contractors Spreadsheet, to ensure the correct Decap rate is actually applied. The spreadsheet defaults to the lower rate, but this can be over-written to the higher rate where appropriate

Practice note 4: 2010: The valuation for rating of NHS hospitals

Introduction

This practice note has been revised following Counsel’s advice that “treatment” as described below should be regarded as a non-domestic use of property: “‘Treatment’” means treatment in its normal sense and therefore includes, but is not limited to, any medical intervention, diagnostic care or observation undertaken by professional staff in hospitals, including doctors, nurses, midwives, therapists and psychologists, designed to improve or modify patients’ physical and/or mental abilities and social functions. This includes, but is not limited to nursing (which includes aiding convalescence), psychological interventions, physiotherapy and other sorts of therapy including habilitation and rehabilitation”

A period of 60 days remains a fair determinant of short-stay accommodation. Therefore for hospital ward space to qualify as domestic property within s66 of the Local Government Finance Act 1988 it will be necessary to establish that patient stays are in excess of 60 days while not receiving “treatment”. This is thought to be extremely unlikely.

Consequently it is likely that ward space and ancillary accommodation which was previously apportioned between domestic and non-domestic use should now be treated as solely non- domestic use and assessed accordingly. Further detail is provided in the Rating Manual (RM) Section 840 to which reference should be made.

This policy recognises the significant changes that have taken place in healthcare provision since the policy was first formulated some 25 years ago. The incidence of hospitals providing “care” as opposed to “treatment”, for example the old style geriatric wards, is now thought to be very much a feature of the past.

Permanent staff accommodation (but not temporary accommodation provided for “on-call” staff or patients’ relatives) should continue to be treated as domestic accommodation and where this is present the hereditament is to be regarded as a composite property.

The interpretation and application of exemption under paragraph 16 of Schedule 5 of LGFA remains unaltered and should continue to be applied in appropriate circumstances (see Rating Manual Section 840)

It remains the case that there may well be some NHS hospitals which will remain as composite hereditaments. The approach to valuation in circumstances where a domestic element is present is now contained in Appendix 1 to the main section of the rating manual and no longer features in this practice note.

The remaining elements of this practice note which had for the most part, been agreed with a consortium of agents acting on behalf of the occupiers of the majority of NHS Hospitals throughout England and Wales remains unaltered. However two issues remain unresolved, one relating to the treatment of age and obsolescence in regard to “systems buildings” and the other to land values in Hampshire and parts of Dorset. Both are referred to in the appropriate section of this practice note

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

1. Co-ordination Arrangements

NHS Hospitals are a specialist class and are the responsibility of specialist teams within the business units. Co-ordination and the preparation of practice notes are the responsibility of the Class Co-ordination Team(CCT)(Hospitals). Guidance on the practical implementation and interpretation of the practice note should be sought from the appropriate technical specialist within NSU .The R2010 Special Category Code 134 should be used. The appropriate suffix letter is S.

2. Exemption under LGFA 1988 Sch 5

Areas treated as exempt will be omitted from the GIA. See paragraph B1 below.

3. Composite Hospitals

A hospital will constitute a composite hereditament if it contains

a. Permanent living accommodation for staff, and/or

b. Accommodation generally used as bed spaces for patients staying more than 60 days.

Where a hospital is composite, value will be attributed only to the non-domestic use of property in the manner indicated in section B.

Temporary accommodation provided for “on-call” staff or patients’ relatives is to be treated as non-domestic.

4. Application of the Contractor’s Basis

The contractor’s basis is to be applied in the manner indicated in section C.

5. The Boundary between Domestic and Non-Domestic use of Property in NHS Hospitals

1) Although the cost of all areas within the hereditament must be taken into account for the calculation of contract size allowance, the valuation must then attribute value only to the non-domestic use of property, which is not exempt. This may effectively be done by eliminating from GIA the areas, which are exempt under LGFA 1988 Sch 5 paras 11 and 16, and by excluding certain areas from GIA as follows:

a. All wards and patient bedrooms normally used at 1 April 2008i by patients who have no residence elsewhere, (for the avoidance of doubt patients who are sectioned under the mental health acts should be considered to have no home elsewhere) orii for periods exceeding 60 days by patients with homes elsewhere, iii The number of days to be calculated for the purposes of this paragraph should be the sum of the days stay in any wards in the hereditament. Where it appears that long stay figures provided by a Trust do not fully reflect the above, an appropriate adjustment should be made to these figures, having regard to the best opinion of the trust

b. Ward sisters’ stations associated with wards falling within (a) above.

c. Toilets, showers, washrooms, lobbies, entrance ways and corridors solely used for access to long stay wards together with stores whether for drugs, dressings or cleaning materials which are ancillary to a ward or wards falling within (a) above, but not central stores, unless the hospital falls within (d) below.

d. Where all patients treated in the hospital fall within category (a) above, all stores and all ancillary offices, except those offices used exclusively for or in connection with treatment of patients, personnel administration, clinical research, or staff training.

e. Permanent living accommodation for staff, (but not “on-call” accommodation).

f. Day rooms, libraries, hobby rooms, wholly used by patients accommodated in wards/rooms falling within (a) (to the extent to which they are not exempt under Sch5 para 16).

g. Kitchens and canteens, boiler houses, on-site laundries wholly serving patients accommodated in wards/rooms falling within (a) above and/or staff housed in accommodation within (e) above.

2) Wards used partly for domestic purposes should be partly excluded from GIA. The wards falling within this category will be those normally used at AVD by certain patients who have no residence elsewhere, or for periods exceeding 60 days by patients with homes elsewhere. The remainder of such wards will normally accommodate patients staying for periods of 60 days or less and will constitute non-domestic property. The area to be excluded from GIA will be found by applying to the total floor area of the ward the following fraction:

1) Accommodation described in (b), (c) (f) or (g) above, but serving a ward or wards falling within para 2 rather than 1(a), shall be excluded from GIA to the extent of the floor area of the accommodation multiplied by the fraction in para 2 above, having regard to all wards served.

2) Accommodation described in (d), (f) and/or (g) above but used by, or for, both long and short stay patients shall be excluded from GIA to the extent of the total area of the accommodation multiplied by the following fraction:

1) Where all EFA within a block is to be excluded from GIA in accordance with 1(a)-(g) above, the whole block is to be excluded from valuation. Where only part of the EFA within the block is to be excluded in accordance with 1 to 4 above, the area excluded within the block should be the GIA of the block multiplied by the following fraction:

If it is impractical to calculate the total EFA of the block or floor, the area excluded should be increased by 20% to give a notional GIA reflecting shared access. Where it is more convenient to ascertain the non-domestic area within a “composite” building directly rather than by deducting the domestic area, the appropriate GIA may be found by adding 20% to the non-domestic EFA.

For the purpose of these provisions, GIA will be as defined in the RICS Code of Measuring Practice, and EFA will equate to NIA as defined in that code but including all bathrooms, sluices and WCs situated within wards, or used exclusively for the purposes of particular wards, and excluding all corridors providing access to any areas defined in paras 1 - 4 above, or to other parts of the hospital.

6. Application Of The Contractor’s Basis

Stage 1

6.1 Building Costs

The following overall costs psm shall be taken to represent the ERC of individual blocks of permanent construction

Cost £psm overall GIA – before external works, contract size allowance and fees
Non Acute Hospitals E.g. Maternity, Geriatric, Mental Health, Community
Year of building Completion Acute Hospitals Excl Operating theatres **But see note Below Operating theatre Education and Nurse Training Buildings NOT Post Grad Medical centres Medium/high secure mental health units **But see note Below
Pre 1945 1108 901 1291 830 901
1945-1959 1293 1050 1503 970 1050
1960-1964 1066 870 1245 799 870
1965-1969 1000 812 1163 750 812
1970-1974 942 762 1090 706 762
1975-1980 1000 812 1163 750 812
1981-1994 1327 1088 1621 995 1088
1995-2002 1542 1198 1663 1156 1198
2003-2005 1601 1244 1715 1201 1244
2006 – 31.3.2010 1676 1350 1768 1238 To be individually considered
1.4.2010 onwards To be individually considered To be individually considered To be individually considered To be individually considered
For further guidance on post 1/4/2010 developments see Appendix 1. The contents of the appendix have not been agreed

The costs relating to acute hospitals in all age bands should be increased by up to £24 per sq m if a combined heat and power plant (CHP) is installed without the necessary certification granting partial exemption, and to a proportionately lower figure where the capacity of the plant does not serve the whole hospital. Where CHP plant is installed which is exempt the costs for all age bands should be reduced by £6.

The following overall costs psm shall be taken to represent the ERC of individual blocks of permanent construction:

*For Non-acute hospitals, minor operation rooms/suites, which do not vary significantly as regards quality/specification from the remainder of the hospital, should be costed at the standard rather than operating theatre level. Where an operating theatre is of a standard commensurate with that expected in an acute hospital, the operating theatre cost should be applied to the area of the theatre (not to the remainder of the suite).

** Where the proportion of domestic long stay beds nights(i.e. relating to patients who have occupied bed nights for in excess of 60 days and during that period have received no treatment(as indicated above)) in non-acute hospitals is more than 30the above costs in terms of £psm should for all age bands be reduced by the following percentages –

If located in

Central London 13.7%

Rest of London 14.5%

M25 Belt 14.7%

Remainder of SE England 14.9 %

Remainder of England & Cardiff 15.3 %

Wales (excluding Cardiff) & Other low value areas 15.6 %

Definitions of the areas referred to above are included within this practice note under the section headed Developed Land Value to which reference should be made

This reduction shall only be applied to ward areas and associated ancillary accommodation as defined in section B of this practice note.

For further guidance on this topic see Appendix 1. The contents of the appendix have not been agreed

Following the revision in policy in respect of the interpretation of domestic accommodation within health care hereditaments this adjustment will now be rarely applied

*** Education and Nurse training buildings shall be valued at 75% of the cost of an acute building of the same age as is detailed in the table above.

6.1.2 Post 2005 Buildings

£1676 is a maximum and to be applied to all new whole acute hospitals (or such hospitals wholly built in phases from 2006 onwards) unless adjusted overall costs of new hospitals show that they should be at less in which case those lower adjusted costs will be adopted.

Extensions will be valued at £1676 unless they are of lower than Queen Elizabeth Romford specification, in which case they will be taken at pre 2006 cost. £1676 should be adopted only for buildings or extensions exhibiting a higher quality of construction than is average for pre 2006 hospitals.

6.1.3 Buildings designed many years before completion

Special treatment may be warranted where a hospital was designed many years before completion.

6.1.4 Minor Buildings

Minor out buildings such as meter houses, bottle stores, small (i.e. less than 26 sq ms) sheds and stores etc. should not be costed, as they are included within the external works addition. All other buildings should be costed as main buildings.

6.1.5 Older Community Hospitals of Cellular Layout

In the pre-1959 community etc bands, prices should be reduced by up to 20% for single storey and 25% for multi-storey where the hereditament is sub-divided internally by solid walls into relatively small rooms.

6.1.6 Low spec 1981-2008 buildings on acute sites

Permanent buildings which are 1981-2008 additions to existing acute buildings and of lower specification than normal for that period are to be costed within range between:

  • The Acute price and
  • The equivalent Community price (this could be the Community operating theatre price if new block is an operating theatre).

It is envisaged that only a minority of 1981- 2008buildings will qualify for such treatment.

6.1.7 Definition of Acute Hospital

There is no official definition within the NHS of an Acute Hospital. Typically a hospital coming within this description provides a wide range of specialist care and treatment for patients that may include routine, complex and life saving surgery and specialist diagnostic procedures and treatment. Although some consultations and treatments may be undertaken on an outpatient basis, an Acute Hospital will usually have a significant inpatient resource for observation, treatment and recovery. Acute Hospitals may also be teaching or university hospitals reflecting the opportunities they afford to provide medical training in general and specialist areas.

The distinguishing features of these hospitals usually include:

  • Major operating theatres, full A&E, ICU & HDU facilities.

  • Of significant importance within the Trust.

  • Substantial general wards.

In most instances the status of a hospital will have been established in the 2005 List and is unlikely to have changed. In cases of doubt caseworkers should in the first instance refer to their Technical Advisers for further guidance.

6.1.8 Exceptions

Exceptions from the above costs are set out in paras 1.1.9 to 1.1.16 below.

6.1.9 System buildings

System or modular buildings should be valued at the appropriate rate for the hospital, see para 1.1, other than blocks which are constructed using the “Oxford” or “Best Buy” systems when reductions should be made from the above costs as follows:

Pre 1960 -16.5%
1960-1964 -16.5%
1965-1969 -16.5%
1970-1974 -16.5%
1975-1980 -10%
1981 onwards -27.5%

Consideration may be given to extending this reduction to certain other “systems”, where appropriate. Flat roof allowance should not be given to system buildings.

6.1.10 Temporary Buildings (including timber buildings)

For all blocks of temporary, or timber, construction (even where those buildings have in fact been on site for many years) a cost of £553 per sm GIA (before external works, contract size allowance, fees and age and obsolescence) should be adopted for all buildings first occupied prior to 2008, and for newer buildings £650 per sq m. Where the temporary or timber building is unheated the cost of £500/£650/m2 should be reduced by 12.5%.

6.1.11 Stores and other inferior buildings

For all separate or distinct stores, plant rooms, workshops, offices of inferior construction and garages (but not other buildings) a cost of £480 psm GIA (before external works, contract size allowance, fees, and age and obsolescence) should be adopted regardless of age.

6.1.12 EMS (Second World War Emergency Medical Services) Buildings

EMS buildings will be valued at £400 psm to reflect age & obsolescence provided that those buildings are currently used as fully functional wards. An addition of up to 10% is appropriate where the building has been refurbished. Further allowances may be made where EMS buildings are not currently used as fully functioning wards. There should be no adjustments for flat roofs to EMS buildings.

6.1.13 Day Surgery and Minor Operations Units

Day surgery and minor operations units are rarely “free standing” and normally form part of a larger hospital in which case they would be costed on the appropriate scale.

6.1.14 Multi-storey, Basement and Roof-top Car Parks

For hospitals outside Greater London, no cost should be included for multi-storey, rooftop or basement car parks.

Link blocks and subways that contain no areas that are used for any purpose other than for passage between adjoining blocks should be left out of the costing exercise. This omission is justified because their presence is dictated by the absence of a uniform design and denotes an attempt to reduce the drawbacks of dispersal that would not have arisen if the hospital had been designed as an integral whole. Exceptionally the GIA of link blocks or subways should be included where they are original components of a unified design.

6.1.16 Flat Roofs

A reduction of £281 psm of roof ‘foot print’ should be made to the value of pre 1960 and post 1980 buildings with traditional flat, timber & truss decked, felt covered roofs (£140 psm foot print for flat roofs with other coverings).

No allowance should be made on roofs of post 2004 buildings unless constructed as above.

6.1.17 Plant Rooms

Where plant rooms are located within the main envelope of the hospital building and the GIA of the floor space used for that purpose exceeds 10% of the total GIA of the hospital building, consideration should be given to the exclusion of the excess GIA from the valuation. Such an approach will only be appropriate where it is clear that the excess floor space is surplus to the current requirements of the hospital.

