Sports and leisure centres (private)

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

1. Scope

This instruction deals with sports and leisure clubs (private - both wet/dry and dry only), generally referred to as health and Fitness Clubs. Local authority sports and leisure centres are a separate class. (See section 960: local authority sports centres, tennis centres, swimming pools and leisure centres).

2. List description and special category code

List description: health and fitness club and premises

Scat code: 260 (wet and dry) - suffix (S)

Scat code: 259 (dry only) - suffix (S)

For dry only (S) is only applicable where the RV exceeds £50,000 (outside London) or £60,000 (within) unless the operator is part of a corporate chain.

List description: gymnasium/fitness centre and premises

Scat code: 416 - suffix (G)

List description: gymnasium / fitness centre and premises

Scat code: 503 - suffix (S/V/G) When within/part of specialist property:

3. Responsible team

The National Valuation Unit are responsible for valuations of health and fitness clubs under Scat codes 259, 260 and 503. Valuations of gyms and fitness centres under Scat code 416 are the responsibility of the Regional Valuation Unit. Any queries of a complex nature arising from a particular case should be raised through the CCT to be referred to the NVU fitness class facilitator.

4. Co-ordination

The Class Co-ordination team has overall responsibility for the co-ordination of these classes. The team is responsible for approach, accuracy and consistency of valuations. The team will deliver practice notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. Caseworkers and referencers have a responsibility to:

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

5. Legal framework

Where rental evidence is available, the weight to be attached should be considered in light of the propositions set down in Lotus & Delta v Culverwell (VO) and Leicester City Council [1976] 239 EG 287. This will be particularly relevant to the dry only budget gyms where rental evidence is plentiful.

a. where the hereditament which is the subject of consideration is actually let that rent should be taken as the starting basis

b. the more closely the circumstances under which the rent agreed both as to time, subject matter and conditions relate to the statutory requirements contained in the definition of Rateable Value (Schedule 6, Para 2 (1) Local Government Finance Act 1988 (as amended by the Rating (Valuation) Act 1999).

c. where rents of similar properties are available they too are to be fully reviewed in order to confirm or otherwise the level of value indicated by the actual rent of the subject property

d. Assessments of other comparable properties are relevant. When a valuation list is prepared these assessments are to be taken as indicating comparative values estimated by the valuation officer. In subsequent proceedings on that list therefore, they can be properly be referred to as giving an indication of that opinion

e. In light of all the evidence an opinion can then be formed of the value of the appeal hereditament, the weight to be attached to the differing types of evidence depending on the one hand the nature of the actual rent and on the other hand, on the degree of comparability found in other properties

f. In those cases where there are no rents available of comparable properties a review of other assessments may be helpful but in each circumstances it would be difficult to reject the evidence of the actual rent

Rebus Sic Stantibus - The mode or category of occupation for these classes will be sports and leisure - health and fitness clubs. In considering whether it is correct to import rental evidence from other modes and category, guidance can be taken from the case of Scottish & Newcastle (Retail) Ltd v Williams (VO) [2000] RA119 and in particular LJ Walker, “any evidence relating to the rents or assessments of other hereditaments may be taken into account provided it is relevant to the valuation”. The valuer must therefore be able to show that if rents are imported from outside health and fitness, there is evidence to show that health and fitness would be prepared to pay that level of rent - see Re. the Appeal of Reeves (VO) 2007 RA 168 and Cheal Meats V Ray (VO) 2012 RA 145.

6. Survey requirements

Area measurement

Both wet/dry and dry only units should be measured to gross internal area (GIA) in accordance with the VOA Code of Measuring Practice for Rating Purposes.

However for converted occupations reference needs to be made to net usable area (NUA) which is defined as GIA less plant rooms, essential fire corridors, staircases and access areas.

Where the ratio of GIA to NUA exceeds 1.1, an allowance will be applied calculated as one percent for every one percent by which the factor exceeds 1.1, to a maximum of 20%. Thus if the factor is 1.15 a 5% allowance will apply.

Building characteristics

• the age of the building with dates of any subsequent alterations or refurbishments
• identification of all wet areas (swimming pools and surround), along with steam rooms and sauna
• mezzanine floors and whether they are enclosed to form separate studios or open to the gym
• number of floors
• squash courts - record number of courts and size
• badminton halls - record number of courts and size
• tennis halls - records number of courts, surface and size
• external facilities - tennis courts (note number, size, surface and floodlighting and whether covered during winter); outdoor swimming pools (note size and whether heated), team pitches (note size and type of surface)
• car parking - number of spaces, is there adequate provision
• extent of grounds
• identify any let-outs that could give rise to a separate assessment

Operating details

• membership levels at date of inspection - has this changed much since AVD ?
• tariff and types at date of inspection - has this changed much since AVD ?
• enquire with operator who they envisage is the local competition?

7. Survey capture

Rating surveys should be captured on the Rating Support Application (RSA) and in all cases plans and surveys should be stored in the property folder of the Electronic Document Records Management (EDRM) system.

8. Valuation approach

8.1 Dry clubs

The rental method of valuation should be used for all dry clubs. Levels of value should be determined by having regard to the evidence and applying the principles outlined in Lotus and Delta above. The very small non-chain dry health and fitness clubs may have an interface with generalist class Gymnasia (Scat 416), which should also be valued by a rentals method.

It is essential that all available evidence is fully considered and analysed. During recessionary times the health and fitness market has seen an explosion of budget dry only clubs opening. Though these are usually rented, the headline rent will need careful analysis and adjustment to consider rent frees and capital contributions. Careful consideration will also need to be given to the length of time these incentives are analysed over. For example first review, 2nd review, first break in the lease, the entire length of the lease. Any queries concerning analysis should be directed to the a CCT member or the NVU Fitness Class Facilitator.

It is also imperative that fitting out costs are obtained from the operator and then carefully analysed to establish the value of the “fitting out” to the occupier. In many cases rents will be shell only and adjustment will need to be made to reflect the tenant’s rateable fit out.

8.2 Wet and dry clubs

Reference should be made to the relevant Practice Note which outlines the scheme for both Greater London and Outside London (for example, the Provinces)

8.3 With racquets clubs (indoor tennis halls)

In the absence of specific rental evidence relating to ‘with racquets’ clubs, the valuation approach is based on comparison with prevailing values in the locality for large, purpose built (non-racquets) health clubs. Reference should be made to the relevant section within the practice note.

9. Valuation support

• Rating Support Application (RSA)
• Survaid
• Class Co-ordination team

Practice note: 2023 - sports and leisure centres (private)

1. Market appraisal

For both the 2010 and 2017 rating lists there was a scarcity of market evidence for wet and dry gyms and the same remains for this revaluation.

As for the state of the market, the general feeling amongst the health and fitness traditional wet/dry clubs is still one of re-positioning themselves and jostling for position in a market that has had to come to terms with the concept of budget dry only gyms, a market that continues to grow.

As with past rating lists, one always needs to proceed with caution when considering the London market which in practice often performs differently to the rest of the United Kingdom, especially in central London and the more affluent suburbs.

The COVID-19 pandemic had a major impact on private health and fitness centres in the period leading up to the AVD (1 April 2021). Details of the various restrictions implemented by statute in response to the pandemic, and of the vaccination rollout, can be found online. In February 2021 the UK Government published its Roadmap out of lockdown for England which set out four steps to relax restrictions. Step 1, easing restrictions on outdoor gatherings, had already taken place by the AVD.

The later three stages of the Roadmap for England included

• the opening of outdoor hospitality, and non-essential retail (Step 2, no earlier than 12 April); and
• most legal restrictions on meeting others outdoors to be lifted, opening of indoor entertainment venues such as cinemas, casinos and bingo halls (Step 3, no earlier than 17 May 2021); and
• the removal of remaining restrictions on social contact (Step 4, no earlier than 21 June)

Subsequent to 1 April 2021 steps 2 and 3 took place as planned, but Step 4 was delayed four weeks to 19 July.

The situation in Wales, both leading up to and after the AVD, was similar although not identical.

Performance in 2020

During the COVID lockdown, whilst the private health and fitness clubs were closed, people continued to exercise.