6.2 Location adjustment

The following location factors should be applied to the above costs. Where a particular hospital falls on or close to the county or London borough boundary and the location factor given in the table below is higher or lower in the adjacent county or borough consideration should be given to adjusting the location factor upward or downward as appropriate.

SCOTLAND
Scotland 1.02

NORTHERN REGION

Cleveland Including Hartlepool, Stockton on Tees, Middlesbrough, Redcar and Cleveland 0.99
Cumbria 1.02
Durham 0.98
Northumberland 1.02
Tyne & Wear 0.98

YORKSHIRE AND HUMBERSIDE REGION

Humberside Including East Yorkshire, Holderness, Kingston on Hull, North Lincs, N E Lincs, Boothferry and Beverley 0.98
North Yorkshire 0.98
South Yorkshire 0.96
West Yorkshire 0.94

EAST MIDLANDS REGION

Derbyshire 0.93
Leicestershire Includes Rutland 0.93
Lincolnshire 0.92
Northamptonshire 0.98
Nottinghamshire 0.92

EAST ANGLIA REGION

Cambridgeshire 0.99
Norfolk 0.93
Suffolk 0.95

SOUTH EAST REGION (EXCLUDING LONDON)

Bedfordshire Includes Luton 1.04
Essex 1.05
Hertfordshire 1.09
Kent 1.07
Surrey 1.12
East Sussex 1.08
West Sussex 1.07
Berkshire 1.07
Buckinghamshire 1.05
Hampshire 1.03
Isle of Wight 1.04
Oxfordshire 1.01

GREATER LONDON

Barking & Dagenham 1.07
Barnet 1.12
Bexley 1.14
Brent 1.14
Bromley 1.11
Camden 1.26
City of London 1.20
City of Westminster 1.26
Croydon 1.15
Ealing 1.15
Enfield 1.09
Greenwich 1.15
Hackney 1.19
Hammersmith & Fulham 1.22
Haringey 1.20
Harrow 1.10
Havering 1.02
Hillingdon 1.10
Hounslow 1.09
Islington 1.20
Kensington & Chelsea 1.27
Kingston Upon Thames 1.17
Lambeth 1.20
Lewisham 1.11
Merton 1.16
Newham 1.08
Redbridge 1.07
Richmond Upon Thames 1.14
Southwark 1.20
Sutton 1.12
Tower Hamlets 1.18
Waltham Forest 1.10
Wandsworth 1.20

SOUTH WESTERN REGION

Avon Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire. 1.03
Cornwall 1.01
Devon 1.00
Dorset 1.03
Gloucestershire 1.03
Somerset 1.00
Wiltshire 1.02

WEST MIDLANDS REGION

Hereford & Worcester 0.93
Shropshire 0.92
Staffordshire 0.90
Warwickshire 0.95
West Midlands 0.93

NORTH WEST REGION

Cheshire 0.90
Greater Manchester 0.91
Lancashire 0.90
Merseyside 0.91

WALES

Clywd 0.93
Dyfed 0.99
Gwent 0.97
Gwynedd 0.95
Mid Glamorgan 0.97
Powys 0.96
South Glamorgan 0.98
West Glamorgan 0.95

Islands

Isle of Man, Isles of Scilly and Channel Islands 1.22

6.3 External Works

6.3.1 The following additions should be made to the locationally adjusted ERC:-

2.5% to 1% Town centre or island site with 90% or greater building ratio, typically with no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament.
7.5%-5% Site with 50%/75% building ratio, typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and limited general parking within the hereditament.
5% to 2.5% As above, but with 80% to 90% building ratio, typically with limited staff parking and landscaping, and with some boundary fencing.
10%-7.5% As above, but with less than 50% building ratio typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which in some cases may fall short of full requirements. At the top end of the range, landscaping around buildings will be extensive and car parking within the site will be adequate for staff and all other users.

6.3.2

Building ratio for this purpose should be taken to be aggregate total GIA (including domestic property within a composite hereditament) expressed as a percentage of total developed land area (excluding any surplus, unnecessary or unwanted land). Some hospitals that suffer from a fragmented layout including a number of minor low-rise buildings may have relatively low site ratios. This may result in artificially high additions for external works. In such circumstances a specific additional allowance will be required at Stage 5 of the valuation in order to eliminate the cost of any external features not required in a modern rationally planned substitute.

6.3.3

Where car-parking provision is inferior to the standard mentioned above as typical for the building plot ratio band the above percentages may be abated to no less than the minimum in the next lowest band. Where parking provision is improved, without altering the building plot ratio band, the percentages may be increased to no more than the maximum in the next highest band.

6.4 Contract Size Adjustment

The aggregate of locationally adjusted building costs and external costs should be subject to contract size adjustment as set out below. The VO Cost Guide for the 2010 Revaluation provides a detailed explanation for this adjustment. The allowance will be determined by the cost of the whole hereditament including that of domestic and exempt areas.

Contract Size Adjustment Table
ERC £ % Adjustment
Up to 0.5 million + 10% max
0.75 million + 7.5%
1.0 million +6%
1.5 million +4%
2.0 million +2%
3.0 million ZERO
4.0 million -1%
5.0 million -2%
6.0 million - 3%
8.0 million -5%
11.0 million -7%
14.0 million -8%
17.0 million -9%
Over 20.0 million - 10.0% MAX
NB. Intermediate figures may be interpolated.

6.5 Professional Fees and Charges

An addition of 9.5% shall be made to the total cost of permanent buildings in Acute & Maternity Hospitals.

An addition of 10% shall be made to the total cost of all other permanent buildings in Geriatric, Psychiatric, Community & Cottage Hospitals & free standing Day Surgery units.

An addition of 5% shall be made to the total cost of temporary buildings assembled on site.

An addition of 2.5% shall be made to the total cost of temporary buildings that are brought onto the site complete rather than for assembly in modular form.

In each case the percentage addition will be made after locational adjustment, the addition of the cost of associated external works, and contract size adjustment.

Stage 2

7. Obsolescence Allowances

7.1 (a) Permanent Buildings

Obsolescence allowances shall be made for individual blocks of permanent buildings within a hospital, after additions for external works and fees, in accordance with the following age-related scale: For the purposes of Age and Obsolescence only, the age of the building should be taken as one year before opening, for buildings constructed before 2010

Year of building completion % Allowance Year of building completion % Allowance
2010 0 1984 21
2009 0.5 1983 22
2008 1 1982 23
2007 1.5 1981 24
2006 2 1980 25
2005 2.5 1979 26
2004 3 1978 27
2003 3.5 1977 28
2002 4 1976 29
2001 4.5 1975 30
2000 5 1974 31
1999 6 1973 32
1998 7 1972 33
1997 8 1971 34
1996 9 1970 35
1995 10 1969 36
1994 11 1968 37
1993 12 1967 38
1992 13 1966 39
1991 14 1965 40
1990 15 1964 41
1989 16 1963 42
1988 17 1962 43
1987 18 1961 44
1986 19 1960 45
1985 20 Pre 1960 45-50
7.1.2

There may be exceptional cases e.g. substantially unmodernised pre-1960 buildings, or buildings pending redevelopment, where an allowance in excess of 50% would be justified.

When considering if a building falls into the category of “substantially un-modernised” regard should be had to the following-

The hypothetical tenant is deemed to have maintained the hereditament in good order not only to command the original rent but to enable it to provide modern healthcare; to do this pre-1960 buildings will be expected to have had an upgraded electrical supply, replaced floor coverings and sanitary fittings during their life. As these are the minimum expectations, the presence of any of these works carried out more than 15/20 years earlier will not offend substantial un-modernisation; nor will compliance with all Fire and Health & Safety regulations.

To qualify for an age/obsolescence allowance in excess of 50% it is expected that the building will predominantly have the following:

  • original roof covering
  • original windows
  • original internal layout
  • original ceiling height, with no suspended ceilings
  • no air conditioning
7.1.3

Where a block dating from before 1981 has been the subject of above average modernisation or refurbishment after 1 April 1995, the ARC may be increased. A more significant addition may be warranted where a very major scheme has been undertaken such as the external recladding of a 1960s building.

7.1.4

Special treatment may be warranted where a hospital was designed during an age range prior to that in which it is completed.

7.1.5

Care should be taken to avoid double counting between this Stage and Stages 1 and 5, particularly in respect of fragmentation/dispersal/poor layout. Where these problems are found within blocks, and are caused by bad internal design, they should normally be regarded as reflected in the age-related costs set out in para 1.1.1 although particular problems evidenced by difficult communications between departments within the block may justify an increase in the percentage allowance of up to 5%. The internal communication problems of tall buildings are however dealt with at para 2.2 below. Where problems arise from bad external arrangement between blocks, the additional allowance falls to be considered at Stage 5 (see para 5 below).

7.1.6

(a) For buildings where there is specific evidence of functional redundancy and/or physical disrepair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where, for example, modern health and safety, fire or building regulations preclude or limit the original purpose of the building.

7.1.7

For “Oxford” or “Best Buy” system-built structures and other accepted systems, the allowances given above may be increased; by a further 10% where the block was built before 1985, and by up to a further 7.5% where the block was built 1985-1995. (VO caseworkers are instructed to refer to NSU before any allowance under this heading is conceded)

For further guidance on this topic see Appendix 1. The contents of the appendix have not been agreed.

7.1.7(b) Temporary Buildings

Obsolescence allowances shall be made for individual blocks of temporary buildings within a hospital, (including those of inferior construction which were erected for temporary purposes and have outlasted their intended lives) after additions for external works and fees, in accordance with the following age-related scale:

2009 1.5% 1994 24.0% 1979
2008 3.0% 1993 25.5% 1978
2007 4.5% 1992 27.0% 1977
2006 6.0% 1991 28.5% 1976
2005 7.5% 1990 30.0% 1979 46.5%
2004 9.0% 1989 31.5% 1978 48.0%
2003 10.5% 1988 33.0% 1977 49.5%
2002 12.0% 1987 34.5% 1976 51.0%
2001 13.5% 1986 36.0% 1975 52.5%
2000 15.0% 1985 37.5% 1974 54.0%
1999 16.5% 1984 39.0% 1973 55.5%
1998 18.0% 1983 40.5% 1972 57.0%
1997 19.5% 1982 42.0% 1971 58.5%
1996 21.0% 1981 43.5% Pre 1971 60.0%
1995 22.5% 1980 45.0%
7.1.8

The deduction of the appropriate allowance from aggregate costs will give the ARC of each block.

8. Multi-floor allowances

8.1.1

The following deductions should be made from the ARCs of individual blocks on the assumption that lift provision is adequate. These deductions should be made after the age-based allowance has been made; the percentage deductions are not cumulative.

Buildings with two main floors or less 0%
Buildings with three main floors or more 10% overall*

For further guidance on this topic see Appendix 1. The contents of the appendix have not been agreed

8.1.2

These deductions are intended to reflect the operational difficulties of running a hospital in a multi-storey building. In particular, they reflect the problems of patients, staff and visitors moving between different storeys. The deductions should only apply therefore to floors which are directly devoted to patient care and will not become applicable if the floors above 2 stories are used for ancillary purposes such as administrative offices, stores, changing rooms or plant areas.

Where the lower floors of a building are larger than the upper floors, the caseworker will need to make a judgement as to the extent to which the extended parts of the lower floors should also benefit from the multi-storey allowance. This will depend on the use of the extension in the context of the use of the building. If the uses are distinct such as a tower block above a two storey podium where the podium houses outpatient and clinical departments and the tower block contains the in-patient areas it is expected that the multi floor allowance will not apply to the podium; whereas if the use in the extension is directly related to the use in the building then it will be appropriate to apply the allowance to the whole. The test to be applied before a decision is taken to apply the allowance to any floor space within a building is as follows: “Is the use of the space hampered by the number of stories in the building?” If the answer is in the negative, no allowance should be made.

8.1.3

Where, exceptionally, lifts are inadequate to serve the actual use that is being made, further allowance may be warranted. This must be justified on the facts of particular cases, and is recognised as not normally necessary.

Stage 3

9. Developed Land Value

The value of the developed land, apportioned in respect of its non-domestic use shall be taken to be the following percentages of the aggregate of the ARC of all buildings and external works:

For further definition of areas, *see below Acute Hospitals Non-acute Hospitals & mental Health Units
*Central London 12.5% 17.0%
*Rest of London 9% 11.25%
*M25 belt 7.5% 9.375%
**Remainder of South East England 6% 7.5%
Wales (excluding Cardiff), Merseyside and North East England***, Cornwall, Devon, Somerset including North Somerset but not Bath and North East Somerset, , Lincolnshire, Copeland, Allerdale, Barrow In Furness 2% 2.5%
Remainder of England (excluding areas indicated below) + Cardiff 4% 5%

Central London is W1, W2, W8, W11, SW1, SW3, SW5, SW7, SW10, WC1, WC2, EC1, EC2, EC3, EC4

Rest of London - West is the London boroughs of Enfield, Barnet, Harrow, Brent, Hillingdon, Ealing, Hounslow, Richmond, Kingston, Wandsworth, Merton, Bromley, and those parts of Camden, Westminster, Kensington & Chelsea, and Hammersmith & Fulham outside the defined postal districts for the London Central zones.

Rest of London - East is the remainder of London falling outside the Central and Rest of London West zones

The “M 25 Belt” is for this purpose defined as the following Billing Authority areas:

Hertfordshire Hertsmere, St Albans, Three Rivers, Watford, Dacorum, Broxbourne, St Alban’s, Welwyn/Hatfield
Buckinghamshire Chiltern, South Bucks, Wycombe
"Berkshire" Slough, Windsor and Maidenhead, Bracknell, Wokingham, Reading
Surrey (the whole county) Surrey Heath, Runnymede, Spelthorne, Elmbridge, Woking, Guildford, Waverley, Tandridge, Reigate & Banstead, Mole Valley, Epsom & Ewell
Essex Epping Forest, Thurrock, Brentwood, Basildon
Kent Sevenoaks, Dartford
West Sussex Crawley

The remainder of South East England is defined as the following counties excluding the Billing Authority areas forming part of the “M 25 Belt” as defined above:

Bedfordshire, Buckinghamshire, Berkshire, Oxfordshire, Hertfordshire, Essex, Kent, East and West Sussex, for the avoidance of doubt the Isle of Wight should be treated as outside “South East England” for the purpose of this Practice Note.

The treatment of land value at Stage 3 for hospitals in Hampshire, Poole, Bournemouth and Christchurch has not been agreed.

For further guidance on this topic see Appendix 1. The contents of the appendix have not been agreed.

North East England is defined as including Northumberland, Tyne & Wear, County Durham, and Cleveland (Hartlepool, Stockton on Tees, Middlesbrough, Redcar and Cleveland).

Where a particular hospital falls on or close to a boundary and the developed land value percentage is higher or in the adjacent area consideration should be given to adjusting the percentage upward or downward as appropriate.

Stage 4

10. Decapitalisation Rate

The ARC of the hereditament shall be decapitalised to an annual equivalent by taking

3.33% (2.97% in Wales).

Stage 5

11. End Adjustments

Problems associated with dispersal of blocks within a hereditament, piecemeal development and lack of integrated design should be addressed at this stage. The allowance to be made in respect of these features should not normally exceed 15%.