The closure led to a high demand for people purchasing their own gym equipment and weights for use at home, with some people experiencing delays in obtaining equipment as demand exceeded supply.

There was also a growth of streaming of online fitness classes and increased demand for interactive packages providing exercise bikes along with online workout sessions.

Although there were some concerns in the market regarding the future impact of the increase in home training, lifting of lockdown restrictions has seen a renewed focus by people on ‘activity, health and well-being’. This along with people wanting more exercise space than available within the home and the desire for social interaction with other gym users has seen people return to the private health and fitness centres as they have re-opened.

The expansion of budget gyms in the UK market has continued with new gyms continuing to be opened, primarily in former retail units and in locations closer to residential areas. This reflects the more flexible membership arrangements and the current trend of people now working more from home.

The portfolios of a couple of operators which struggled with the COVID lockdowns and increased competition have been acquired by other existing budget operators, ensuring their continued use.

The increased interest of people wanting to have a healthier lifestyle and the desire for more social interaction following the lockdowns is supporting the recovery and expansion of the health and fitness market, albeit primarily restricted to dry only.

2. Changes from the last practice note

This Practice Note is predominantly the same as that covering the 2017 Rating List. The only significant changes, as detailed below, are the adjustment of the age scales for age and obsolescence allowances applicable to additions for fit-out and a general uplift in the value bands in the Greater London area.

3. Ratepayer discussions

Initial contact has been made with the private sector consortium of rating agents acting for the majority of the chain operated wet/dry health and fitness clubs. Discussions will be ongoing in the period prior to compilation with a view to securing agreement on the scheme before that date.

4. Valuation Scheme

4.1 The Greater London Area

The table below for Greater London area applies to wet and dry gyms only.

The values in the table below may be subject to adjustment to reflect circumstances at the AVD.

Band	Location	Type of Accommodation	Value £/m2
1	Central London and discrete high value locations	New Breed of Super Club	£200 plus
2	Central London and discrete high value locations	Purpose built/ Quality Conversions	Up to £200
3	Outside Central London	New Breed of Super Club	Up to £175
4	Outside Central London	Purpose Built/Quality Conversions	Up to £160
	Central London and discrete high value locations	Older/Poorer quality Conversions
5	Outside Central London	Older/Poorer quality conversions	Up to £140
6	All Locations	Poor quality conversions with little adaptation. Often small and without a ground floor presence.	Up to £110

Banding

Central London may be considered the prime area with a reliable catchment from its working population, albeit the current trend to work from home will have impacted these clubs. For the purposes of this Practice Note Central London is defined as all areas within the London Underground Circle Line, and areas outside the circle line within 1 mile of a circle line station. For those clubs located on the borderline between central and outside London the judgement will need to be applied following inspection and the application of knowledge of the area.

Outside Central London relies mainly on a residential and incidental working population.

In certain suburban centres there are high quality properties that target an affluent, mainly residential, population. These discrete high value properties typically provide a very comprehensive range of facilities.

Fit-out

The above scale reflects rateable fit-out which as an addition to the shell rental will be the higher of (a) 20% or (b) the Provincial scheme fit-out addition of Wet £40 per sqm and Dry £17.50 per sqm or £15 per sqm

4.2 Outside London

The table below for Outside London applies to wet and dry gyms only.

The values in the table below may be subject to adjustment to reflect circumstances at the AVD.

Band	Location	Characteristics of Unit	Value £/m2
1	London Fringe	Where rental evidence, membership levels and tariff support an uplift. Purpose-built or quality conversions, such that a new unit would not be dissimilar. Expected locations: leisure/retail parks, edge of large towns and cities, upper floors in large towns. These are the upper-end of the market, as usually evidenced by higher tariffs. Size range – normally 2,500 sqm - 4,000 sqm, but smaller and larger units will also fit this type.	Wet/Dry: Shell Range £100 -£125 plus fit-out additions: Wet: add £40/m2 Dry: add £17.50/m2. Value applicable to all main floors.
2	Provincial, and high value locations, excluding London Fringe	Expected to be major operators as above. Competition, between similar styles of operation, will need to be reflected in the range. A monopoly position will suggest higher values	Wet/Dry: Shell Range £85-£105 plus fit-out additions: Wet: add £40/m2 Dry: add £17.50/m2. Rental evidence in parts of the country may suggest lower values in the range. Home Counties, South East and South areas might expect values at, or near the top of the range. Tariff, membership index and retention rates should all be considered. Value applicable to all main floors.
3	London Fringe – definition as above – and other high value locations.	Older and ‘middle’ quality conversions – which may include conversions from: Squash Clubs, warehouses, supermarkets, and offices. This list is not exhaustive and may include other classes of property which will need to be considered on an individual basis. Type of location will determine the point in range e.g. central with good accessibility and parking or outlying industrial estate or peripheral shops location. Also tariff and member index will provide a guide. Competition will need to be considered.	Wet/Dry: Shell Range £75-£100 plus fit-out additions: Wet: add £40/m2 Dry: add £15/m2. Values applicable to all main floors.
4	Provincial	As for Band 3. Bands 3 & 4 will also be applicable for the middle quality purpose-built Clubs, where the quality of fit-out, and range of facilities, is not as extensive as for those Clubs within Bands 1 and 2.	Wet/Dry: Shell Range £70 - £90 plus fit-out additions: Wet: add £40/m2 Dry: add £15/m2. Value applicable to all main floors.
5	Provincial	Miscellaneous conversions with modest adaptation in secondary/tertiary locations	Below £70, including dry fit, with addition of 20% for Wet. Values applicable to all main floors.

4.3 Dry only Gyms

The rental method of valuation should be used for all dry only clubs having regard to rental evidence, as set out in Paragraph 8.1 of the Valuation Office Agency (VOA) Rating Manual Section 965.

Adjustment will be required to reflect the fitting out of a property to a gym from its’ shell state (see below).

4.4 Fit-out

For top quality clubs, the addition for fit-out, to be applied to wet areas (including sauna, steam, jacuzzi, regardless of where situated, but excluding changing rooms) is £40 per sqm, in addition to the shell rate adopted. Where wet areas in clubs of perhaps lesser quality overall are still of a high standard, £40 should still be adopted.

For poorer quality clubs at the bottom of the scale, especially where the changing rooms are inferior, fit-out should be added at £10 - £12.50 per sqm.

Dry clubs only, of a higher quality will have a fit-out addition of £15 per sqm (gyms falling into this category will often include a small area for sauna and steam room).

For dry only budget clubs, actual costs should be obtained. In the absence of costs being supplied the fit-out addition should be not less than £10 per sqm. Where evidence is produced to the contrary refer to the Class Co-ordination Team (CCT) facilitator for Specialist Leisure prior to agreement.

4.5 Fit-out - Age and Obsolescence Scale (for wet and dry gyms)

For wet/dry modern health and fitness clubs outside of London there is a general acceptance, subject to the same physical circumstances existing as at the 31 March 2023/1 April 2023 regarding the hereditament and the locality within which it is located, that the starting basis for the 2023 List rateable value will be parity with the 2017 List rateable value.

However, it is conceded that the fit-out within these clubs is now six years older and therefore to reflect this, the following age and obsolescence (A&O) scheme should be incorporated into the 2023 basis.

2023 age and obsolescence table - All England and Wales

Before age adjustment baseline	Dry Fitted RV/m2 £75.00 and Below	Dry Fitted RV/m2 between £75.01 and £120.00	Dry Fitted RV/m2 £120.01 and above.
2018 +	Nil	Nil	Nil
2015-2017	4.00%	2.00%	Nil
2012-2014	6.00%	4.00%	2.00%
2007-2011	10.00%	7.50%	5.00%
2001-2006	12.50%	10.00%	7.50%
Pre 2000	15.00%	12.50%	10.00%

2017 age and obsolescence table.

Before age adjustment baseline	Dry fitted RV/m2 £75.00 and below	Dry fitted RV/m2 between £75.01 and £120.00	Dry fitted RV/m2 £120.01 and above.
2012 +	Nil	Nil	Nil
2009 to 2011	4.00%	2.00%	Nil
2006 to 2008	6.00%	4.00%	2.00%
2001 to 2005	10.00%	7.50%	5.00%
Pre 2000	12.50%	10%	7.50%

The dry fitted rate in the above table should be the rate per square metre after any adjustment for quantum.

It is important that double-counting does not occur as some clubs may now fall into a lower band than previously. For example, in the 2017 agreement those clubs built in 2007 would have qualified for a 4% allowance where their dry fitted value lay between £75.01/m2 and £120/m2. For 2023 this allowance will be increased to 7.5% - however the reduction in this case will be 3.5% - e.g. the difference between the bands.

The adjustment reduction for A&O should be capped so that it does not exceed the fit-out addition. This is more likely with Central London clubs.

Where a club has been completely refitted to contemporary standards since original construction the later date will form the starting point for any allowances to be granted. If there has been a partial refit the allowance may need adjustment to reflect this.

This A&O scheme will not apply to the recent influx of dry budget clubs. The majority of these budget operators have been valued on the current rents passing, suitably adjusted. Any age and obsolescence will generally therefore be reflected in the analysis of the rental evidence under consideration.

4.6 Quantum

Allowances should be adopted where main space exceeds 4,000 sqm gross internal area (GIA) calculated only on the main space area (excluding the area of any Tennis Hall). Where a net useable area (NUA)/GIA allowance is applicable, the GIA after adjustment will be used to determine any allowance for quantum.

Main Space	> 4,000m2	5,000m2	6,000m2	7,000m2
Allowance	1% per 100m2	10%	20%	30%

Main space areas in excess of 7,000 sqm require separate consideration

4.7 Internal Layout and Facilities

Floor Levels - The valuation price assumes accommodation on up to two floors, or three floors if a swimming pool is installed in the basement. Allowances may be appropriate for accommodation below basement or above first floor levels, depending on the individual hereditament. The settlements in the 2010 and 2017 Rating Lists have provided a sound basis for the valuation of occupations that vary from these parameters and that basis should be followed.

Mezzanine floors - Mezzanine floors are to be valued at between 50% and 100% of main space depending on the degree of fixation and enclosure. For example, a 50% allowance could apply to a workout or weights area reached by open steps.

Squash Courts - Where part of a converted squash club and situated within the main space, up to 3 courts should be included at full rate, each subsequent court should be valued at 50% main space rate (or as an end adjustment adopt 32m2/court x main space rate). For poor independent converted ex-squash clubs, consider whether the proportion of space occupied by the courts justifies this approach - a more correct approach might be to value these at £1,500 - £2,000 a court.

For squash courts situated in tennis halls, or in other structures separate from the main space – adopt a rate of £1,500 each.

Badminton Halls - These may be of similar build style and quality to tennis halls, but will be much smaller and, with a sprung timber floor, will be capable of a variety of uses. To reflect quality, lower natural light levels and less control over heating, adopt 50% of overall main space rate. Where the quality is much better, although still below that of the main space, adopt up to 75%.

4.8 External facilities (additions apply to all clubs)

Outside facilities e.g. swimming pools, tennis courts, will be added at the rates applied to the 2017 List (see below). This additional value will reflect patio areas, barbeques, kiosks, etc. Additional facilities such as extensive grounds should not be considered a liability.

Tennis Courts

Permanent bubble-courts - £2,500/court

Steel frame/plastic covered courts £2,500/court

Outdoor Tennis Courts – Artificial surface, fenced

• with floodlighting £1,650 per court
• without floodlighting £1,200 per court

Outdoor Swimming Pools (excluding children’s splash pools) Covered (lightweight but permanent structure) - adopt 50% of main overall space rate.

Uncovered – adopt water area x £65/m2 (to include all associated features)

Team Pitches 7 - 11 aside (artificial or grass) £2,500 per pitch

Five-aside pitches (fenced, floodlit, plastic surface)

£1,650 per pitch.

Car Parking - The basis is inclusive of car parking, except where parking space would not normally be provided e.g. city centres

4.9 With Racquets Clubs (indoor tennis halls)

Main Space - These should also be valued according to the above scales and include additions for outside facilities as appropriate. Quantum is to be reflected as above, where the main space (excluding tennis hall) exceeds 4,000 sqm GIA. There is to be no further allowance for quantum, as these clubs are, it is understood, the most profitable in the Health & Fitness sector – lounge, bar, restaurant and function areas are larger than many “main space” only clubs, to achieve higher spend from the targeted family membership. Extensive well-fitted changing areas are also an attraction for this type of trade, contributing towards the success of this style.

Tennis Halls (Greater London Area)

Tennis Halls are valued at 20% of main space, as adjusted for quantum, where appropriate.

Tennis Halls (Outside London)

Tennis Halls are to be added at 12.5% of the adopted Dry floor rate per m2. Quantum adjustment, based on main space only, will be at the appropriate rate for the area of main space, on shell value only, subject to a cap of 20%.

4.10 Other Matters

Fire Escapes – Internal - If within the main structure but the exit is from the upper floors direct to the outside with no internal access to the ground floor, then exclude from GIA. If the Fire Escape has access to the Ground Floor, then include in GIA.

Soccerdomes - Where forming part of a health club assessment they are to be valued similarly to attached Tennis Halls, but at 20% of the adopted fitted Dry floor rate per m2. Similar provisions for quantum to Tennis Halls will apply.

Retail Units - Retail units within the club - if at ground floor level value at 55.0% of the unfitted Dry rate, where located at first floor level then value at 40.0% of the Dry unfitted rate. Any quantum adjustment should apply to the whole of the hereditament including the retail element.

4.11 Poor Performers

The 2017 agreed basis set a value to RV at 21% of sustainable AVD turnover. However, this was subject to a minimum price (rental basis) of £54 per m2 for Dry fitted (20% uplift for Wet). Any mezzanines, first floors valued at lower than fitted Dry price, tennis halls etc., all to be devalued at same ratio as in original valuation for example, if mezzanine originally 75% of Dry fitted, the revised approach would be to take 75% of £54 e.g.£40.50. Tennis halls will be £6.75 (e.g.12.50% of fitted price).

The same scheme will apply to 2023 Rating Lists assessments.

For the 2023 List the agreed basis is to set an RV at 21% of the sustainable FMT for 2019/20 trading year.

Having established the likely FMT for the 19/20 trading year (ending March or before), the valuer should then consider any further adjustments needed to reflect the receipts envisaged as at 1 April 2021. The reasonable efficient operator (REO) will take a view not only on the trade immediately achievable at AVD, but the trade over a period of time ahead, as they are assumed to be taking a tenancy with a reasonable prospect of continuance.

This however, will be subject to a minimum price (rental basis) of £45.00/m2 for dry fitted (with a 20% uplift for wet).

Worked example

Gym X - Total Size 9,746m2 (AVD Turnover £2m) GF Dry 5,819m2, Wet 1,182m2, Tennis Hall 2,745m2 plus 5 outdoor tennis courts and outdoor 160m2 swimming pool.

All externals such as squash courts, outdoor tennis courts, outdoor pools, 5-a-side pitches, should have prices applied as stated above.

Valuation based on sustainable AVD turnover (subject to any pandemic adjustment) for Gym X say, £1,750,000 x 21% = £367,500 RV - this will be the RV, subject to the absolute minimum RV from the check valuation:

Check valuation @ £45 per m2 (fitted)

GF dry	5,819m2 @ £45	=	£261,855
Wet	1,182m2 @ £54	=	£63,828
Tennis hall	2,745m2 @ £5.62	=	£15,427
Plus - outdoor pool	160m2 @ £65	=	£10,400
Tennis courts	5 x £1,650	=	£8,250
	Total		£359,760	Say, £357,500 RV

In the example of Gym X, the floor area based RV (£357,500) is lower than the value based on the sustainable AVD trade less any pandemic adjustment (£367,500) and so the RV £367,500 should therefore be adopted.

In the majority of cases the turnover valuation will prevail, but the floor valuation should always be checked and the higher of the two figures adopted as the RV.