End allowances will always be a subjective judgement to be made by the Valuers dealing with a particular case. Only they will have inspected the hospital and be familiar with any disadvantages it may suffer. When making these judgements, Valuers may wish to bear in mind the following factors which are considered to be amongst the most relevant:

  • The total number of buildings on site.
  • The percentage of total floor area contained within any reasonably well designed central core building.
  • Superfluity may need to be reflected where it can be identified
  • general layout of the site from an operational viewpoint.
  • quality and convenience of links between buildings.
  • general arrangement and degree of dispersal of the buildings.
  • the site slopes noticeably.
  • there is a wide mix of ages of buildings (this can make maintenance and servicing more difficult).
  • a particular cost arises solely due to fragmentation and dispersal eg. the cost of operating an in-site bus service due to the fragmented and/or steeply sloping nature of the site.
  • location may be relevant but only in fairly rare cases eg. where access is particularly poor or where security problems or other specific nuisances arise due to the particular locality in which the hospital is located and where those nuisances might not be expected to arise elsewhere within the catchment area that the hospital serves.
  • Shared sites with substantial trust and university presence.
  • Duplicated reception areas, and ancillaries, caused by dispersal (but bearing in mind that centralised reception areas are not a feature of larger hospitals, and that separate receptions for individual departments may be operationally required).

It should be noted that:

  • It is not necessarily considered to be a disadvantage to have distinct single separate blocks for mental health units, EMI, paediatric care, maternity, workshops/boiler house/storage provided that where appropriate, these have good quality links with relevant blocks eg. paediatric wards with operating theatres.
  • presence of a number of dispersed small, low value ancillary buildings (eg. nissen huts) should have little impact on the overall percentage end allowance.

It is considered that the following factors, when considered in isolation, will not usually warrant any end allowance:

A hospital that is constructed on a gently sloping site.

  • Where a hospital is “as designed”, where all buildings are linked and are of a similar age.
  • For large acute hospitals, piecemeal development up to 10 separate buildings (more extensive piecemeal development would however be likely to warrant an end allowance).

It should be emphasised that the above factors would only fail to attract an end allowance where they are present in isolation. A combination of any of the above factors may well warrant an end allowance.

Practice note 4: 2010: Appendix 1: Guidance note NHS hospitals

This guidance note is to be read in conjunction with the revised 2010 practice note relating to NHS Hospitals. It gives guidance on those aspects of the practice note which were not agreed with the syndicate of agents acting on behalf of a number of Primary Care Trusts or where reference to further guidance is made within the practice note.

The subject matters covered relate to

  • Building Costs to be applied at stage 1 of the contractors basis of valuation where the date of completion occurs after 1/4/2010
  • The application of a reduction in building costs to non –acute hospitals where long stay bed nights exceed 30% of total bed nights.
  • The treatment of age and obsolescence relating to “Oxford” or “Best Buy” Systems built structures
  • Multi-floor allowances
  • Land values in Hampshire and parts of Dorset

1. Building Costs post 1/4/2010(PN reference 1.1.)

The revised 2010 practice note advises VO’s that the cost applicable to buildings erected post 1/4/2010 in respect of all hospitals should have regard to actual cost.(In respect of medium and high secure mental health units this applies to buildings completed after 31st December 2006) “Have regard to” should not be taken to mean “adopt” . The first step in the consideration of known building costs is the analysis and adjustment of the costs such that they are compatible with both the level of building costs at the AVD and with the principles of the contractors basis of valuation. The exercise should preferably be undertaken by a building cost expert in NABS. Only in circumstances where full analysed and adjusted costs are available and the costs of all non –rateable elements have been allowed for should the actual adjusted cost be adopted .

In other circumstances the following practice should be followed

a. Where only headline costs are known or cost information is incomplete, so as not to permit identification of non-rateable and/or abnormal costs, a 30% deduction should be made from the cost after adjustment for date, location and contract size (subject to an underpinning minimum of £1676 in respect of acute hospitals and £1350 in respect of non-acute hospitals)

b. Where no cost information is available the cost to be applied may be up to a maximum of 30% above the 2010 costs dependant upon the perceived quality of the buildings under consideration.

Vo’s should be aware that the increased costs are largely attributable to enhanced specification partly attributable to the “green agenda” and partly due to the availability of funds prior to the current period of austerity. Although the former will continue to be a feature in building works completed post 2012, the latter will not.

In the event of an appeal leading to litigation it may be necessary to reconsider the costs adopted which in respect of submissions to the Tribunals would be expected to align with the actual adjusted costs.

The above is subject to the general proviso relating to extensions of existing hereditaments contained with paragraph 1.1.2 of the practice note

2. Reduction in Building Costs were long stay bed nights exceed 30% of total bed nights (PN reference 1.1.)

This provision is concerned with the entire hospital and should not be applied on a ward by ward basis i.e. Only where long stay bed nights exceed 30% of total bed nights across all wards should the lower costs be adopted and then only applied to ward areas and associated ancillary accommodation. A new code MW is available for use within the revised valuation spreadsheet and should be applied to the those line entries to which the lower cost is to apply.

3. The treatment of age and obsolescence relating to “Oxford” or “Best Buy” Systems built structures (PN reference 2.1.6)

In general buildings as referred to above or other accepted systems should only be given the additional allowances where it can be established that due to their method of construction the buildings performance has deteriorated at a faster rate than that normally associated with traditional buildings. This may manifest itself in higher than normal maintenance, repair and running costs. In respect of buildings constructed in the period 1985-1995 caseworkers should refer to NSU before any allowance is conceded. It is expected that clear evidence of accelerated depreciation will be advanced to justify an allowance.

4. Multi-floor allowances (MFA) (PN reference 2.1.6)

MFAs are intended to reflect the operational difficulties of running a hospital in a multi-storey building. In particular, they reflect the problems of patients, staff and visitors moving between different storeys. The deductions should only apply, therefore, to floors which are directly devoted to patient care and will not become applicable if the floors above 2 stories are used for ancillary purposes such as administrative offices, stores (other than for medical supplies), changing rooms or plant areas.

Where the lower floors of a building are larger than the upper floors, the VO’will need to make a judgement as to the extent to which the extended parts of the lower floors should also benefit from the multi-storey allowance. This will depend on the use of the extension in the context of the use of the building. If the uses are distinct such as a tower block above a two storey podium where the podium houses outpatient and clinical departments and the tower block contains the in-patient areas it is expected that the multi floor allowance will not apply to the podium; whereas if the use in the extension is directly related to the use in the building then it will be appropriate to apply the allowance to the whole.

5. Land values in Hampshire and parts of Dorset (PN reference 3.1)

Land values in Hampshire, Poole, Bournemouth and Christchurch have not been agreed. VO’s should continue to apply the land value addition appropriate to defined areas of SE England (6% and 7.5%) to hospitals situated in these locations. Appellants will be expected to justify the application of lower values by reference to actual land sales in those areas.

It is possible that this issue may require resolution via litigation in which case actual land values rather than a % of ARC will be required at stage 3 of the valuation. In preparation of this possibility referencers and caseworkers should record the actual developed land area within the survey record/ valuation sheet.

Queries relating to this guidance note should be directed to NSU(Civics)

Practice note 5: 2010: The valuation for rating of private sector hospitals

This practice note has been revised following Counsel’s advice that “treatment” as described below should be regarded as a non-domestic use of property: “‘Treatment’” means treatment in its normal sense and therefore includes, but is not limited to, any medical intervention, diagnostic care or observation undertaken by professional staff in hospitals, including doctors, nurses, midwives, therapists and psychologists, designed to improve or modify patients’ physical and/or mental abilities and social functions. This includes, but is not limited to nursing (which includes aiding convalescence), psychological interventions, physiotherapy and other sorts of therapy including habilitation and rehabilitation”

A period of 60 days remains a fair determinant of short-stay accommodation. Therefore for hospital ward space to qualify as domestic property within s66 of the Local Government Finance Act 1988 it will be necessary to establish that patient stays are in excess of 60 days while not receiving “treatment”. This is thought to be extremely unlikely.

Consequently it is likely that ward space and ancillary accommodation which was previously apportioned between domestic and non-domestic use should now be treated as solely non- domestic use and assessed accordingly. Further detail is provided in the Rating Manual (RM) Section 840 to which reference should be made.

This policy recognises the significant changes that have taken place in healthcare provision since the policy was first formulated some 25 years ago. The incidence of hospitals providing “care” as opposed to “treatment”, for example the old style geriatric wards, is now thought to be very much a feature of the past.

Permanent staff accommodation (but not temporary accommodation provided for “on-call” staff or patients’ relatives) should continue to be treated as domestic accommodation and where this is present the hereditament is to be regarded as a composite property.

The interpretation and application of exemption under paragraph 16 of Schedule 5 of LGFA remains unaltered and should continue to be applied in appropriate circumstances (see Rating Manual Section 840)

It remains the case that there may well be some private hospitals which will remain as composite hereditaments. The approach to valuation in circumstances where a domestic element is present is now contained in Appendix 1 to the main section of the rating manual dealing with NHS hospitals and does not features in this practice note.

1. Co-ordination arrangements

Private Hospitals are a specialist class, responsibility for ensuring effective co-ordination lies with the appropriate CCT. Guidance on interpretation of the practice note and difficulties of implementation should be referred to the NSU specialist advisor For more information see Rating Manual – Section: Practice Note 1: 2010

The Special Category Code 135 should be used. As a specialist class the appropriate suffix letter is S.

2. Valuation Basis

The contractor’s basis provides the principal method of valuation, without prejudice to the application of a rental basis where evidence is available; such evidence is likely to be found in Central London and it is anticipated that valuation on this basis will be confined to this location.

This property is valued using the non-bulk server.

3. Basis of measurement and referencing

All referencing should be on the basis of Gross Internal Area (GIA) as defined in the RICS/ISVA Code of Measuring Practice (4th edition). One overall GIA should be found for the hospital with separate areas to GIA identified for:

  • Outbuildings, including temporary Portakabin offices
  • Separate stores, workshops and garages situated outside of the principal hospital accommodation

4. Exemption issues; composite hospitals

Exemptions under the provisions of LGFA 1988 Sch 5, issues of composite hereditaments and of the boundary between domestic and non-domestic use arise in the NHS Estate. The principles to be adopted, should the need arise, are set out in the companion practice note concerning NHS Hospitals and the associated Rating Manual section and are not reproduced here in the interests of brevity.

5. Application of the Contractors Basis

5.1 Building Costs

The following overall costs /m2 shall be taken to represent the ERC of individual blocks of permanent construction: these are costs per square metre GIA before external works, contract size allowance and fees.

Up to1994 1995 to 2002 2003- 2005 2006 to 1/4/2010 Post 2010
Acute Care Hospitals 1362 1474 1555 1600 To be individually considered
For psychiatric care hospitals and those lacking operating theatres, HDU and X-Ray suites 1225 1325 1400 1440 To be individually considered

System and modular buildings should be cost on their own merits, this may be at the same level as the main hospital , higher or lower depending on specification. Where available regard should be had to actual costs.

For all blocks of temporary construction a cost of £500 per m2 GIA for buildings pre 2003, age and obsolesce £650/m2 for buildings built 2003 onwards (before external works, contract size allowance and fees) should be adopted regardless of age.

For all separate stores, workshops, plant rooms and garages (but not other buildings) a cost of £480 per m2 GIA (before external works, contract size allowance age, obsolesce and fees) should be adopted regardless of age.

Link blocks and subways that contain no areas that are used for any purpose other than for passage between adjoining blocks should be left out of the costing exercise. This omission is justified because their presence is dictated by the absence of a uniform design and denotes an attempt to reduce the drawbacks of dispersal that would not have arisen if the hospital had been designed as an integral whole. Exceptionally the GIA of link blocks or subways should be included where they are original components of a unified design.

Where plant rooms are located within the main envelope of the hospital building and the GIA of the floor space used for that purpose exceeds 10% of the total GIA of the hospital building, consideration should be given to the exclusion of the excess GIA from the valuation. Such an approach will only be appropriate where it is clear that the excess floor space is surplus to the current requirements of the hospital.

5.2 Location Adjustment

The following location factors should be applied to the costs referred to at paragraph 5.1. Where a particular hospital falls on or close to the county or London borough boundary and the location factor given in the table below is higher or lower in the adjacent county or borough consideration should be given to adjusting the location factor upward or downward as appropriate.

NORTHERN REGION

Cleveland Including Hartlepool, Stockton on Tees, Middlesbrough, Redcar and Cleveland 0.99
Cumbria 1.02
Durham 0.98
Northumberland 1.02
Tyne & Wear 0.98

YORKSHIRE AND HUMBERSIDE REGION

Humberside Including East Yorkshire, Holderness, Kingston on Hull, North Lincs, N E Lincs, Boothferry and Beverley 0.94
North Yorkshire 0.98
South Yorkshire 0.96
West Yorkshire 0.94

EAST MIDLANDS REGION

Derbyshire 0.93
Leicestershire Includes Rutland 0.93
Lincolnshire 0.92
Northamptonshire 0.98
Nottinghamshire 0.92

EAST ANGLIA REGION

Cambridgeshire 0.99
Norfolk 0.93
Suffolk 0.95

SOUTH EAST REGION (EXCLUDING LONDON)

Bedfordshire Includes Luton 1.04
Essex 1.05
Hertfordshire 1.09
Kent 1.07
Surrey 1.12
East Sussex 1.08
West Sussex 1.07
Berkshire 1.07
Buckinghamshire 1.05
Hampshire 1.03
Isle of Wight 1.04
Oxfordshire 1.01

GREATER LONDON

Barking & Dagenham 1.07
Barnet 1.12
Bexley 1.14
Brent 1.14
Bromley 1.11
Camden 1.26
City of London 1.20
City of Westminster 1.26
Croydon 1.15
Ealing 1.15
Enfield 1.09
Greenwich 1.15
Hackney 1.19
Hammersmith & Fulham 1.22
Haringey 1.20
Harrow 1.10
Havering 1.02
Hillingdon 1.10
Hounslow 1.09
Islington 1.20
Kensington & Chelsea 1.27
Kingston Upon Thames 1.17
Lambeth 1.20
Lewisham 1.11
Merton 1.16
Newham 1.08
Redbridge 1.07
Richmond Upon Thames 1.14
Southwark 1.20
Sutton 1.12
Tower Hamlets 1.18
Waltham Forest 1.10
Wandsworth 1.20

SOUTH WESTERN REGION

Avon Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire. 1.03
Cornwall 1.01
Devon 1.00
Dorset 1.03
Gloucestershire 1.03
Somerset 1.00
Wiltshire 1.02

WEST MIDLANDS REGION

Hereford & Worcester 0.93
Shropshire 0.92
Staffordshire 0.90
Warwickshire 0.95
West Midlands 0.93

NORTH WEST REGION

Cheshire 0.90
Greater Manchester 0.91
Lancashire 0.90
Merseyside 0.91

WALES

Clywd 0.93
Dyfed 0.99
Gwent 0.97
Gwynedd 0.95
Mid Glamorgan 0.97
Powys 0.96
South Glamorgan 0.98
West Glamorgan 0.95

Islands

Isle of Man, Isles of Scilly and Channel Islands 1.22

5.3 External Works

The following additions should be made:

2.5% to 1% Town centre or island site with 90% or greater building ratio, typically with no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament.
5% to 2.5% As above, but with 80% to 90% building ratio, typically with limited staff parking and landscaping, and with some boundary fencing.
7.5%-5% Site with 50%/75% building ratio, typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and limited general parking within the hereditament.
10%-7.5% As above, but with less than 50% building ratio typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which in some cases may fall short of full requirements. At the top end of the range, landscaping around buildings will be extensive and car parking within the site will be adequate for staff and all other users. It is expected that most Private Hospitals will not reach the upper end of the range

Building ratio for this purpose should be taken to be aggregate total GIA (including domestic property within a composite hereditament) expressed as a percentage of total developed land area (excluding any surplus, unnecessary or unwanted land).