Application of scheme

To qualify for consideration as a ‘poor performer’ the health and fitness hereditament must have existed at the AVD and meet the following criteria:

• include wet and dry facilities
• minimum GIA of greater than 2,000 sqm, or if less, consideration will be given to extending the scheme if the hereditament is in the nature of a corporate health and fitness club and typically offers the type of facilities generally found in those clubs
• wet (pool and surround to exclude changing areas) must exceed 174.99 sqm

Any queries from agents challenging the exclusion of a club from the scheme should be referred to the National Valuation Unit (NVU) fitness class facilitator.

The onus for providing AVD turnover is with the occupier / representative. Care must be taken to ensure the AVD turnover provided is indicative of AVD fair maintainable trade.

One operator - due to size and layout of these clubs a revised sustainable AVD turnover at 17% is applicable subject to a check valuation at £38.00 /m2

Where properties have been valued on the poor performer scheme based on a percentage of FMT or at the base level, no further allowances for quantum or age & obsolescence will be applicable (the only exception is if an allowance for CHP (Combined heat & Power System) is required, whereby an allowance of £10,000 will be applied).

Confidentiality - under no circumstances should the turnover of an operator be discussed with anyone other than the agent acting for that operator who initially supplied the information. The information is commercially sensitive and confidential to the operator concerned.

Rating Support Application (RSA) - for the purposes of RSA the allowance for poor performance, whether arrived at using a percentage of the sustainable AVD trade or a price per sqm, should be shown in the rate per sqm and not as an end allowance. Also ensure case remarks are entered to show that this hereditament has been agreed as a poor performer and the revised rate per sqm is not indicative of tone within the area.

Both floor values of £45.00/m2 and £38.00/m2 are effective for the life of the 2023 Rating Lists. If they have been applied at compilation any later Schedule 6 para 2 (7) mentioned matters material changes in circumstances (MCCs) will not lead to a further reduction during the course of the 2023 Rating List.

4.12 Combined Heat and Power Systems

Private Sports and Leisure Centres with a combined heat and power system and can provide a valid Secretary of State Climate Charge Levy (CCL) Exemption Certificate qualify for an end allowance of £10,000 off the total unrounded Rateable Value.

Practice note 1: 2017 - Sports and leisure centres (Private)

1. Market appraisal

The strong market which started in the late 1990s and continued into the new millennium started to slow for traditional chain operated wet/dry gyms from 2008. Rental levels reached a plateau, and activity slowed considerably, with relatively few new clubs being built. Indeed for the 2010 Rating Lists there was a scarcity of market evidence, with most rent reviews either showing no uplift or where rental growth was evidenced this was due to pre-determined RPI increases. At 2015 this lack of rental evidence continues to prevail. Also during the period (2008-2015) the only new club operator to enter the market was DW Sports and they tailed off acquiring sites from 2010.

In addition to having to face the post 2008 recession, the private health and fitness market had to come to terms with the influx of budget (dry only) operators who have continued to expand since 2009. However from 2015 there have been signs of recovery, with the launch of some new wet and dry clubs. That said, this recovery within the industry and signs of future optimism have yet to be evidenced by rental increases at rent review or lease renewal.

Prior to the last AVD - 1 April 2008 - there were a number of mergers and acquisitions that took place in order to increase market share.

Not withstanding these acquisitions and mergers, post 2008 a number of operators have experienced difficult trading and some went into administration.

As for the state of the market, the general feeling amongst the health and fitness traditional wet/dry clubs is one of re-positioning themselves and jostling for position in a market that has had to come to terms with the concept of budget - those that fail to grasp this, especially those at the lower end who provide wet facilities may struggle to survive in the next three to five years.

Contrary to this, the market for budget operators and for the small fitness suite/gym style operators as at April 2015 is extremely buoyant, both of which are as a result of the emergence of the “value for money” culture and the recession (no different to the retail or hotel sector).

The major corporate players in this market all charge between £9.99 to £19.99 per month and offer a much less “with frills” product with reduced overheads by focusing on dry only and reduced staffing levels. There is no denying that their proliferation has impacted membership levels of some wet/dry operators, especially those operating at the lower end.

However, one always needs to proceed with caution when considering the London market which in practice often performs differently to the rest of the UK - there are many clubs in London that are recession proof. Also in London, especially, a new concept of “microgyms” has emerged with footprints as small as 500sqm. These tend to specialise in spinning for example, or specific exercise classes only.

In addition to the main impact of budget operators the traditional wet/dry clubs have also been adversely affected by other competitors, e.g. hotels, golf and country clubs, boutique beautician/fitness clubs, who have added to their facilities and further diluted the market. Local authority centres have also added to the competition with extensive refurbishments, new facilities and additions. This latter competition has always existed, it is the proliferation of budget clubs that has really shaken the market.

The market at AVD therefore appears to be split, with the budget operators still acquiring at speed, whereas the traditional wet/dry market is in a period of consolidation, with very few examples of new clubs being built.

2. Changes from the last practice note

This Practice Note is predominantly the same as that covering the 2010 Rating Lists. The only significant changes, as detailed below, are the adjustment of the age scales for age and obsolescence allowances applicable to additions for fit-out and a general uplift in the value bands in the Greater London area.

3. Ratepayer discussions

Discussions have been held with the private sector consortium of rating agents acting for the majority of the chain operated wet/dry health and fitness clubs. Individual meetings have also taken place with two of the large budget dry only operators. Their views have been considered in the preparation of this Practice Note.

4. Valuation scheme

4.1 The Greater London area

The table below for Greater London area applies to wet and dry gyms only.

Band	Location	Type of Accommodation	Value £/m2
1	Central London and discrete high value locations	New Breed of Super Club	£200 plus
2	Central London and discrete high value locations	Purpose built/ Quality Conversions	Up to £200
3	Outside Central London	New Breed of Super Club	Up to £175
4	Outside Central London	Purpose Built/Quality Conversions	Up to £160
	Central London and discrete high value locations	Older/Poorer quality Conversions
5	Outside Central London	Older/Poorer quality conversions	Up to £140
6	All Locations	Poor quality conversions with little adaptation. Often small and without a ground floor presence.	Up to £110

Banding

Central London may be considered the prime area with a reliable catchment from its working population. For the purposes of this Practice Note Central London is defined as all areas within the London Underground Circle Line, and areas outside the circle line within 1 mile of a circle line station. For those clubs located on the borderline between central and outside London the judgement will need to be applied following inspection and the application of knowledge of the area.

Outside Central London relies mainly on a residential and incidental working population.

In certain suburban centres there are high quality properties that target an affluent, mainly residential, population. These discrete high value properties typically provide a very comprehensive range of facilities.

Fit-out

The above scale reflects rateable fit-out which as an addition to the shell rental will be the higher of: (a) 20% or (b) the Provincial scheme fit-out addition of Wet £40 per sqm and Dry £17.50 per sqm or £15 per sqm

4.2 Outside London

The table below for Outside London applies to wet and dry gyms only.

Band	Location	Characteristics of Unit	Value £/m2
1	LONDON FRINGE	Where rental evidence, membership levels and tariff supports an uplift. Purpose-built or quality conversions, such that a new unit would not be dissimilar. Expected locations; leisure/retail parks, edge of large towns and cities, upper floors in large towns. Expected Operators: David Lloyd, Virgin Active, Nuffield Health, Bannatynes, DW Sports, et al. i.e. the upper-end of the market, as usually evidenced by higher tariffs. Size range – normally 2,500 sqm-4,000 sqm, but smaller and larger units will also fit this type.	Wet/Dry: Shell Range £100 -£125 plus fit-out additions: Wet: add £40/m2 Dry: add £17.50/m2. APPLICABLE TO ALL MAIN FLOORS
2	Provincial, and high value locations, excluding London Fringe	Expected Major Operators: as above. Competition, between similar styles of operation, will need to be reflected in the range. A monopoly position will suggest higher values	Wet/Dry: Shell Range £85-£105 plus fit-out additions: Wet: add £40/m2 Dry: add £17.50/m2 Rental evidence in parts of the country may suggest lower values in the range. Home Counties, South East and South areas might expect values at, or near the top of the range. Tariff, membership index and retention rates should all be considered. APPLICABLE TO ALL MAIN FLOORS
3	London Fringe – definition as above – and other high value locations.	Older and ‘middle’ quality conversions – which may include conversions from: Squash Clubs, warehouses, supermarkets, and offices. This list is not exhaustive and may include other classes of property which will need to be considered on an individual basis. Type of location will determine the point in range e.g. central with good accessibility and parking or outlying industrial estate or peripheral shops location. Also tariff and member index will provide a guide. Competition will need to be considered.	Wet/Dry: Shell Range £75-£100 plus fit-out additions: Wet: add £40/m2 Dry: add £15/m2. APPLICABLE TO ALL MAIN FLOORS
4	Provincial	As for Band 3. Bands 3 & 4 will also be applicable for the middle quality purpose-built Clubs, where the quality of fit-out, and range of facilities, is not as extensive as for those Clubs within Bands 1 and 2.	Wet/Dry: Shell Range £70 - £90 plus fit-out additions: Wet: add £40/m2 Dry: add £15/m2. APPLICABLE TO ALL MAIN FLOORS
5	Provincial	Miscellaneous conversions with modest adaptation in secondary/tertiary locations	Below £70, including dry fit, with addition of 20% for Wet. APPLICABLE TO ALL MAIN FLOORS

4.3 Dry only Gyms

The rental method of valuation should be used for all dry only clubs having regard to rental evidence, as set out in Paragraph 8.1 of the VOA Rating Manual Section 965.

Adjustment will be required to reflect the fitting out of a property to a gym from its’ shell state (see below).

4.4 Fit-out

For top quality clubs, the addition for fit-out, to be applied to wet areas (including sauna, steam, jacuzzi, regardless of where situated, but excluding changing rooms) is £40 per sqm, in addition to the shell rate adopted. Where wet areas in clubs of perhaps lesser quality overall are still of a high standard, £40 should still be adopted.

For poorer quality clubs at the bottom of the scale, especially where the changing rooms are inferior, fit-out should be added at £10-£12.50 per sqm.

Dry clubs only, of a higher quality, will have a fit-out addition of £15 per sqm (gyms falling into this category will often include a small area for sauna and steam room).

For dry only budget clubs actual costs should be obtained. In the absence of costs being supplied the fit-out addition should be not less than £10 per sqm. Where evidence is produced to the contrary refer to the CCT facilitator for Specialist Leisure prior to agreement.

4.5 Fit-out - age and obsolescence scale (for wet and dry gyms)

For wet/dry modern health and fitness clubs outside of London there is a general acceptance, subject to the same physical circumstances existing as at the 31 March 2017 / 1 April 2017 regarding the hereditament and the locality within which it is located, that the starting basis for the 2017 Lists rateable value will be parity with the 2010 Lists rateable value.

However, it is conceded that the fit-out within these clubs is now seven years older and therefore to reflect this, the following age and obsolescence (A&O) scheme should be incorporated into the 2017 basis - this has been discussed with, and accepted by, representatives of the Private Sports and Leisure Clubs.

2017 Age and Obsolescence Table - All England and Wales

Before age adjustment baseline	Dry Fitted RV/m2 £75.00 and Below	Dry Fitted RV/m2 between £75.01 and £120.00	Dry Fitted RV/m2 £120.01 and above.
2012 +	Nil	Nil	Nil
2009-2011	4.00%	2.00%	Nil
2006--2008	6.00%	4.00%	2.00%
2001-2005	10.00%	7.50%	5.00%
Pre 2000	12.50%	10%	7.50%

2010 Age and Obsolescence Table.

Before age adjustment baseline	Dry Fitted RV/m2 £75.00 and Below	Dry Fitted RV/m2 between £75.01 and £120.00	Dry Fitted RV/m2 £120.01 and above.
2005 +	Nil	Nil	Nil
2002-2004	4.00%	2.00%	Nil
1999-2001	6.00%	4.00%	2.00%
1994-1998	10.00%	7.50%	5.00%
Pre 1993	12.50%	10%	7.50%

The dry fitted rate in the above table should be the rate per square metre after any adjustment for quantum.

It is important that double-counting does not occur as some clubs may now fall into a lower band than previously. For example in the 2010 agreement those clubs built in 1998 would have qualified for a 7.50% allowance where their dry fitted value lay between £75.01/m2 and £120/m2. For 2017 this allowance will be increased to 10% - however the reduction in this case will be 2.5% - i.e. the difference between the bands.

Care also needs to be taken to ensure that the reduction for A&O does not exceed the fit-out addition. This is more likely with Central London clubs.

Where a club has been completely refitted to contemporary standards since original construction the later date will form the starting point for any allowances to be granted. If there has been a partial refit the allowance may need adjustment to reflect this.

Regulation 15 Transitional Certificates are not to be issued to apply the 2017 A&O scheme to the 2010 List. This amended scheme is 2017 specific.

This A&O scheme will not generally apply to the recent influx of dry budget clubs. The majority of these budget operators have been valued on the current rents passing, suitably adjusted. Any age and obsolescence is therefore already reflected in the analysis of the rental evidence under consideration. In previous Lists Fitness First was included with the wet/dry clubs. However since 2008 there has been an explosion of rented dry only clubs and therefore the dry only Fitness Firsts will be valued in-accordance with the dry scheme of value.

4.6 Quantum

Allowances should be adopted where MAIN SPACE exceeds 4,000 sqm (GIA) calculated only on the main space area (excluding the area of any Tennis Hall). Where an NUA/GIA allowance is applicable, the GIA after adjustment will be used to determine any allowance for quantum.

Main Space	> 4,000m2	5,000m2	6,000m2	7,000m2
Allowance	1% per 100m2	10%	20%	30%

Main space areas in excess of 7,000 sqm require separate consideration

4.7 Internal layout and facilities

Floor Levels - The valuation price assumes accommodation on up to two floors, or three floors if a swimming pool is installed in the basement. Allowances may be appropriate for accommodation below basement or above first floor levels, depending on the individual hereditament. The settlements in the 2010 Rating List have provided a sound basis for the valuation of occupations that vary from these parameters and that basis should be followed.

Mezzanine floors - Mezzanine floors are to be valued at between 50% and 100% of main space depending on the degree of fixation and enclosure. For example a 50% allowance could apply to a workout or weights area reached by open steps.

Squash Courts - Where part of a converted squash club and situated within the main space, up to 3 courts should be included at full rate, each subsequent court should be valued at 50% main space rate (or as an end adjustment adopt 32m2/court x main space rate). For poor independent converted ex-squash clubs, consider whether the proportion of space occupied by the courts justifies this approach - a more correct approach might be to value these at £1,500 - £2,000 a court.

For squash courts situated in tennis halls, or in other structures separate from the main space – adopt a rate of £1,500 each.

Badminton Halls - These may be of similar build style and quality to tennis halls, but will be much smaller and, with a sprung timber floor, will be capable of a variety of uses. To reflect quality, lower natural light levels and less control over heating, adopt 50% of overall main space rate. Where the quality is much better, although still below that of the main space, adopt up to 75%.

4.8 External facilities (additions apply to all clubs)

Outside facilities eg swimming pools, tennis courts, will be added at the rates applied to the 2010 List (see below). This additional value will reflect patio areas, BBQs, Kiosks, etc. Additional facilities such as extensive grounds should not be considered a liability.

Tennis Courts

Permanent bubble-courts - £2,500/court

Steel frame/plastic covered courts £2,500/court

Outdoor Tennis Courts – Artificial surface, fenced

with floodlighting £1,650 per court

without floodlighting £1,200 per court

Outdoor Swimming Pools (excluding children’s splash pools) Covered (lightweight but permanent structure) - adopt 50% of main overall space rate.

Uncovered – adopt water area x £65/m2 (to include all associated features)

Team Pitches 7 - 11 aside (artificial or grass)£2,500 per pitch

Five-aside pitches (fenced, floodlit, plastic surface)

£1,650 per pitch.

Car Parking The basis is inclusive of car parking, except where parking space would not normally be provided e.g. city centres

4.9 With Racquets Clubs (indoor tennis halls)

Main Space These should also be valued according to the above scales, and include additions for outside facilities as appropriate. Quantum is to be reflected as above, where the main space (excluding tennis hall) exceeds 4,000 sqm GIA. There is to be no further allowance for quantum, as these clubs are, it is understood, the most profitable in the Health & Fitness sector – lounge, bar, restaurant and function areas are larger than many “main space” only clubs, to achieve higher spend from the targeted family membership. Extensive well-fitted changing areas are also an attraction for this type of trade, contributing towards the success of this style.