The above does not include multi storey or basement car parking for which a separate addition should be made.

5.4(a) Contract Size Adjustment

The aggregate of building costs (adjusted for location) and external costs should be subject to contract size adjustment as set out below.

ERC £ % Adjustment
Up to 0.5 million + 10% max
0.75 million + 7.5%
1.0 million +6%
1.5 million +4%
2.0 million +2%
3.0 million ZERO
4.0 million -1%
5.0 million -2%
6.0 million -3%
8.0 million -5%
11.0 million -7%
14.0 million -8%
17.0 million -9%
Over 20.0 million - 10.0% MAX
NB. Intermediate figures may be interpolated.

5.5 Professional Fees and Charges

An addition of 9.5% shall be made to the building costs and external costs for all acute buildings including maternity buildings, adjusted for location and contract size.

An addition of 10% shall be made for Psychiatric buildings and outbuildings

Where Temporary Buildings form a significant part of the valuation:

  • Professional Fees of 5% shall be added to the total cost of temporary buildings assembled on site.
  • Professional Fees of 2.5% shall be added to the total cost of temporary buildings which are brought onto the site complete rather than for assembly in modular form.

5.6 Obsolescence Allowances

The age related allowances as shown below should be applied. For the purposes of Age and Obsolescence only, the age of the building should be taken as one year before opening.

Year of building completion % Allowance Year of building completion % Allowance
2010 0 1984 21
2009 0.5 1983 22
2008 1 1982 23
2007 1.5 1981 24
2006 2 1980 25
2005 2.5 1979 26
2004 3 1978 27
2003 3.5 1977 28
2002 4 1976 29
2001 4.5 1975 30
2000 5 1974 31
1999 6 1973 32
1998 7 1972 33
1997 8 1971 34
1996 9 1970 35
1995 10 1969 36
1994 11 1968 37
1993 12 1967 38
1992 13 1966 39
1991 14 1965 40
1990 15 1964 41
1989 16 1963 42
1988 17 1962 43
1987 18 1961 44
1986 19 1960 45
1985 20 Pre 1960 45-50

Where a private hospital has undergone significant works of refurbishment consideration should be given to reducing the indicated allowance.

Where a purpose built hospital is extended within ten years of its construction and the extension is built to the same design, then the obsolescence allowances applied to the extension should be the same as that for the original building.

5.7 Multi-floor allowances

The following deductions should be made from the ARCs of individual blocks on the assumption that lift provision is adequate. These deductions should be made after the age-based allowance has been made; the percentage deductions are not cumulative.

Buildings with two main floors or less 0%
Buildings with three main floors or more 10% overall*
Buildings with eight or more floors 10% on overall*basis up to 7th floor, then 15% on 8th floor and above.

Where the allowance is made on an overall basis, the percentage deduction will be made in respect of all floors of the building. In the case of the lower two main floors it will not be applied to an area larger than the footprint of the floor above the higher of these.

Hospitals constructed on sloping sites with multiple levels do not qualify for the above allowances unless there is more than one main floor above the highest main floor with ground level access.

Where, exceptionally, lifts are inadequate to serve the actual use, which is being made, further allowance may be warranted. This must be justified on the facts of particular cases, and is recognised as not normally necessary.

In the case of buildings comprising three main floors, where the top floor is composed wholly or mainly of accommodation not directly devoted to patient care (e.g. offices, stores or plant areas) the overall allowance shown in the above table should be reduced to 5%. Where buildings comprise more than 3 three main floors and one or more floors above second floor level is composed wholly or mainly of accommodation not directly devoted to patient care (e.g. offices, stores or plant areas) the overall allowance shown in the table above should be restricted to 5 % in respect of these floors only.

5.8 Developed Land Value

The value of the developed land, apportioned in respect of its non-domestic use shall be taken to be the following percentages of the aggregate of the ARC of all buildings and external works:

London Central (W1, W2, W8, W11, SW1, SW3, SW5, SW7, SW10, WC1, WC2, EC1, EC2, EC3, EC4) Appropriate Capital Value BUT not less than 12.5% of ARC.
London Inner (SW6, W9, W10, W12, W14, NW1, NW8, N1, E1, E2, SE1) Appropriate Capital Value BUT not less than 12.5% of ARC.
Remainder of London boroughs Appropriate Capital Value BUT not less than 12.5% of ARC.
M25 belt 12%
Remainder of South East England 10.15%
Remainder of England & Wales 7.5%

For the purposes of the above table:

  • The M25 Belt should be taken to be the whole county of Surrey, plus Windsor & Maidenhead, Slough, Wokingham, Bracknell Forest, South Bucks, Wycombe, Chiltern, Reading, Oxford (City), Cambridge (City), Dacorum, Three Rivers, Watford, St Alban’s, Hertsmere, Welwyn/Hatfield, E Herts, Broxbourne, Epping Forest, Brentwood, and Sevenoaks

  • The Rest of South East consists of those parts of the counties of Kent, East Sussex, West Sussex, Hants (exc. Isle of Wight), Berks, Bucks, Oxon, Herts, Beds, and Essex,( to the extent that they exclude the BAs listed as in the M25 belt), plus Bournemouth, Poole and Christchurch

Where the evidence indicates that the adoption of the percentage addition for land value produces a land value addition, which in terms of a value per hectare, is in excess of prevailing land values in the immediate locality in which the hospital is located, actual residential building land values current at AVD, less 20% are to be adopted in the alternative.

5.9 Undeveloped Land Value

Undeveloped land will consist of amenity land other than that for the immediate landscaping of buildings. Land which is in excess of that required for amenity use should be ignored. The areas of car parks and roadways are not to be treated as undeveloped land. The value of undeveloped land should be found by using a price per hectare derived from evidence of transactions in other amenity or sports field land. The value adopted should reflect fencing and drainage. The typical range of values recommended for undeveloped land is as below:

Greater London area zone 1 (postal districts EC, WC, W1, W2, W11, W8, SW1, SW3, SW5, SW7 and SW10) £1,650,000 per hectare
Greater London area zone 2 (Greater London excluding zones 1 and 3) £175,000 per hectare
Greater London area zone 3 (within 4 miles of GLA boundary) £60,000 per hectare.
Within M25, but outside Greater London £50,000 per hectare
North East* £25,000 per hectare
Remainder of England and Wales £45,000 per hectare
  • North East consists of Northumberland, Tyne & Wear, Durham and Cleveland

5.10 Decapitalisation Rate

The ARC of the hereditament shall be decapitalised to an annual equivalent by taking the lower statutory Decap. Rate of 3.33%,

5.11 End Adjustments

Where a hospital is particularly poorly located, either by way of access or the general environment in which it is sited it maybe appropriate to incorporate a stage 5 allowance within the valuation. Examples would be hospitals with access through an industrial estate or poor housing development or those located on the sites of NHS Hospitals where the NHS facility is itself located in an area where a private facility would not normally be sited. Similarly an allowance maybe appropriate where it can be demonstrated that a hospital is so remote from the main road network or areas of population that it has a bearing on the ability of the hospital to attract patients.

Likewise problems associated with dispersal of blocks within a hereditament, piecemeal development and lack of integrated design should be addressed at this stage. The allowance to be made in respect of these features should not normally exceed 10%. Allowances conceded during negotiations on the 2005 List should normally be maintained into the 2010 List where the circumstances justifying the concession can clearly still be seen to apply, subject to the comments below.

Construction of new private hospitals dropped off during the 1990s, and during this period, there has been a considerable rise in the use of day care surgery and the average length of stay in hospital following many other procedures has fallen. These factors impact in two ways on the valuation of private hospitals.

Firstly previous measures used for measuring the performance of private hospitals occupancy of bed spaces at midnight may no longer be an accurate yardstick of performance, since a bed may be used by more than one patient during the day, yet generating no overnight stays.

Secondly these two factors have impacted on the likely design of new hospitals, in that it is likely that a lower proportion of ward space required in new hospitals, than in existing hospitals built during the rapid expansion of the sector in the 1980s or earlier. This point is accepted and is therefore reflected in the agreed prices of main buildings for buildings constructed prior to 1995. It follows that hospitals constructed in 1995 or later are likely to be of a design reflecting modern requirements.

Both these points should be taken into account when considering end allowances.

Overall the performance of a particular hospital will need to be judged over at least a 12-month period so as to eliminate the disproportionate effect of holiday periods where the private sector is normally quiet.

Practice note 6: 2010: The valuation for rating of private sector eye hospitals & clinics

Co-ordination Arrangements

Private sector Eye Hospitals and clinics are a generalist class (with specialist guidance as necessary). They should be allocated a primary description code of MH. The SCAT will depend upon the method of valuation adopted

Rentals Basis 437

Exceptionally

Contractors basis 436

As a generalists Class the appropriate suffix letter should be G in both cases.

Method of Valuation

Eye clinics and hospitals are located within a broad spectrum of buildings of different age and specification ranging from converted pre- Victorian residences to purpose built facilities located on edge of town business parks. Many of these buildings will be occupied under a lease and as a consequence it is considered there will be sufficient rental evidence available for the majority of hereditaments in this class to be valued by reference to the rentals method. When considering the pool of rental evidence, regard may be had to rental evidence drawn from other private clinics which are considered to be in the same mode or category of use.

The valuation scheme to be applied will in most instances embrace other private clinics and should utilise valuation scales VXOSUGLIFT1 & VXOSUGNLIFT1.

Exceptionally where there is no rent passing and the building is in such a location and of such a nature that comparison cannot be drawn to rented property in the same mode or category of use elsewhere then the contractors method maybe utilised. Guidance regarding the costs to be adopted and the decap rate to be applied should be sought from the appropriate specialist in NSU.

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

Practice note 2: 2005: Primary care centres/surgeries (GP)/health centres

This Practice Note has been discussed with Simon Harris, Montagu Evans and James Thompson, Drivers Jonas, representatives of private practice acting for the majority of health authorities/trusts in occupation of primary care centres and has been agreed with the exception of some elements as shown in italics. Most particularly Appendix 1 to this Practice Note has not been agreed with the above mentioned practitioners and does not form part of the memorandum of agreement.

1. Method of Valuation.

These hereditaments span a range of types and sizes and include what have popularly been known as “health centres or clinics”, but which are now also termed “primary care centres”, as well as individual GP practice premises.

For the purposes of the 2005 Rating List, for existing assessments where there is an established pattern of valuation, whether it is rentals or contractors test, this should be adopted. For the avoidance of doubt, this practice note does not recommend wholesale revision of method where a body of settlements or comparable assessments exists.

For New Assessments, the method of valuation to be applied is either the rental or contractors test basis in accordance with the flowchart attached as Appendix 1(which is not part of this agreement).

2. Rentals Basis

The existence of direct rental evidence should be investigated in any health related building as the prime source of evidence. Modern forms of provision means that even some highly specialised hereditaments such as kidney dialysis centres can be leasehold and apparently subject to significant rents. In such cases, great care should be taken to ensure that any rental information is carefully investigated to remove non-rateable elements, which may be substantial. Rents that are related to the cost of construction or a return on that cost such as LIFT rents will be of little assistance, as will sale and leasebacks.

Rents that are subject to the Doctors Rent & Rates Scheme, along with their supporting evidence, should be reviewed in the basket of rents considered.

3. Contractors Basis

This part is intended to apply to typical trust health centres

Specialist facilities such as diagnostic centres may require special consideration if the standard of construction or provision of rateable services differs substantially from a typical health centre.

Stage 1

3.1. Building Costs - permanent buildings

Pre 2007 2007onwards
GIA m2 £ /m2 GIA £ /m2 GIA
450 760 800
600 725 760
1000 710 745
2000 700 735

No contract size adjustment is to be made. See note regarding the spreadsheet in part 6

£/m2 figures are to be interpolated for intermediate GIAs.

E.g. A health centre of 850m2, built pre 2007, should have a price calculated as follows:

Price for 600 m2 unit £725

Price for 1000 m2 unit £710

Appropriate price for 850m2

=£725/m2 + (£710/m2-£725/m2) x (850m2-600m2)
(100m2-600m2)
=£725/m2 + (-£15/m2) x (250)
(400)
= £725/m2-£9.37/m2
= £715.62/m2

3.2 For Pre 2003 blocks of temporary construction a cost of £422 per m2 GIA (before external works, contract size allowance and fees) should be adopted. Whilst for those constructed 2003 onwards a cost of £443 per m2 GIA (on the same basis) should be adopted

3.3 For all separate stores, workshops, and garages (but not other buildings) a cost of £375 per m2 GIA (before external works, contract size allowance and fees) should be adopted regardless of age.

3.4 Link blocks and subways that contain no areas that are used for any purpose other than for passage between adjoining blocks should be left out of the costing exercise. This omission is justified because their presence is dictated by the absence of a uniform design and denotes an attempt to reduce the drawbacks of dispersal, which would not have arisen if the health centre had been designed as an integral whole. Exceptionally the GIA of link blocks or subways should be included where they are original components of a unified design.

3.5 Location Adjustment

The factors set out in Table 1 should be applied to the above costs.

3.6 External Works

The following additions should be made to the locationally adjusted ERC of all buildings

Suggested % addition Description
Single storey 2 storeys or more (lower % for more storeys)
2.5%-5% 1%-2.5% Town centre or island site, typically with no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament.
5%-8.5% 2.5%-5% As above, but typically with very limited staff parking and landscaping, and with some boundary fencing.
8.5%-14% 5%-7.5% Site typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and very limited general parking within the hereditament.
14%-17.5% 7.5-10% As above, but typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which falls short of full requirements.
17.5%-20% 7.5%-10% Site typically with extensive landscaping around buildings, secure boundary fencing and adequate parking within the hereditament for staff and all other users.

Where hereditaments do not fit exactly into one of the above categories it will be necessary for valuers to exercise further judgment.

3.7 Professional Fees and Charges

An addition of 10% shall be made to the total cost of permanent buildings.

For Temporary Buildings an addition of 5% and for Modular Buildings an addition of 2.5% should be made.

In each case the percentage addition will be made after location adjustment and the addition of the cost of associated external works.

3.8 Flat Roof

A reduction of £225 psm of roof “footprint” should be made to the value of permanent buildings with flat felt roofs, £112 psm reduction for flat roofs of permanent buildings with other coverings.

3.9 Allowances for inferior construction

A percentage allowance will be made where permanent buildings of a given age exhibit the stated type of construction. This allowance will be deducted from the aggregate ERC derived from the table at 3.1, following the addition of externals and fees.

These allowances should not be made in the case of temporary buildings and stores etc. priced according to para.3.2.

Appropriate allowances are as follows (allowances may not be aggregated between tables):

Either:
Table 3.9.1(a)
Construction type Percentage allowance
Buildings with a significant wall area made up of Continuous, storey height, non-structural infill cladding panels (usually incorporating windows). (These panels are typically found in conjunction with gable walls of brick/block construction). 10%
As above but where such infill cladding panels are not continuous Up to 10% depending on the extent of such panels
Inferior facing brickwork † This allowance is intended to reflect the difference between the quality of facing brick typically used in NHS Health Centres compared with the high quality facing generally present in the private modern beacons. It should be noted that it is not necessary for the brickwork to display a defect or disrepair to attract this allowance. Up to 5%
Buildings of a “pre second world war school” type* exhibiting excessive height and circulation space or poor circulation arrangements. *Pre second world war school” type is typified by a higher central general purpose/circulatory space often with clerestory windows, surrounded by lower consulting and ancillary rooms around the perimeter. These were typically constructed between 1920 and 1960. 5%

In the case of buildings constructed between 1945 and 1959 suffering from inferior facing brickwork, any allowance which may be warranted should not be duplicated at Stage 2.

Table 3.9.1 (b)
Construction type Percentage allowance
Light structural steel or timber frame buildings with flat roof and very little or no brickwork to walls, typically substantially pre-fabricated and assembled on site (to include system built buildings) 27.5%

Or

Table 3.9.1(c)

Minimum allowances

Year Construction Type Minimum percentage allowance
1960-64 Any 5% minimum
1965-74 Any 10% minimum
1975-80 Any 5% minimum

The specific allowances mentioned at Para 3.9.1 (a) and (b) above, if appropriate, are to count against the minima in table 3.9.1(c).

A) For example: A “Pre second world war school” type building (5% allowance, ref para 3.9.1(a)) built between 1965 and 1974, would have the minimum allowance of 10% (ref 3.9.1(c)).

B) A “Pre second world war school” type building (5% allowance, ref para 3.9.1(a)) built between 1975 and 1980 would have only that as minimum allowance of 5% (ref para 3.9.1(c)).

C) A building built between 1960 and 1964, which has none of the features mentioned in para 3.9.1(a) will attract only the minimum allowance of 5%.

Stage 2

3.10 Obsolescence allowances shall be made after additions for external works, fees and any allowance under Para 2.6 (allowances for inferior construction), in accordance with the following age-related scale/footnotes. The age to be adopted is one year prior to the date of building completion:

Year % Allowance Year % Allowance
2005 0 1980 20
2004 0.5 1979 21
2003 1 1978 22
2002 1.5 1977 23
2001 2 1976 24
2000 2.5 1975 25
1999 3 1974 26
1998 3.5 1973 27
1997 4 1972 28
1996 4.5 1971 29
1995 5 1970 30
1994 6 1969 31
1993 7 1968 32
1992 8 1967 33
1991 9 1966 34
1990 10 1965 35
1989 11 1964 36
1988 12 1963 37
1987 13 1962 38
1986 14 1961 39
1985 15 1960 40
1984 16 1959 41
1983 17 1958 42
1982 18 1957 43
1981 19 1956 44
1980 20 1955 45
Pre 1955 45-50

3.10.1 The scale is not intended to be rigidly age-based and allows for some flexibility in selection of allowance having regard to variations in the functional utility and physical condition of buildings of particular ages. This flexibility is limited to the use of a notional age (for this purpose only) of up to 5 years either side of the year of completion. The internal communication problems of tall buildings are however dealt with at Para 3.11 below.

3.10.2 In the case of refurbished buildings a notional age between the date of refurbishment and the date of original construction may be used in order to derive an appropriate age and obsolescence allowance.

For buildings where there is specific evidence of functional redundancy and/or physical disrepair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where for example modern health and safety, fire or building regulations preclude or limit the original purpose of the building. Care should be taken to not then duplicate this at stage 5.

There may be exceptional cases e.g. substantially unmodernised pre 1955 buildings or redundant buildings where an allowance in excess of 50% may be justified.

Special treatment may also be necessary where a health centre was designed many years before completion (possibly warranting treatment in an earlier age group).

3.10.3 Where an allowance has been given under table 3.9.1(b) above (for light framework buildings) or the building is temporary (and priced according to 3.2) the maximum allowance given under 3.10 above may be increased; by a further 10% where the block was built before 1980 and by a further 7.5% where the block was built 1980-1995.

3.10.4 The deduction of the appropriate allowances from aggregate costs will give the ARC.

3.11 Multi-floor allowances

The following deductions should be made from Adjusted Replacement Costs for health centres with 2 main floors or more on the assumption that lift provision is adequate. These deductions should be made after the age-based obsolescence allowance has been applied.

Buildings with 2 main floors or less 0%
Buildings up to 7th floor 10% overall
8th floor and above 15% (10%overall below 8th floor)

Where, a two-storey building has no lifts an allowance of 10% on the first floor may be warranted.

For buildings of three storeys and above, where lifts are inadequate to serve the actual use that is being made, a further allowance may be warranted.

This must be justified on the facts of particular cases, and is recognised as not normally necessary.

Stage 3

4. Land Value

4.1 Developed Land Value

The value of the developed land, apportioned in respect of its non-domestic use shall be taken to be the following percentages of the aggregate of the ARC of all buildings and external works:

Heathrow -M25 belt 18.5%
South East England (outside the M25) 13.5%
Remainder of England and Wales 8.0%

It is not intended that there should be abrupt changes in the approach to site values between the above locational groupings and shading of these percentages may need to be applied close to their boundaries.

This section does not apply to any part of Greater London where an appropriate uplift needs to be considered separately.

The “Heathrow-M25 belt” is for this purpose defined as the following Billing Authority areas:

Hertfordshire Hertsmere, St Albans, Three Rivers, Watford, Dacorum
Buckinghamshire Chiltern, South Bucks, Wycombe
"Berkshire" Slough, Windsor and Maidenhead, Bracknell, Wokingham, Reading
Surrey Surrey Heath, Runnymede, Spellthorne, Elmbridge, Woking, Guildford, Waverley
Oxfordshire Oxford

South East England is defined as the following counties excluding the Billing Authority areas forming part of the “Heathrow - M25 belt” and excluding portions of other Billing Authority areas that lie within the M25:

Bedfordshire, Buckinghamshire, Berkshire, Oxfordshire, Hertfordshire, Essex, Kent, East and West Sussex, Surrey, Hampshire, and the Bournemouth area of Dorset.

For the avoidance of doubt the Isle of Wight should be treated as outside “South East England” for the purpose of this Practice Note.

Treatment of developed land value within the M25 is outside the scope of this agreement.

4.2 Undeveloped Land Value.

Undeveloped land will consist of amenity land other than that for the immediate landscaping of buildings. Land which is in excess of that required for amenity use should be ignored. The areas of car parks and roadways are not to be treated as undeveloped land.

The value of undeveloped land should be found by using a price per hectare derived from evidence of transactions in other amenity or sports field land. The value adopted should reflect fencing and drainage. The typical range of values for undeveloped land is £10,000 to £30,000 per hectare.

Stage 4

5. Decapitalisation Rate

The Adjusted Replacement Cost (ARC) of the hereditament shall be decapitalised to an annual equivalent by taking the prescribed rate. Guidance as to whether the upper or lower rate is appropriate can be found in Appendix 2 of this practice note

Stage 5

6. End Adjustments

At this stage the valuer should consider whether any adjustment should be made to the stage 4 figure to reflect considerations which would affect the hereditament as a whole, such as piecemeal development, lack of integrated design, shared site, or a location which is isolated from the health centres catchment population, but which have not been accounted for at other stages. The maximum allowance under this heading would not normally exceed 10%

7. Location Factors - Revaluation 2005

NB. The regions referred to are administrative areas and are not significant cost boundaries

Northern Region
Cleveland .91
Cumbria .95
Durham .91
Northumberland .94
Tyne & Wear .91
Yorkshire And Humberside Region
Humberside .90
North Yorkshire .91
South Yorkshire .90
West Yorkshire .88
East Midlands Region
Derbyshire .93
Leicestershire .93
Lincolnshire .93
Northamptonshire .98
Nottinghamshire .92
East Anglia Region
Cambridgeshire 1.04
Norfolk .97
Suffolk 1.01
South East Region (Excluding London)
Bedfordshire 1.08
Essex 1.08
Hertfordshire 1.13
Kent 1.12
Surrey 1.16
East Sussex 1.12
West Sussex 1.10
Berkshire 1.10
Buckinghamshire 1.09
Hampshire 1.06
Isle of Wight 1.07
Oxfordshire 1.05
Greater London
Barking and Dagenham 1.13
Barnet 1.19
Bexley 1.20
Brent 1.21
Bromley 1.16
Camden 1.32
City of London 1.26
City of Westminster 1.30
Croydon 1.20
Ealing 1.20
Enfield 1.14
Greenwich 1.20
Hackney 1.27
Hammersmith & Fulham 1.27
Haringey 1.22
Harrow 1.16
Havering 1.07
Hillingdon 1.15
Hounslow 1.15
Islington 1.24
Kensington & Chelsea 1.35
Kingston Upon Thames 1.24
Lambeth 1.26
Lewisham 1.17
Merton 1.21
Newham 1.13
Redbridge 1.12
Richmond Upon Thames 1.20
Southwark 1.30
Sutton 1.16
Tower Hamlets 1.23
Waltham Forest 1.19
Wandsworth 1.25
South Western Region
Avon .96
Cornwall .93
Devon .94
Dorset .97
Gloucestershire .96
Somerset .94
Wiltshire .96
West Midlands Region
Hereford & Worcester .95
Shropshire .94
Staffordshire .93
Warwickshire .98
West Midlands .96
North West Region
Cheshire .94
Greater Manchester .95
Lancashire .95
Merseyside .96
Wales
Clwyd .90
Dyfed .95
Gwent .95
Gwynedd .91
Mid Glamorgan .95
Powys .92
South Glamorgan .96
West Glamorgan .93

These location factors are reproduced from the VO cost guide and should be applied in accordance with advice contained within that guide. In any case of contradiction the cost guide figure should take priority.

Appendix 1 - Method of Valuation Flowchart to be considered for New Primary Care Assessments.

Practice note 2: 2005: Appendix 2: Primary care centres decapitalisation rate

1. Practice for 2005 & later Rating Lists

It is considered that following the widening of the definition of primary care hereditament for 1995 Rating Lists it is not correct to consider any areas as “partial treatment” areas, as generally they are used overwhelmingly for the reception or treatment of “persons suffering from any illness, injury or infirmity”.

A revised and simplified scheme has thus been drawn up for the classification of primary care centre activities for use in cases where it appears that a significant amount of floor area within a primary care centre is used for activities not involving the “reception or treatment of persons suffering from any illness, injury or infirmity” (i.e. uses not listed below as being Category A uses).

2. Classification of Primary Care Centre activities

Activities within a primary care centre can be divided into three categories (as defined below); a. Those that are overwhelmingly used for reception or treatment of persons suffering from any illness, injury or infirmity; b. Those which are not so used and; c. Ancillary uses shared between categories.

Where the floor area used for category (a) exceeds the floor area used for category (b) the primary care centre should be treated as a “primary care hereditament” and the lower decapitalisation rate used.

Below are listed the types of accommodation which are considered to fall into these categories A, B and C:

Category A

Areas that are overwhelmingly used for reception or treatment of persons suffering from any illness, injury or infirmity;

This category will include:

  • General Practitioner (GP) or Health Authority (HA) consulting and examination rooms;
  • GP patient records/computer rooms;
  • Practice Managers Offices;
  • Common rooms for use of Doctor’s surgery only;
  • HA Therapy rooms;
  • GP Treatment and/or minor operations rooms;
  • Dental Surgeries;
  • Dental Lab;
  • Chiropody/Podiatry rooms;
  • Reception/waiting areas that only serve full treatment use areas;
  • Other rooms wholly used for, reception/treatment, or therapy;
  • Areas wholly ancillary to areas falling within this classification.

For the avoidance of doubt, main reception/waiting areas would not fall within this category, but would come within the ancillary group.

Category B

Those areas that are not used for reception or treatment of persons suffering from any illness, injury or infirmity.

This category will include;

  • HA Offices;
  • HA Health Education Rooms;
  • District/School Nurse, Midwives and Health visitor’s Office*;
  • Speech Therapist’s Office*;
  • Family Planning Clinic;
  • Well Baby and Woman Clinic;
  • Reception/waiting areas that only serve category B areas.

*Where these offices are used as a base for external work rather than work within the primary care centre or for “Reception or Treatment” within the relevant definition.

Category C

Ancillary uses shared between categories.

This category will include;

  • Reception and waiting areas common to a number of occupiers and which do not fall under category A;
  • Corridors;
  • Toilets;
  • Common rooms for use of whole centre;
  • Stores;
  • Boiler rooms;
  • Caretaker’s office/store.

NB It is of course accepted that the above lists are by no means exhaustive.

3. Shared ancillary areas in multi building hereditaments

Where a category C shared ancillary use (such as reception area) only serves some of the buildings in this type of hereditament, its floor area should be apportioned pro rata between the category A and B uses within the buildings served.

Where a category C use serves all buildings within a multi building hereditament, its floor area can be treated similarly to a single building hereditament.

4. Areas with a known pattern of uses

Some areas may be earmarked to be used on specific days for a use falling within one category, and for the remainder of the time for a use falling within another category. For example a room might be used on half a day per week for treatment of ulcers (category A use), and for the rest of the time as a well woman clinic (category B use). In these instances the floor space should be apportioned between the two categories of use according to the proportion of usage time allocated to each of them (in the above example, and on the basis of a 5 day working week for the primary care centre, 1/10th to category A and the remaining 9/10ths to category B).

5. Important Note

Having decided on the appropriate Decap rate it is important if using the Generic Contractors Spreadsheet, to ensure the correct Decap rate is actually applied. The spreadsheet defaults to the lower rate, but this can be over-written to the higher rate where appropriate

Practice note 4: 2005: The valuation for rating of NHS hospitals

A. Introduction

1. The Practice Note

This Practice Note provides guidance on the method of valuation for rating purposes of all NHS hospitals. It has been discussed and agreed with representatives of Private Practitioners acting for the majority of NHS bodies in occupation of hospitals.

2. Valuation Basis

The contractor’s basis provides the principal method of valuation, without prejudice to the application of a rental basis where evidence is available; such evidence is confined to the smaller type of clinic in a limited number of localities.

3. Basis of measurement and referencing

All referencing should be on the basis of Gross Internal Area (GIA) as defined in the RICS/ISVA Code of Measuring Practice (4th edition).

4. Exemption under LGFA 1988 Sch 5

Areas treated as exempt will be omitted from the GIA. See paragraph B1 below.

5. Composite Hospitals

A hospital will constitute a composite hereditament if it contains

a. permanent living accommodation for staff, and/or b. accommodation generally used as bed spaces for patients staying more than 60 days.

Where a hospital is composite, value will be attributed only to the non-domestic use of property in the manner indicated in section B.

Temporary accommodation provided for “on-call” staff or patients’ relatives is to be treated as non-domestic.

6. Application of the Contractor’s Basis

The contractor’s basis is to be applied in the manner indicated in section C.