Tennis Halls (Greater London Area)

Tennis Halls are valued at 20% of main space, as adjusted for quantum, where appropriate.

Tennis Halls (Outside London)

Tennis Halls are to be added at 12.5% of the adopted Dry floor rate per m2. Quantum adjustment, BASED ON MAIN SPACE ONLY, will be at the appropriate rate for the area of main space, on shell value only, subject to a cap of 20%.

4.10 Other matters

Fire Escapes – Internal - If within the main structure but the exit is from the upper floors direct to the outside with no internal access to the ground floor, then exclude from GIA. If the Fire Escape has access to the Ground Floor, then include in GIA.

Soccerdomes - Where forming part of a health club assessment they are to be valued similarly to attached Tennis Halls, but at 20% of the adopted fitted Dry floor rate per m2. Similar provisions for quantum to Tennis Halls will apply.

Retail Units Retail units within the club - if at ground floor level value at 100% of the unfitted Dry rate, where located at first floor level then value at 75% of the Dry unfitted rate. Any quantum adjustment should apply to the whole of the hereditament including the retail element.

4.11 Poor performers

Following a meeting with representative agents acting on behalf of most of the major operators in the market (David Lloyd, Virgin Active, Nuffield Health, LA Fitness, Bannatynes) a scheme was agreed for 2010 Rating Lists covering those clubs highlighted by the industry which, evidenced by the sustainable AVD turnover, were accepted to be poor performers.

The 2010 agreed basis set a value to RV at 21% of sustainable AVD turnover. However, this was subject to a minimum price (rental basis) of £60 per m2 for Dry fitted (20% uplift for Wet). Any mezzanines, first floors valued at lower than fitted Dry price, tennis halls etc., all to be devalued at same ratio as in original valuation e.g. if mezzanine originally 75% of Dry fitted, the revised approach would be to take 75% of £60 i.e. £45. Tennis halls will be £7.50 (i.e. 12.50% of fitted price).

The same scheme will apply to 2017 Rating Lists assessments. However, the RV is set at 21% of AVD turnover subject to a minimum of £54.00 per square meter Dry fitted rate (with 20% uplift for Wet).

Worked example -

AnyGym - Total Size 9,746m2 (AVD Turnover £2m) GF Dry 5,819m2, Wet 1,182m2, Tennis Hall 2,745m2 plus 5 outdoor tennis courts and outdoor 160m2 swimming pool.

All externals such as squash courts, outdoor tennis courts, outdoor pools, 5-a-side pitches, should have prices applied as stated above.

Valuation based on sustainable AVD turnover for AnyGym say, £2m x 21% = £420,000 RV - this will be the RV, subject to the absolute minimum RV from the check valuation:

Check valuation @ £54 per m2 (fitted)

GF Dry	5,819m2 @ £54	=	£314,226
Wet	1,182m2 @ £64-80	=	£76,594
Tennis Hall	2,745m2 @ £6.75	=	£18,529
Plus - Outdoor Pool	160m2 @ £65	=	£10,400
Tennis Courts	5 @ £1,650	=	£8,250
	Total		£427,999	Say, £427,500 RV

In the example of AnyGym the floor area based RV (£427,500) is higher than the value based on the sustainable AVD trade (£420,000) and should therefore be adopted. However, in the majority of cases the turnover valuation will prevail, but the floor valuation should always be checked and the higher of the two figures adopted as the RV.

Application of scheme

To qualify for consideration as a ‘poor performer’ the health and fitness hereditament must have existed at the AVD and meet the following criteria:

• include wet and dry facilities
• minimum GIA of greater than 2,000 sqm, or if less, consideration will be given to extending the scheme if the hereditament is in the nature of a corporate health and fitness club and typically offers the type of facilities generally found in those clubs.
• wet (pool and surround to exclude changing areas) must exceed 174.99 sqm

Any queries from agents challenging the exclusion of a club from the scheme should be referred to the National Valuation Unit (NVU) Fitness Class Facilitator.

The onus for providing AVD turnover is with the agent. Care must be taken to ensure the AVD turnover provided is indicative of AVD fair maintainable trade.

Total Fitness - Due to size and layout of these clubs a revised sustainable AVD turnover at 17% is applicable subject to a check valuation at £45.00/m2

Confidentiality - Under no circumstances should the turnover of an operator be discussed with anyone other than the agent acting for that operator who initially supplied the information. The information is commercially sensitive and confidential to the operator concerned.

RSA- For the purposes of RSA the allowance for poor performance, whether arrived at using a percentage of the sustainable AVD trade or a price per sqm, should be shown in the rate per sqm and not as an end allowance. Also ensure case remarks are entered to show that this hereditament has been agreed as a poor performer and the revised rate per sqm is not indicative of tone within the area.

Both floor values of £54.00/m2 and £45.00/m2 are effective for the life of the 2017 Rating Lists. If they have been applied at compilation any later Schedule 6 para 2 (7) mentioned matters (MCCs) will not lead to a further reduction during the course of the 2017 Rating Lists.

4.12 Combined Heat and Power Systems

Private Sports and Leisure Centres with a combined heat and power system and can provide a valid Secretary of State Climate Charge Levy (CCL) Exemption Certificate qualify for an end allowance of £10,000 off the total unrounded Rateable Value.

Practice note: 2010 - Sports and leisure centres (Private)

1. Co-ordination

Sports and Leisure Centres (Private) generally referred as Health and Fitness clubs as a class are split between Generalists and Specialists. Responsibility for ensuring that appropriate co ordination takes place lies with the Specialists. Co-ordination responsibilities are set out in RM: S6: Pt 1

Special Category Codes:

259 (Dry)	Specialists to deal with all properties where 2005 List RV exceeds £65,000, or where occupied by clubs forming part of a chain. Generalists to deal with non-chain properties up to £65,000 RV.
260 (Wet and Dry)

As a split class, the appropriate suffix letter should be G or S.

Dry sports and leisure centres (Scat 259) valued by Generalists will have an interface with the Unit class Gymnasia (Scat 416G).

Exceptionally, where leisure facilities are attached to Timeshare Complexes, but are subject to separate assessment, they remain the responsibility of the Valuer dealing with the Timeshare Complex and will accordingly be suffixed S.

2. Scope of Practice note

This Practice Note deals solely with private sports and leisure centres. Local authority sports and leisure centres are a separate class, covered in RM: S6: Pt 3 S960.

3. State of the market at the Antecedent Valuation Date (AVD)

The previous AVD of 1 April 2003 saw a maturing market, with strong competition in some geographical areas. Generally demand had peaked, so that the great surge of activity in this sector that began in the later 1990’s was over. Rental levels reached a plateau, and activity slowed considerably, with relatively few new clubs being built.

Between the AVDs for the 2005 and 2010 Rating Lists the market has shown more consolidated activity. Holmes Place was absorbed by Virgin Active in 2006. In the same year (2006) Bannatynes acquired the Living Well clubs from the Hilton and re-branded, LA Fitness also acquired Dragons. In 2007 Next Generation was acquired and rebranded by London and Regional Properties who also owned David Lloyd. Also in 2007 Nuffield acquired Cannons. In 2009 DW Sports acquired the heath and fitness clubs of JJB and have continued to expand.

Other competitors, e.g. hotels, golf and country clubs, boutique beautician/fitness clubs, added to their facilities and further diluted the market; whilst local authority centres also added to the competition with extensive refurbishments, new facilities and additions.

Many of the rent reviews between the AVDs have been at nil increase or at fixed uplifts under the terms of the leases. Sale and leaseback transactions have also been a feature of the market since 2003, with Total Fitness, Fitness First and LA Fitness raising considerable capital by this means.