B. The Boundary between Domestic and Non-Domestic use of Property in NHS Hospitals

  1. Although the cost of all areas within the hereditament must be taken into account for the calculation of contract size allowance, the valuation must then attribute value only to the non-domestic use of property, which is not exempt. This may effectively be done by eliminating from GIA the areas, which are exempt under LGFA 1988 Sch 5 paras 11 and 16, and by excluding certain areas from GIA as follows:

a. All wards and patient bedrooms normally used at 1 April 2003

i) by patients who have no residence elsewhere, (for the avoidance of doubt patients who are sectioned under the mental health acts should be considered to have no home elsewhere) or

ii) for periods exceeding 60 days by patients with homes elsewhere,

iii) The number of days to be calculated for the purposes of this paragraph should be the sum of the days stay in any wards in the hereditament. Where it appears that long stay figures provided by a Trust do not fully reflect the above, an appropriate adjustment should be made to these figures, having regard to the best opinion of the trust.

b. Ward sisters’ stations associated with wards falling within (a) above.

c. Toilets, showers, washrooms, lobbies, entrance ways and corridors solely used for access to long stay wards together with stores whether for drugs, dressings or cleaning materials which are ancillary to a ward or wards falling within (a) above, but not central stores, unless the hospital falls within (d) below.

d. Where all patients treated in the hospital fall within category (a) above, all stores and all ancillary offices, except those offices used exclusively for or in connection with treatment of patients, personnel administration, clinical research, or staff training.

e. Permanent living accommodation for staff, (but not “on-call” accommodation).

f. Day rooms, libraries, hobby rooms, wholly used by patients accommodated in wards/rooms falling within (a) (to the extent to which they are not exempt under Sch5 para 16).

g. Kitchens and canteens, boiler houses, on-site laundries wholly serving patients accommodated in wards/rooms falling within (a) above and/or staff housed in accommodation within (e) above.

  1. Wards used partly for domestic purposes should be partly excluded from GIA. The wards falling within this category will be those normally used at AVD by certain patients who have no residence elsewhere, or for periods exceeding 60 days by patients with homes elsewhere. The remainder of such wards will normally accommodate patients staying for periods of 60 days or less and will constitute non-domestic property. The area to be excluded from GIA will be found by applying to the total floor area of the ward the following fraction:

usual number of long stay patients in ward

usual total number of patients in ward

  1. Accommodation described in (b) or (c) above, but serving a ward or wards falling within para 2 rather than 1(a), shall be excluded from GIA to the extent of the floor area of the accommodation multiplied by the fraction in para 2 above, having regard to all wards served.

  2. Accommodation described in (d), (f) and/or (g) above but used by, or for, both long and short stay patients shall be excluded from GIA to the extent of the total area of the accommodation multiplied by the following fraction:

usual annual number of long stay patient days

usual total annual number of patient days

  1. Where all EFA within a block is to be excluded from GIA in accordance with 1(a)-(g) above, the whole block is to be excluded from valuation. Where only part of the EFA within the block is to be excluded in accordance with 1 to 4 above, the area excluded within the block should be the GIA of the block multiplied by the following fraction:

EFA of areas to be excluded

total EFA of the block

If it is impractical to calculate the total EFA of the block or floor, the area excluded should be increased by 20% to give a notional GIA reflecting shared access. Where it is more convenient to ascertain the non-domestic area within a “composite” building directly rather than by deducting the domestic area, the appropriate GIA may be found by adding 20% to the non-domestic EFA.

For the purpose of these provisions, GIA will be as defined in the RICS Code of Measuring Practice, and EFA will equate to NIA as defined in that code but including all bathrooms, sluices and WCs situated within wards, or used exclusively for the purposes of particular wards, and excluding all corridors providing access to any areas defined in paras 1 - 4 above, or to other parts of the hospital.

C. Application Of The Contractor’s Basis

Stage 1

1.1 Building Costs

The following overall costs per sm shall be taken to represent the ERC of individual blocks of permanent construction:

Cost per sm GIA before external works, contract size allowance and fees
Acute/Teaching Hospitals Non Acute Hospitals Eg Maternity, Geriatric, Psychiatric, Day Surgery (free-standing only), Community **But See note Below
Year of building completion £psm overall GIA £psm overall GIA excl Operating theatres £psm operating theatre* GIA** Education and Nurse Training Buildings
Pre 1945 891 725 1038 668
1945-1959 1040 844 1209 780
1960-1964 857 700 1001 643
1965-1969 804 653 935 603
1970-1974 757 613 877 568
1975-1980 804 653 935 603
1981-1994 1067 875 1303 800
1995-2002 1240 963 1338 930
2003 onwards 1288 1000 1379 966

*For Non-acute hospitals, minor operation rooms/suites, which do not vary significantly as regards quality/specification from the remainder of the hospital, should be costed at the standard rather than operating theatre level. Where an operating theatre is of a standard commensurate with that expected in an acute hospital, the operating theatre cost should be applied to the area of the theatre (not to the remainder of the suite).

** For non acute hospitals in which the proportion of long-stay beds is more than 30%, the above cost in terms of £psm excluding operating theatres should for all age bands be reduced by 16%.

1.1.2 Post 2002 Buildings

£1288 is a maximum and to be applied to all new whole hospitals (or hospitals wholly built in phases from 2003 onwards) unless adjusted overall costs of new hospitals show that they should be at less in which case those lower adjusted costs will be adopted.

Extensions will be valued at £1288 unless they are of lower than Royal Glamorgan specification, in which case they will be taken at pre 1995 cost. £1288 should be adopted only for buildings or extensions exhibiting a higher quality of construction than is average for pre 2003 hospitals.

1.1.3 Buildings designed many years before completion

Special treatment may be warranted where a hospital was designed many years before completion.

1.1.4 Minor Buildings

Minor out buildings such as meter houses, bottle stores, small (ie. less than 26 sq ms) sheds and stores etc. should not be costed as they are included within the external works addition. All other buildings should be costed as main buildings.

1.1.5 Education and Nurse Training Buildings

Education and Nurse training buildings shall be valued at 75% of the cost of an acute building of the same age see table 1.1.1

1.1.6 Older Community Hospitals of Cellular Layout

In the pre-1959 community etc bands, prices should be reduced by up to 20% for single storey and 25% for multi-storey where the hereditament is sub-divided internally by solid walls into relatively small rooms.

1.1.7 Low spec 1981-2003 buildings on Acute sites

Permanent buildings which are 1981-2003 additions to existing acute buildings and of lower specification than normal for that period are to be costed within range between:

  • The Acute price and
  • The equivalent Community price (this could be the Community operating theatre price if new block is an operating theatre).

It is envisaged that only a minority of 1981-2003 buildings will qualify for such treatment.

1.1.8 Definition of Acute Hospital

Although there can be no strict definition of an ‘Acute or Teaching Hospital’ distinguishing features will usually include:-

  • Major operating theatres, full A&E, ICU & HDU facilities
  • A district of regional importance
  • A minimum size of 35,000 sm
  • Substantial general wards

It is hoped and expected that in the great majority of cases, there will be no dispute as to whether a particular hospital falls into the ‘Acute/Teaching’ or ‘Maternity, Geriatric, Psychiatric, Day Surgery, Community and Cottage Hospital’ category. In exceptional borderline cases valuers may wish to value the hospital on both Acute and Community bases and use their discretion as to the end figure adopted.

1.1.9 Exceptions from the above costs are set out in paras 1.1.10 to 1.1.17 below.

1.1.10 System buildings

For blocks which are constructed using the “Oxford” or “Best Buy” systems, reductions should be made from the above costs as follows:

Pre 1960 -16.5%
1960-1964 -16.5%
1965-1969 -16.5%
1970-1974 -16.5%
1975-1980 -0% (analysed cost evidence shows no distinction)
1981 onwards -27.5%

Consideration may be given to extending this reduction to certain other “systems”, where appropriate. Flat roof allowance should not be given to system buildings.

1.1.11 Temporary Buildings (including timber buildings)

For all blocks of temporary, or timber, construction (even where those buildings have in fact been on site for many years) a cost of £422 per sm GIA (before external works, contract size allowance, fees and age and obsolescence) should be adopted for all buildings first occupied prior to 2003, and for newer buildings £443 per sq m.

1.1.12 Stores and other inferior buildings

For all separate or distinct stores, workshops, offices of inferior construction and garages (but not other buildings) a cost of £375 per sm GIA (before external works, contract size allowance, fees, and age and obsolescence) should be adopted regardless of age.

1.1.13 EMS (Second World War Emergency Medical Services) Buildings

EMS buildings will be valued at £348 psm to reflect age & obsolescence provided that those buildings are currently used as fully functional wards. Further allowances may be made where EMS buildings are not currently used as fully functioning wards. There should be no adjustments for flat roofs to EMS buildings.

1.1.14 Day Surgery and Minor Operations Units

Day surgery and minor operations units are rarely “free standing” and normally form part of a larger hospital in which case they would be costed on the appropriate scale.

1.1.15 Multi-storey, Basement and Roof-top Car Parks

For hospitals outside Greater London, no cost should be included for multi-storey, roof-top or basement car parks.

Link blocks and subways which contain no areas which are used for any purpose other than for passage between adjoining blocks should be left out of the costing exercise. This omission is justified because their presence is dictated by the absence of a uniform design and denotes an attempt to reduce the drawbacks of dispersal which would not have arisen if the hospital had been designed as an integral whole. Exceptionally the GIA of link blocks or subways should be included where they are original components of a unified design.

1.1.17 Flat Roofs

A reduction of £225 psm of roof ‘foot print’ should be made to the value of pre 1960 and post 1980 buildings with flat felt roofs (£112 psm foot print for flat roofs with other coverings).

1.2 Locational Adjustment

The factors set out in Table 1A should be applied to the above costs.

1.3 External Works

1.3.1 The following additions should be made to the locationally adjusted ERC:-

2.5% to 1% Town centre or island site with 90% or greater building ratio, typically with no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament.
5% to 2.5% As above, but with 80% to 90% building ratio, typically with limited staff parking and landscaping, and with some boundary fencing.
7.5%-5% Site with 50%/75% building ratio, typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and limited general parking within the hereditament.
10%-7.5% As above, but with less than 50% building ratio typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which in some cases may fall short of full requirements. At the top end of the range, landscaping around buildings will be extensive and car parking within the site will be adequate for staff and all other users.

1.3.2 Building ratio for this purpose should be taken to be aggregate total GIA (including domestic property within a composite hereditament) expressed as a percentage of total developed land area (excluding any surplus, unnecessary or unwanted land). Some hospitals that suffer from a fragmented layout including a number of minor low rise buildings may have relatively low site ratios. This may result in artificially high additions for external works. In such circumstances a specific additional allowance will be required at Stage 5 of the valuation in order to eliminate the cost of any external features not required in a modern rationally planned substitute.

1.3.3 Where car parking provision is inferior to the standard mentioned above as typical for the building plot ratio band the above percentages may be abated to no less than the minimum in the next lowest band. Where parking provision is improved, without altering the building plot ratio band, the percentages may be increased to no more than the maximum in the next highest band.

1.4 Contract Size Adjustment

The aggregate of locationally adjusted building costs and external costs should be subject to contract size adjustment as set out in Table 1B. The allowance will be determined by the cost of the whole hereditament including that of domestic and exempt areas.

1.5 Professional Fees and Charges

An addition of 12% shall be made to the total cost of permanent buildings in Acute & Maternity Hospitals.

An addition of 10% shall be made to the total cost of all other permanent buildings in Geriatric, Psychiatric, Community & Cottage Hospitals & free standing Day Surgery units.

An addition of 5% shall be made to the total cost of temporary buildings assembled on site.

An addition of 2.5% shall be made to the total cost of temporary buildings which are brought onto the site complete rather than for assembly in modular form.

In each case the percentage addition will be made after locational adjustment, the addition of the cost of associated external works, and contract size adjustment.

Stage 2

2.1 Obsolescence Allowances

2.1.1(a) Permanent Buildings

Obsolescence allowances shall be made for individual blocks of permanent buildings within a hospital, after additions for external works and fees, in accordance with the following age-related scale: For the purposes of Age and Obsolescence only, the age of the building should be taken as one year before opening, for buildings constructed before 2005

Year of building completion % Allowance Year of building completion % Allowance
2005 0 1979 21
2004 0.5 1978 22
2003 1 1977 23
2002 1.5 1976 24
2001 2 1975 25
2000 2.5 1974 26
1999 3 1973 27
1998 3.5 1972 28
1997 4 1971 29
1996 4.5 1970 30
1995 5 1969 31
1994 6 1968 32
1993 7 1967 33
1992 8 1966 34
1991 9 1965 35
1990 10 1964 36
1989 11 1963 37
1988 12 1962 38
1987 13 1961 39
1986 14 1960 40
1985 15 1959 41
1984 16 1958 42
1983 17 1957 43
1982 18 1956 44
1981 19 1955 45
1980 20 Pre 1955 45-50

2.1.2 There may be exceptional cases e.g. substantially unmodernised pre-war buildings, or buildings pending redevelopment, where an allowance in excess of 50% would be justified.

2.1.3 Where a block dating from before 1981 has been the subject of above average modernisation or refurbishment after 1 April 1995, the ARC may be increased by up to 10%, subject to a ceiling set by the ERC adopted at Stage 1. A more significant addition may be warranted where a very major scheme has been undertaken such as the external recladding of a 1960s building.

2.1.4 Special treatment may be warranted where a hospital was designed many years before completion.

2004 1.5%
2003 3.0%
2002 4.5%
2001 6.0%
2000 7.5%
1999 9.0%
1998 10.5%
1997 12.0%
1996 13.5%
1995 15.0%
1994 16.5%
1993 18.0%
1992 19.5%
1991 21.0%
1990 22.5%
1989 24.0%
1988 25.5%
1987 27.0%
1986 28.5%
1985 30.0%
1984 31.5%
1983 33.0%
1982 34.5%
1981 36.0%
1980 37.5%
1979 39.0%
1978 40.5%
1977 42.0%
1976 43.5%
1975 45.0%
1974 46.5%
1973 48.0%
1972 49.5%
1971 51.0%
1970 52.5%
1969 54.0%
1968 55.5%
1967 57.0%
1966 58.5%
Pre 1966 60.0%

2.1.5 Care should be taken to avoid double counting between this Stage and Stages 1 and 5, particularly in respect of fragmentation/dispersal/poor layout. Where these problems are found within blocks, and are caused by bad internal design, they should normally be regarded as reflected in the age-related costs set out in para 1.1.1 although particular problems evidenced by difficult communications between departments within the block may justify an increase in the percentage allowance of up to 5%. The internal communication problems of tall buildings are however dealt with at para 2.2 below. Where problems arise from bad external arrangement between blocks, the additional allowance falls to be considered at Stage 5 (see para 5 below).

2.1.6 For buildings where there is specific evidence of functional redundancy and/or physical disrepair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where m, for example, where modern health and safety, fire or building regulations preclude or limit the original purpose of the building

2.1.7 For “Oxford” or “Best Buy” system-built structures and other accepted systems, the allowances given above may be increased; by a further 10% where the block was built before 1975, and by up to a further 7.5% where the block was built 1975-1985.

2.1.8(b) Temporary Buildings

Obsolescence allowances shall be made for individual blocks of temporary buildings within a hospital, (including those of inferior construction which were erected for temporary purposes and have outlasted their intended lives) after additions for external works and fees, in accordance with the following age-related scale:

2.1.9 The deduction of the appropriate allowance from aggregate costs will give the ARC of each block.

2.2 Multi-floor allowances

2.2.1 The following deductions should be made from the ARCs of individual blocks on the assumption that lift provision is adequate. These deductions should be made after the age-based allowance has been made; the percentage deductions are not cumulative.