Generally the economic climate at AVD 2008 was gloomier than was the case in 2003, even before the financial problems in Autumn 2008. Interest rates were higher; the rising cost of essentials such as food and fuel; the housing market and the wider global concerns all combined to produce an air of uncertainty as to how much disposable income is available for leisure pursuits. Some commentators paint a bleak picture for the industry– the Times (4/3/08) reports the heyday of the gym has gone. In 2003 there were 8.7 million Club members, with slightly fewer in 2007 Joining fees have fallen, tariff levels are under pressure, drop-out rates for new members are high (60%) against a backdrop of a growing obesity problem. However, the Annual Fitness Industry, as at June 2008, reports in the period 1/4/07 to 31/3/08, a small increase in membership levels, no overall retention issues, operators margins and tariff levels being maintained and that membership is viewed as a “must-have” rather than a luxury with increasing concern about fitness levels.

Post 2010 the Esporta portfolio was sold in 2011 to Virgin Active and other independent operators. Greens was acquired by Nuffield Health in 2012.

Since 2010 there have also been some operators who have experience difficult trading such as Fitness First who just avoided administration in 2012, unlike Total Fitness who went into administration in 2012. A buy-out of Total Fitness by a management team saw a reduced portfolio of 16. David Lloyd was acquired by TDR Capital in 2013 and LA Fitness in March 2014 sold half of its gyms in order to consolidate its market position.

Also since 2010 there has been a proliferation in the market of dry only budget gyms. The major corporate players in this market being Pure Gym (61 clubs) launched in 2009, the Gym Group (42 clubs), Xercise4less, Fit4less, Gym4less and Easy Gym. These new operators charging between £12.99 to £19.99 per month have impacted membership levels of some wet/dry operators, especially those operating at the lower end.

4. Valuation approach

4.1 Non-Chain operated dry clubs

The rental method of valuation should be used for all smaller dry clubs. Levels of value should be determined at Unit level having regard to the evidence. Dry sports and leisure centres will have an interface with the Unit Class Gymnasia (Scat 416G), which should be valued on a similar basis.

It is essential that all available evidence is considered and properly analysed in order to establish a proper basis of valuation. In many cases rents will relate to the shell only and adjustment will need to be made to reflect the tenant’s rateable fit out. For the better quality clubs regard may also be had to the relevant 2010 scheme of valuation for chain-operated clubs.

4.2 Wet & Dry, and chain operated dry clubs

Valuers should refer to the relevant 2010 scheme of valuation for guidance (Appendix 1 – Greater London, Appendix 2 - Provincial). These have been arrived at following analysis of all available rental information and research into fit-out costs, predominantly from chain operators. When Units are dealing with smaller, non-chain, Wet & Dry clubs, whilst a valuation can be arrived at using the scheme, it is necessary to also have regard to local evidence before fixing a value.

4.3 ‘With Racquets’ Clubs

In the absence of specific rental evidence relating to ‘with racquets’ clubs, the valuation approach is based on comparison with prevailing values in the locality for large, purpose built (non racquets) health clubs. Valuers should refer to the relevant 2010 scheme of valuation for guidance (Appendix 1 – Greater London, Appendix 2 - Provincial).

5. IT support

Within RSA analysis and valuation scales specifically for this class enable input of factual data to achieve valuations that follow the recommended approach.

6. Other matters

When an issue relating to the valuation of Private Sports and Leisure Centres cannot be resolved locally the Members of the Fitness Class Co-ordination Team are able to advise.

Practice note 1: 2010: Appendix 1 - Sports & leisure centres (Private)

Health & Fitness Clubs Within The Greater London Area

Group	Location	Type of Accommodation	Value £/m2
1	Central London and discrete high value locations	New Breed of Super Club	Up to £200
2	Central London and discrete high value locations	Purpose built/ Quality Conversions	Up to £175
3	Outside Central London	New Breed of Super Club	Up to £160
4	Outside Central London	Purpose Built/Quality Conversions	Up to £140
	Central London and discrete high value locations	Older/Poorer quality Conversions
5	Outside Central London	Older/Poorer quality conversions	Up to £110
6	All Locations	Poor quality conversions with little adaptation. Often small and without a ground floor presence.	Up to £75

Banding

Central London may be considered the prime area with a reliable catchment from its working population. Outside Central London relies mainly on a residential and incidental working population. In certain suburban centres there are high quality properties that target an affluent, mainly residential, population. These discrete high value properties typically provide a very comprehensive range of facilities.

Fit-out

The above scale reflects rateable fit-out which as an addition to the shell rental will be the higher of:

a. 20% or b. the Provincial scheme fit-out addition of Wet £40/m2 and Dry £17.50/m2 or £15/m2

Fit-out - Age and Obsolescence Scale

There is a general acceptance that for the modern health and fitness club, subject to the same physical circumstances existing as at the 31.3.2010 regarding the hereditament and the locality within which it is located, the starting basis for the 2010 RV will be parity with the 2005 List RV.

However, it is accepted that the fit out within these clubs is now 5 years older and therefore to reflect this the following age and obsolescence (A&O) scheme detailed below should be incorporated into the 2010 basis - this has been discussed with, and accepted by, representatives of the Private Sports and Leisure Clubs:

Before age adjustment baseline	Dry Fitted RV/m2 £75.00 and Below	Dry Fitted RV/m2 between £75.01 and £120.00	Dry Fitted RV/m2 £120.01 and above.
2005 +	Nil	Nil	Nil
2002-2004	4.00%	2.00%	Nil
1999-2001	6.00%	4.00%	2.00%
1994-1998	10.00%	7.50%	5.00%
Pre 1993	12.50%	10%	7.50%

Where a club has been completely refitted to contemporary standards since original construction the later date will form the starting point for any allowances to be granted. If there has been a partial refit the allowance may need adjustment to reflect this.

Regulation 15 Transitional Certificates are not to be issued to apply the A&O scheme to the 2005 List. This scheme is 2010 specific.

Further, this A&O scheme will not generally apply to the recent influx of budget clubs. The majority of these budget operators have been valued on the current rents passing suitably adjusted. Any age and obsolescence is therefore already reflected in the analysis of the rental evidence under consideration.

Area Measurement

Initial valuation is based on Gross Internal Area (GIA). However for converted occupations reference should be made to Net Usable Area (NUA) which is defined as GIA less plant rooms, essential fire corridors, staircases and access areas. Where the ratio of GIA to NUA exceeds 1.1, an allowance will be applied calculated as one percent for every one percent by which the factor exceeds 1.1, to a maximum of 20%. Thus if the factor is 1.15 a 5% allowance will apply.

Quantum

Allowances should be adopted where MAIN SPACE exceeds 4000m2 (GIA) calculated only on the main space area (excluding the area of the Tennis Hall). Where an NUA/GIA allowance is applicable, the GIA after adjustment will be used to determine any allowance for quantum.

Main Space	> 4000m2	5000m2	6000m2	7000m2
Allowance	1% per 100m2	10%	20%	30%

Main space areas in excess of 7000m2 require separate consideration.

Internal Layout and Facilities

Floor Levels - The valuation price assumes accommodation on up to two floors, or three floors if a swimming pool is installed in the basement. Allowances may be appropriate for accommodation below basement or above first floor levels, depending on the individual hereditament. The settlements in the 2000 Rating List have provided a sound basis for the valuation of occupations that vary from these parameters and that basis should be followed.

Mezzanine floors - Mezzanine floors are to be valued at between 50% and 100% of main space depending on the degree of fixation and enclosure. For example a 50% allowance could apply to a workout or weights area reached by open steps.

Squash Courts - Where part of a converted squash club and situated within the main space, up to 3 courts should be included at full rate, each subsequent court should be valued at 50% main space rate (or as an end adjustment adopt 32m2/court x main space rate).

For squash courts situated in tennis halls, or in other structures separate from the main space – adopt rate of £1500 each.

Badminton Halls - These may be of similar build style and quality to tennis halls, but will be much smaller and, with a sprung timber floor, will be capable of a variety of uses. To reflect quality, lower natural light levels and less control over heating, adopt 50% of overall main space rate. Where the quality is much better, although still below that of the main space, adopt up to 75%.

External Facilities (additions apply to all clubs, including “with racquets” clubs):

Tennis Courts Artificial surface, fenced, unlit - £1200 / court. Artificial surface, fenced, floodlit - £1650 / court.