Buildings with two main floors or less 0%
Buildings with three main floors or more 10% overall*
Buildings with eight or more floors 10% on overall* basis up to 7th floor, then 15% on 8th floor and above.

2.2.2 Where, exceptionally, lifts are inadequate to serve the actual use which is being made, further allowance may be warranted. This must be justified on the facts of particular cases, and is recognised as not normally necessary.

Stage 3

3.1. Developed Land Value

3.1.1 Acute Hospitals

The value of the developed land for acute hospitals, apportioned in respect of its non-domestic use shall be taken to be the following percentages of the aggregate of the ARC of all buildings and external works:

Acutes Non-acute Hospitals Non-acute Hospitals where longstay beds are more than 30% of total
London Central (W1, W2, W8, W11, SW1, SW3, SW5,SW7, SW10, WC1, WC2, EC1, EC2, EC3, EC4) 25% 26.25% 30%
London Inner (SW6, W9, W10, W12, W14, NW1, NW8, N1, E1, E2, SE1(north)*) 20% 21.00% 23%
London boroughs of Enfield, Barnet, Harrow, Brent, Hillingdon, Ealing, Hounslow, Richmond, Kingston, Wandsworth, Merton, Bromley, and those parts of Camden, Westminster, Kensington & Chelsea, and Hammersmith & Fulham outside the defined postal districts for the London Central and Inner zones 15% 15.75% 17.5%
Remainder of the London Boroughs (including SE1 (south)*) and the Heathrow - M25 belt and the London peripheral hospitals 10% 10.5% 12%
Remainder of South East England ** 7.5% 7.85% 8.75%
Wales, North and West of England *** 2.5% 2.625% 3%
Remainder of England 5% 5.25% 6%

*SE1(north) includes land between the River Thames and Hercules Road, Baylis Road, The Cut, Union street, Newcomen Street, Snowsfields, Crucifix Lane, and Druid Street; SE1 (south) comprises the remainder of the SE1 postal district.

The London Peripheral Hospitals are:

Harefield, Farnborough, Orpington, Harold Wood, Claybury, Royal National Orthopaedic, Barnet General, Chase Farm, along with any additional sites in the same vicinity as the above named Hospitals.

The “Heathrow - M25 belt” is for this purpose defined as the following Billing Authority areas:

Hertfordshire Hertsmere, St Albans, Three Rivers, Watford, Dacorum
Buckinghamshire Chiltern, South Bucks, Wycombe
"Berkshire" Slough, Windsor and Maidenhead, Bracknell, Wokingham, Reading
Surrey Surrey Heath, Runnymede, Spelthorne, Elmbridge, Woking, Guildford, Waverley
Oxfordshire Oxford

Remainder of South East England is defined as the following counties excluding the Billing Authority areas forming part of the “Heathrow - M25 belt”:

Bedfordshire, Buckinghamshire, Berkshire, Oxfordshire, Hertfordshire, Essex, Kent, East and West Sussex, Surrey, and the following Billing Authorities in Hampshire: Rushmoor, Hart, Basingstoke & Deane, and East Hampshire (Winchester to be treated as intermediate between “Remainder of South East England” and “Remainder of England”).

*The Billing Authorities in the areas of the **north and west of England and throughout Wales are specified in Table 1C.

3.2 Undeveloped Land Value

3.2.1 Undeveloped land will consist of amenity land other than that for the immediate landscaping of buildings. Land which is in excess of that required for amenity use should be ignored. The areas of car parks and roadways are not to be treated as undeveloped land.

3.2.2 The value of undeveloped land should be found by using a price per hectare derived from evidence of transactions in other amenity or sports field land. The value adopted should reflect fencing and drainage. The typical range of values for undeveloped land is between £10,000 to £30,000 per hectare.

Stage 4

4. Decapitalisation Rate

The ARC of the hereditament shall be decapitalised to an annual equivalent by taking 3.33% (3.3% in Wales).

Stage 5

5. End Adjustments

Problems associated with dispersal of blocks within a hereditament, piecemeal development and lack of integrated design should be addressed at this stage.

See the Appendix to this Practice Note.

Table 1A

Location Factors - Revaluation 2005

NB. The regions referred to are administrative areas and are not significant cost boundaries

The factors set out in the VO cost guide should be applied to the above costs. These are reproduced below for convenience, but in case of doubt reference should always be made to the cost guide

Northern Region 0.92
Cleveland 0.91
Cumbria 0.95
Durham 0.91
Northumberland 0.94
Tyne & Wear 0.91

Yorkshire And Humberside Region 0.89

Humberside 0.90
North Yorkshire 0.91
South Yorkshire 0.90
West Yorkshire 0.88

East Midlands Region 0.94

Derbyshire 0.93
Leicestershire 0.93
Lincolnshire 0.93
Northamptonshire 0.98
Nottinghamshire 0.92

East Anglia Region 1.01

Cambridgeshire 1.04
Norfolk 0.97
Suffolk 1.01

South East Region 1.10(Excluding London)

Bedfordshire 1.08
Essex 1.08
Hertfordshire 1.13
Kent 1.12
Surrey 1.16
East Sussex 1.12
West Sussex 1.10
Berkshire 1.10
Buckinghamshire 1.09
Hampshire 1.06
Isle of Wight 1.07
Oxfordshire 1.05

Greater London 1.22

Barking & Dagenham 1.13
Barnet 1.19
Bexley 1.20
Brent 1.21
Bromley 1.16
Camden 1.32
City of London 1.26
City of Westminster 1.30
Croydon 1.20
Ealing 1.20
Enfield 1.14
Greenwich 1.20
Hackney 1.27
Hammersmith and Fulham 1.27
Haringey 1.22
Harrow 1.16
Havering 1.07
Hillingdon 1.15
Hounslow 1.15
Islington 1.24
Kensington & Chelsea 1.35
Kingston Upon Thames 1.24
Lambeth 1.26
Lewisham 1.17
Merton 1.21
Newham 1.13
Redbridge 1.12
Richmond Upon Thames 1.20
Southwark 1.30
Sutton 1.16
Tower Hamlets 1.23
Waltham Forest 1.19
Wandsworth 1.25

South Western Region 0.95

Avon 0.96
Cornwall 0.93
Devon 0.94
Dorset 0.97
Gloucestershire 0.96
Somerset 0.94
Wiltshire 0.96

West Midlands Region 0.95

Hereford & Worcester 0.95
Shropshire 0.94
Staffordshire 0.93
Warwickshire 0.98
West Midlands 0.96

North West Region 0.95

Cheshire 0.94
Greater Manchester 0.95
Lancashire 0.95
Merseyside 0.96

Wales 0.94

Clywd 0.90
Dyfed 0.95
Gwent 0.95
Gwynedd 0.91
Mid Glamorgan 0.95
Powys 0.92
South Glamorgan 0.96
West Glamorgan 0.93
Table 1B
Contract Size Adjustment
ERC £ Adjustment
Up to 0.5 million + 10% max
0.75 million + 5%
1.0 million + 2.5%
1.5 million + 1.0%
2.0 million ZERO
3.0 million -2%
4.0 million -3%
5.0 million -4%
6.0 million -5%
8.0 million -6%
11.0 million -7%
14.0 million -8%
17.0 million -9%
Over 20.0 million -10% max
NB: Intermediate figures may be interpolated
Table 1C

List of billing authority areas in the north and west of England and throughout Wales where the lower land value applies (ie 2.5% for acute hospitals and 2.625 % for the non acutes, 3% for non acutes with over 30% long-stay beds)

BA CODE BILLING AUTHORITY VOA GROUP OFFICE NAME
905 Allerdale North West
2905 Alnwick Newcastle
4405 Barnsley Sheffield
910 Barrow-in-Furness North West
2910 Berwick-upon-Tweed Newcastle
2372 Blackburn with Darwen North West
2373 Blackpool North West
6910 Blaenau Gwent South Wales
2915 Blyth Valley Newcastle
2505 Boston Sheffield
6915 Bridgend South Wales
2315 Burnley North West
6920 Caerphilly South Wales
805 Caradon South West
6815 Cardiff South Wales
915 Carlisle North West
6825 Carmarthenshire South Wales
810 Carrick South West
2920 Castle Morpeth Newcastle
6820 Ceredigion South Wales
1305 Chester-le-Street Newcastle
2320 Chorley North West
6905 Conwy North Wales
920 Copeland North West
1350 Darlington Newcastle
6830 Denbighshire North Wales
1315 Derwentside Newcastle
4410 Doncaster Sheffield
1320 Durham Newcastle
1325 Easington Newcastle
1105 East Devon South West
2510 East Lindsey Sheffield
2001 East Riding of Yorkshire Sheffield
925 Eden North West
1110 Exeter South West
6835 Flintshire North Wales
2325 Fylde North West
4505 Gateshead Newcastle
6810 Gwynedd North Wales
724 Hartlepool Newcastle
2330 Hyndburn North West
6805 Isle of Anglesey North Wales
835 Isles of Scilly South West
815 Kerrier South West
2004 Kingston upon Hull Sheffield
2335 Lancaster North West
2515 Lincoln Sheffield
3305 Mendip South West
6925 Merthyr Tydfil South Wales
1135 Mid Devon South West
734 Middlesbrough Newcastle
6840 Monmouthshire South Wales
6930 Neath Port Talbot South Wales
4510 Newcastle-upon-Tyne Newcastle
6935 Newport South Wales
820 North Cornwall South West
1115 North Devon South West
2002 North East Lincolnshire Sheffield
2520 North Kesteven Sheffield
121 North Somerset Bristol
2003 North Lincolnshire Sheffield
4515 North Tyneside Newcastle
6845 Pembrokeshire South Wales
2340 Pendle North West
825 Penwith South West
1160 Plymouth South West
6850 Powys 1 (Montogmeryshire) North Wales
6853 Powys 2 (Radnorshire) South Wales
6854 Powys 3 (Breconshire) South Wales
2345 Preston North West
728 Redcar and Cleveland Newcastle
830 Restormel South West
6940 Rhondda, Cynon, Taff South Wales
2350 Ribble Valley North West
2355 Rossendale North West
4415 Rotherham Sheffield
1330 Sedgefield Newcastle
3310 Sedgemoor South West
4420 Sheffield Sheffield
1125 South Hams South West
2525 South Holland Sheffield
2530 South Kesteven Sheffield
930 South Lakeland North West
2360 South Ribble North West
3325 South Somerset South West
4520 South Tyneside Newcastle
738 Stockton-on-Tees Newcastle
4525 Sunderland Newcastle
6855 Swansea South Wales
3315 Taunton Deane South West
1335 Teesdale Newcastle
1130 Teignbridge South West
1165 Torbay South West
6945 Torfaen South Wales
1145 Torridge South West
2925 Tynedale Newcastle
6950 Vale of Glamorgan South Wales
2930 Wansbeck Newcastle
1340 Wear Valley Newcastle
1150 West Devon South West
2365 West Lancashire North West
2535 West Lindsey Sheffield
3320 West Somerset South West
6955 Wrexham North Wales
2370 Wyre North West

The adjustment for contract size should be made having regard to the total ERC (after adjustment for location but before the addition for fees) in accordance with the following scales:-

Practice note 4: 2005: Appendix: Stage 5 end allowances

Problems associated with dispersal of blocks within a hereditament, piecemeal development and lack of integrated design should be addressed at this stage. The allowance to be made in respect of these features should not normally exceed 15%.

End allowances will always be a subjective judgement to be made by the Valuers dealing with a particular case. Only they will have inspected the hospital and be familiar with any disadvantages it may suffer. When making these judgements, Valuers may wish to bear in mind the following factors which are considered to be amongst the most relevant:

  • The total number of buildings on site.
  • The percentage of total floor area contained within any reasonably well designed central core building.
  • Superfluity may need to be reflected where it can be identified
  • general layout of the site from an operational viewpoint.
  • quality and convenience of links between buildings.
  • general arrangement and degree of dispersal of the buildings.
  • the site slopes noticeably.
  • there is a wide mix of ages of buildings (this can make maintenance and servicing more difficult).
  • a particular cost arises solely due to fragmentation and dispersal eg. the cost of operating an in-site bus service due to the fragmented and/or steeply sloping nature of the site.
  • location may be relevant but only in fairly rare cases eg. where access is particularly poor or where security problems or other specific nuisances arise due to the particular locality in which the hospital is located and where those nuisances might not be expected to arise elsewhere within the catchment area that the hospital serves.
  • Shared sites with substantial trust and university presence.
  • Duplicated reception areas, and ancillaries, caused by dispersal (but bearing in mind that centralised reception areas are not a feature of larger hospitals, and that separate receptions for individual departments may be operationally required).

It should be noted that:

  • It is not necessarily considered to be a disadvantage to have distinct single separate blocks for mental health units, EMI, paediatric care, maternity, workshops/boiler house/storage provided that where appropriate, these have good quality links with relevant blocks eg. paediatric wards with operating theatres.
  • presence of a number of dispersed small, low value ancillary buildings (eg. nissen huts) should have little impact on the overall percentage end allowance.

It is considered that the following factors, when considered in isolation, will not usually warrant any end allowance:

A hospital that is constructed on a gently sloping site.

  • Where a hospital is “as designed”, where all buildings are linked and are of a similar age.
  • For large acute hospitals, piecemeal development up to 10 separate buildings (more extensive piecemeal development would however be likely to warrant an end allowance).

It should be emphasised that the above factors would only fail to attract an end allowance where they are present in isolation. A combination of any of the above factors may well warrant an end allowance.

The end allowances described below are those reflecting the circumstances that applied at those subject hospitals at the time of the 2000 List and if the physical circumstances at the named hospitals have become different at the (2005) material date then alternative % allowances may become appropriate at those named hospitals in order to reflect any changed circumstances.

Examples

Set out below by way of example are end allowances that have been agreed with Trust’s agents on a number of Acute Hospitals around the country together with commentary on each site. Similar principles will apply to smaller Community etc sites although the ideal number of buildings for the smaller hospitals will be less.

1. Frenchay Hospital Bristol

  • A significant amount of EMS buildings with little intercommunication or link corridors between them.
  • Fragmented site with over 150 individual buildings.
  • of value in one good modern integrated block.
  • range 1732 to 1990s.
  • shaped spine road providing access to most parts of the site.
  • site with sufficient, but inconveniently located, undeveloped land for expansion.
  • good access to the M4 motorway.

An end allowance of 10% is considered appropriate.

2. The Royal Hampshire Hospital Winchester

  • Severely sloping site with buildings on 6 different levels.
  • Around 50 individual buildings.
  • range 1868 to 1989.
  • car park for the size of the hospital.
  • It has a Grade II listed building.
  • Piecemeal development.
  • Public road running through the site which makes security difficult but provides maintenance free distribution.
  • Located near the city centre some distance from the motorway with narrow surrounding roads.
  • The majority of value is in modern core buildings.
  • The mental health unit is separate from the other functions of the hospital.

An end allowance of 15% is considered appropriate.

3. Churchill Hospital Oxford

  • Approximately 60 buildings.
  • Age range 1942 to 1999.
  • Significant part of site built at one time.
  • Reasonably good links between buildings.
  • Piecemeal development.
  • Good circular distribution road.
  • Site is quite level.

An end allowance of 7.5% (plus 2.5% if link corridor areas still in valued area) is considered appropriate.

4. Northampton General Hospital

  • Piecemeal development.
  • Over 90 separate buildings.
  • Age range 1765 to 1990s.
  • Lack of parking for patients but ample for staff.
  • layout so that it is difficult for a visitor to negotiate.
  • site.
  • sloping site with split level main buildings.
  • sm of 82,900 sm in 1970s core block.

An end allowance of 15% is considered appropriate.

5. Stepping Hill, Stockport Hospital

  • Narrow distribution road, piecemeal development and on a cluttered, tight site.
  • Age range 1895 to 2000.
  • Total of 80 separate buildings.
  • Good modern core 10,350 sm of 49,900 sm.
  • The service area is separated.
  • The outpatients and paediatric departments are separate from the remainder of the hospital.
  • level site.

An end allowance of 12.5% is considered appropriate.

6. The Royal Oldham Hospital

  • Fragmented layout with a large number of Victorian multi-storey buildings still in use.
  • 70 buildings.
  • range 1890 to 2000.
  • modern core of 18,600 sm of total 67,500 sm (35% of value) with room for expansion.
  • to the large conurbation its urban situation is a necessity but it has the advantage of good link roads.
  • parking.
  • hospital is moving towards its perceived ideal ie. “functional communality”, with the service building situated in one area, administration in another, outpatients in another etc.
  • sloping site.

An end allowance of 10% is considered appropriate.

7. North Manchester General Hospital

  • Large site with over 100 separate buildings.
  • Age range 1870 to 2000.
  • 16,865 sm in central core out of total area of 95,000 sm.
  • Undulating, hilly site.
  • Dispersal.
  • There are a large number of Victorian multi-storey buildings.
  • distribution road but it is long and any advantage is offset by the cost of maintaining it.

The problems and disadvantages suffered by this hospital are so far removed from the ideal that they are exceptional and would warrant more than the maximum 15% allowance to be determined by the subjective opinIions of the valuers concerned.

8. John Radcliffe, Oxford

  • 95% of value in 8 x 1971-78 blocks.
  • Most blocks are linked.
  • Gently sloping site.
  • 100,000 sm teaching hospital.

An end allowance of 2.5% is considered appropriate.

9. Milton Keynes General Hospital

  • Mostly built in 1984.
  • Integrated design with good internal communication.
  • Well located.
  • Gently sloping site but no associated operational problems.
  • No end allowance of is considered appropriate.

Practice note 5: 2005: The valuation for rating of private sector hospitals

1. Co-ordination arrangements

Private Hospitals are are an SRU class, Responsibility for ensuring effective co-ordination lies with the SRUs. For more information see Rating Manual – section 6 part 1: Practice Note 1: 2005

The Reval 2005 Special Category Code 135 should be used. As an SRU Class the appropriate suffix letter should be S.

2. Valuation Basis

The contractor’s basis provides the principal method of valuation, without prejudice to the application of a rental basis where evidence is available; such evidence is likely to be found in Central London and it is anticipated that valuation on this basis will be confined to this location.

3. Basis of measurement and referencing

All referencing should be on the basis of Gross Internal Area (GIA) as defined in the RICS/ISVA Code of Measuring Practice (4th edition). One overall GIA should be found for the hospital with separate areas to GIA identified for:

a. Outbuildings, including temporary Portakabin offices b. Separate stores, workshops and garages situated outside of the principal hospital accommodation

4. Exemption issues; composite hospitals.

Exemptions under the provisions of LGFA 1988 Sch 5, issues of composite hereditaments and of the boundary between domestic and non-domestic use arise commonly in the NHS Estate. Except in the case of private hospitals offering long-term care for mental health problems, rehabilitation and trauma treatment these subjects are unlikely to occur in the private sector. The principles to be adopted, should the need arise are set out in the companion Practice Note concerning NHS Hospitals and are not reproduced here in the interests of brevity.

5. Application of the Contractors Basis

5.1 Building Costs

The following overall costs /m2 shall be taken to represent the ERC of individual blocks of permanent construction: these are costs per square metre GIA before external works, contract size allowance and fees.

Up to1994 1995 to 2002 2003 onwards
Acute Care Hospitals 1095 1185 1250
For psychiatric care hospitals and those lacking operating theatres, HDU and X-Ray suites 985 1065 1125
Maternity 985 1065 1125

For all blocks of temporary construction a cost of £422 per m2 GIA for buildings pre 2003, and £443/m2 for buildings built 2003 onwards (before external works, contract size allowance and fees) should be adopted regardless of age. No Age and obsolescence should be taken form these figures.

For all separate stores, workshops, and garages (but not other buildings) a cost of £375 per m2 GIA (before external works, contract size allowance and fees) should be adopted regardless of age.

5.2 Locational Adjustment

The factors set out in in the VO cost guide should be applied to the above costs. These are reproduced below for convenience, but in case of doubt reference should always be made to the cost guide

Northern Region 0.92

Cleveland 0.91
Cumbria 0.95
Durham 0.91
Northumberland 0.94
Tyne & Wear 0.91

Yorkshire And Humberside Region 0.89

Humberside 0.90
North Yorkshire 0.91
South Yorkshire 0.90
West Yorkshire 0.88

East Midlands Region 0.94

Derbyshire 0.93
Leicestershire 0.93
Lincolnshire 0.93
Northamptonshire 0.98
Nottinghamshire 0.92

East Anglia Region 1.01

Cambridgeshire 1.04
Norfolk 0.97
Suffolk 1.01

South East Region 1.10 (Excluding London)

Bedfordshire 1.08
Essex 1.08
Hertfordshire 1.13
Kent 1.12
Surrey 1.16
East Sussex 1.12
West Sussex 1.10
Berkshire 1.10
Buckinghamshire 1.09
Hampshire 1.06
Isle of Wight 1.07
Oxfordshire 1.05

Greater London 1.22

Barking & Dagenham 1.13
Barnet 1.19
Bexley 1.20
Brent 1.21
Bromley 1.16
Camden 1.32
City of London 1.26
City of Westminster 1.30
Croydon 1.20
Ealing 1.20
Enfield 1.14
Greenwich 1.20
Hackney 1.27
Hammersmith & Fulham 1.27
Haringey 1.22
Harrow 1.16
Havering 1.07
Hillingdon 1.15
Hounslow 1.15
Islington 1.24
Kensington & Chelsea 1.35
Kingston Upon Thames 1.24
Lambeth 1.26
Lewisham 1.17
Merton 1.21
Newham 1.13
Redbridge 1.12
Richmond Upon Thames 1.20
Southwark 1.30
Sutton 1.16
Tower Hamlets 1.23
Waltham Forest 1.19
Wandsworth 1.25

South Western Region 0.95

Avon 0.96
Cornwall 0.93
Devon 0.94
Dorset 0.97
Gloucestershire 0.96
Somerset 0.94
Wiltshire 0.96

West Midlands Region 0.95

Hereford & Worcester 0.95
Shropshire 0.94
Staffordshire 0.93
Warwickshire 0.98
West Midlands 0.96

North West Region 0.95

Cheshire 0.94
Greater Manchester 0.95
Lancashire 0.95
Merseyside 0.96

Wales 0.94

Clwyd 0.90
Dyfed 0.95
Gwent 0.95
Gwynedd 0.91
Mid Glamorgan 0.95
Powys 0.92
South Glamorgan 0.96
West Glamorgan 0.93

5.3 External Works

The following additions should be made to:

2.5% to 1% Town centre or island site with 90% or greater building ratio, typically with no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament.
5% to 2.5% As above, but with 80% to 90% building ratio, typically with limited staff parking and landscaping, and with some boundary fencing.
7.5%-5% Site with 50%/75% building ratio, typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and limited general parking within the hereditament.
10%-7.5% As above, but with less than 50% building ratio typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which in some cases may fall short of full requirements. At the top end of the range, landscaping around buildings will be extensive and car parking within the site will be adequate for staff and all other users. It is expected that most Private Hospitals will not reach the upper end of the range

Building ratio for this purpose should be taken to be aggregate total GIA (including domestic property within a composite hereditament) expressed as a percentage of total developed land area (excluding any surplus, unnecessary or unwanted land).

The above does not include multi storey or basement car parking for which a separate addition should be made.

5.4 Contract Size Adjustment

The aggregate of locationally adjusted building costs and external costs should be subject to contract size adjustment as set out in the VOA cost guide.

>ERC £ % adjustment
up to 0.5 million + 10% max
0.75 million + 5%
1.0 million + 2.5%
1.5 million + 1.0%
2.0 million ZERO
3.0 million - 2.0%
4.0 million - 3.0%
5.0 million - 4.0%
6.0 million - 5.0%
8.0 million - 6.0%
11.0 million - 7.0%
14.0 million - 8.0%
17.0 million - 9.0%
OVER 20.0 million - 10.0% MAX
NB. Intermediate figures may be interpolated.

5.5 Professional Fees and Charges

An addition of 12% shall be made to the building costs and external costs for all acute buildings including maternity buildings, adjusted for location and contract size.

An addition of 10% shall be made for Psychiatric buildings and outbuildings

Where Temporary Buildings form a significant part of the valuation:

  • Professional Fees of 5% shall be added to the total cost of temporary buildings assembled on site.
  • Professional Fees of 2.5% shall be added to the total cost of temporary buildings which are brought onto the site complete rather than for assembly in modular form.

5.6 Obsolescence Allowances

The age related allowances contained in the VOA cost guide should be applied Except to the prices for temporary buildings), which for convenience is reproduced below, In case of doubt reference should always be made to the cost guide.

For the purposes of Age and Obsolecense only, the age of the building should be taken as one year before opening, for buildings constructed before 2005.

Where a private hospital has undergone significant works of refurbishment consideration should be given to reducing the indicated allowance.

Where a purpose built hospital is extended within ten years of its construction and the extension is built to the same design, then the obsolescence allowances applied to the extension should be the same as that for the original building.

Year Percentage deduction
2005 0.00
2004 0.50
2003 1.00
2002 1.50
2001 2.00
2000 2.50
1999 3.00
1998 3.50
1997 4.00
1996 4.50
1995 5.00
1994 6.00
1993 7.00
1992 8.00
1991 9.00
1990 10.00
1989 11.00
1988 12.00
1987 13.00
1986 14.00
1985 15.00
1984 16.00
1983 17.00
1982 18.00
1981 19.00
1980 20.00
1979 21.00
1978 22.00
1977 23.00
1976 24.00
1975 25.00
1974 26.00
1973 27.00
1972 28.00
1971 29.00
1970 30.00
1969 31.00
1968 32.00
1967 33.00
1966 34.00
1965 35.00
1964 36.00
1963 37.00
1962 38.00
1961 39.00
1960 40.00
1959 41.00
1958 42.00
1957 43.00
1956 44.00
1955 45.00
Pre-1955 45.00 to 50.00

5.7 Multi-floor allowances

The following deductions should be made from the ARCs of individual blocks on the assumption that lift provision is adequate. These deductions should be made after the age-based allowance has been made; the percentage deductions are not cumulative.

Buildings with two main floors or less 0%
Buildings with three main floors or more 10% overall*
Buildings with eight or more floors 10% on overall* basis up to 7th floor, then 15% on 8th floor and above.

Where the allowance is made on an overall basis, the percentage deduction will be made in respect of all floors of the building. In the case of the lower two main floors it will not be applied to an area larger than the footprint of the floor above the higher of these.

Hospitals constructed on sloping sites with multiple levels do not qualify for the above allowances unless there is more than one main floor above the highest main floor with ground level access.

Where, exceptionally, lifts are inadequate to serve the actual use, which is being made, further allowance may be warranted. This must be justified on the facts of particular cases, and is recognised as not normally necessary.

In the case of buildings comprising three main floors, where the top floor is composed wholly or mainly of accommodation not directly devoted to patient care (e.g. offices, stores or plant areas) the overall allowance shown in the above table should be reduced to 5%. Where buildings comprise more than 3 three main floors and one or more floors above second floor level is composed wholly or mainly of accommodation not directly devoted to patient care (e.g. offices, stores or plant areas) the overall allowance shown in the table above should be restricted to 5 % in respect of these floors only.

5.8 Developed Land Value

The value of the developed land, apportioned in respect of its non-domestic use shall be taken to be the following percentages of the aggregate of the ARC of all buildings and external works:

London Central (W1,W2,W8,W11,SW1,SW3,SW5, SW7,SW10,WC1,WC2,EC1,EC2,EC3,EC4) Appropriate Capital Value BUT not less than 15% of ARC.
London Inner (SW6,W9,W10,W12,W14, Appropriate Capital Value BUT not less than 15% of ARC.
Remainder of London boroughs Appropriate Capital Value BUT not less than 15% of ARC.
Heathrow -M25 belt 15%
Remainder of South East England 12.5%
Remainder of England & Wales 7.5%

The “Heathrow-M25 belt” is for this purpose defined as the following Billing Authority areas:

Remainder of South East England is defined as the following counties excluding the Billing Authority areas forming part of the “Heathrow - M25 belt”:

Bedfordshire, Buckinghamshire, Berkshire, Oxfordshire, Hertfordshire, Essex, Kent, East and West Sussex, Surrey, Hampshire, and the Bournemouth area of Dorset.

5.9 Undeveloped Land Value

Undeveloped land will consist of amenity land other than that for the immediate landscaping of buildings. Land which is in excess of that required for amenity use should be ignored. The areas of car parks and roadways are not to be treated as undeveloped land. The value of undeveloped land should be found by using a price per hectare derived from evidence of transactions in other amenity or sports field land. The value adopted should reflect fencing and drainage. The typical range of values for undeveloped land is between £10000 and £30000 per hectare.

5.10 Decapitalisation Rate

The ARC of the hereditament shall be decapitalised to an annual equivalent by taking the lower statutory Decap. rate.

5.11 End Adjustments

Problems associated with dispersal of blocks within a hereditament, piecemeal development and lack of integrated design should be addressed at this stage. The allowance to be made in respect of these features should not normally exceed 10%. Allowances conceded during negotiations on the 2000 List should normally be maintained into the 2005 List where the circumstances justifying the concession can clearly still be seen to apply, subject to the comments below.

Construction of new private hospitals dropped off during the 1990s, and during this period, there has been a considerable rise in the use of day care surgery and the average length of stay in hospital following many other procedures has fallen. These factors impact in two ways on the valuation of private hospitals.

Firstly previous measures used for measuring the performance of private hospitals occupancy of bed spaces at midnight may no longer be an accurate yardstick of performance, since a bed may be used by more than one patient during the day, yet generating no over night stays.

Secondly these two factors have impacted on the likely design of new hospitals, in that it is likely that a lower proportion of ward space required in new hospitals, than in existing hospitals built during the rapid expansion of the sector in the 1980s or earlier. This point is accepted and is therefore reflected in the agreed prices of main buildings for buildings constructed prior to 1995. It follows that hospitals constructed in 1995 or later are likely to be of a design reflecting modern requirements.

Both these points should be taken into account when considering end allowances.

Overall the performance of a particular hospital will need to be judged over at least a 12-month period so as to eliminate the disproportionate effect of holiday periods where the private sector is normally quiet.