Outdoor Swimming Pools (excluding children’s splash pools): Covered (lightweight but permanent structure) - adopt 50% of main overall space rate. Uncovered – adopt water area x £65/m2 (to include all associated features)

Team Pitches (artificial or grass) £2500 per pitch

Ancillaries Additional facilities, such as terraces, children’s playgrounds, BBQs, kiosks and stores are reflected. Extensive grounds should not be considered a liability.

Car Parking The basis is inclusive of car parking, except where parking space would not normally be provided e.g. Central London.

DW Sports (Ex JJB) Retail units within the club - if at ground floor level value at 100% of the unfitted dry rate, where located at first floor level then value at 75% of the dry unfitted rate. At GF level value at 100% of the unfitted rate. This is a return to the 2005 basis. Any quantum adjustment should apply to the whole of the hereditament including the retail element. .

‘With Racquets’ Clubs

Main Space These should also be valued according to the above scale, and include additions for outside facilities as appropriate. Quantum is to be reflected as above, where the main space (excluding tennis hall) exceeds 4000m2 GIA. There is to be no further allowance for quantum, as these clubs are, it is understood, the most profitable in the Health & Fitness sector – lounge, bar, restaurant and function areas are larger than many “main space” only clubs, to achieve higher spend from the targeted family membership. Extensive well-fitted changing areas are also an attraction for this type of trade, contributing towards the success of this style.

Tennis Halls Tennis Halls are valued at 20% of main space, as adjusted for quantum, where appropriate.

Poor Performers

Following a meeting with representative agents acting on behalf of most of the major operators in the market (David Lloyd, Virgin Active, Nuffield Health, LA Fitness, Fitness First) a scheme has been agreed for those clubs highlighted by the industry which, evidenced by the sustainable AVD turnover, are accepted to be poor performers.

The agreement sets a value to RV at 21% of sustainable AVD turnover. However, this is subject to an absolute minimum price rental basis of £60 per m2 for dry fitted (20% uplift for wet). Any mezzanines, first floors valued at lower than fitted dry price, tennis halls etc all to be devalued at same ratio as in original valuation eg if mezzanine originally 75% of dry fitted, the revised approach would be to take 75% of £60 ie £45. Tennis halls will be £7.50 (ie 12.50% of fitted price)

Worked Example -

AnyGym - Total Size 9746m2 (AVD Turnover £2m) GF Dry 5819m2, Wet 1182m2, Tennis Hall 2745m2 plus 5 outdoor tennis courts and outdoor 160m2 swimming pool.

All externals such as squash courts, outdoor tennis courts, outdoor pools, 5-a-side pitches, should have prices applied as stated above.

Valuation based on sustainable AVD turnover for AnyGym say, £2m X 21% = £420,000 RV - this will be the RV, subject to the absolute minimum RV from the check valuation:

Check valuation @ £60 per m2 (fitted)

GF Dry	5819m2 @ £60	=	£349,140
Wet	1182m2 @ £72	=	£85,104
Tennis Hall	2745m2 @ £7.50	=	£20,587
Plus - Outdoor Pool	160m2 @ £65	=	£10,400
Tennis Courts	5 X £1650	=	£8,250
	Total		£473,481	Say, £472,500 RV

In the example of AnyGym the floor area based RV is higher than the value based on the sustainable AVD trade and should therefore be adopted. However, in the majority of cases the turnover valuation will prevail, but the floor valuation should always be checked and the higher of the two figures adopted as the RV.

To qualify for consideration as a ‘poor performer’ the health and fitness hereditament must have existed at the AVD and meet the following criteria:

• include wet and dry facilities
• Minimum GIA of greater than 2000m2, or if less, consideration will be given to extending the scheme if the hereditament is in the nature of a corporate health and fitness club and typically offers the type of facilities generally found in those clubs.
• wet (pool and surround to exclude changing areas) must exceed 174.99m2

Any queries from agents challenging the exclusion of a club from the scheme should be referred to the Fitness Class Co-ordination Team facilitator or the National Valuation Unit (NVU).

The onus for providing AVD turnover is with the agent. Care must be taken to ensure the AVD turnover provided is indicative of AVD fair maintainable trade. There are examples of operators who at AVD were under trading evidenced by the fact that a new operator has acquired the club post AVD and is now trading better in recessionary times, compared with April 2008. In those cases the post AVD turnover should be adopted.

Total Fitness - Due to size and layout of these clubs a revised sustainable AVD turnover at 17% is applicable subject to a check valuation at £50.00/m2

Confidentiality - Under no circumstances should the turnover of an operator be discussed with anyone other than the agent acting for that operator who initially supplied the information. The information is commercially sensitive and confidential to the operator concerned.

RSA - For the purposes of RSA the allowance for poor performance, whether arrived at using a percentage of the sustainable AVD trade or a price per m2, should be shown in the rate per m2 and not as an end allowance. Also ensure case remarks are entered to show that this hereditament has been agreed as a poor performer and the revised rate per m2 is not indicative of tone within the area.

Both floor values of £60.00/m2 and £50.00/m2 are as at 1.4.2010. Post compilation Schedule 6 para 2 (7) mentioned matters (MCCs) may lead to this basis being reduced during the life of the 2010 List.

Transitional Certificates - Poor Performers

Unless there is an MCC that has been missed in the 2005 List under no circumstances should a Regulation 15 Transitional Certificate be issued. The fact that the 2010 RV is now substantially less in some cases than the 2005 RV is not a reason in isolation to issue a Regulation 15 Certificate. This scheme is 2010 specific. Case remarks should be added to confirm why a TR certificate has not been issued.

Practice note 1: 2010: Appendix 2 - Sports & leisure centres (Private)

Band	Location	Characteristics of Unit	Value £/m2
1	LONDON FRINGE	Where rental evidence, membership levels and tariff supports an uplift. Purpose-built or quality conversions, such that a new unit would not be dissimilar. Mostly wet and dry. Expected locations; leisure/retail parks, edge of large towns and cities, upper floors in large towns. Expected Operators: David Lloyd, Esporta, Virgin Active, Greens, Cannons, et al. i.e. the upper-end of the market, as usually evidenced by higher tariffs. Size range – normally 2500m2-4000m2, but smaller and larger units will also fit this type.	Wet/Dry:Shell Range £100 -£125 Plus fit-out additions:Wet: add £40/m2 Dry: add £17.50/m2 Dry only: not expected to be found at this level. Compare with London basis. APPLICABLE TO ALL MAIN FLOORS
2	Provincial, and high value locations, excluding London Fringe	---------Ditto----------- Expected Major Operators: as above, These clubs are expected to be wet and dry. Competition, between similar styles of operation, will need to be reflected in the range. A monopoly position will suggest higher values	Wet/Dry:Shell Range £85-£105Plus fit-out additions: Wet: add £40/m2 Dry: add £17.50/m2 Rental evidence in parts of the country may suggest lower values in the range. Home Counties, South East and South areas might expect values at, or near the top of the range. Tariff, membership index and retention rates should all be considered APPLICABLE TO ALL MAIN FLOORS
3	London Fringe – definition as above – and other high value locations.	Older and ‘middle’ quality conversions – will include good conversions, and some will include a swimming pool (e.g. Cannons – converted Squash Clubs and LA Fitness-converted cinema) and also good conversions of e.g. warehouses, supermarkets, and offices e.g. Fitness First, LA Fitness. Type of location will determine point in range e.g. central with good accessibility and parking, or outlying industrial estate or peripheral shops location. Also tariff and member index will provide a guide. Competition will need to be reflected.	Wet/Dry: Shell Range £75-£100Plus fit-out additions: Wet: add £40/m2 Dry: add £15/m2Dry only: Shell Range £75-£110, with fit-out addition of £15/m2 Compare with London basis. APPLICABLE TO ALL MAIN FLOORS
4	Provincial	As for Band 3.Bands 3 & 4 will also be applicable for the middle quality purpose-built Clubs, where the quality of fit-out, and range of facilities, is not as extensive as for those Clubs within Bands 1 & 2.Fitness First clubs will include those ostensibly purpose-built, but where a partial first-floor of lower quality has been added (often GF only rented). Also single/multi-floor Clubs, where floor values are the same	Wet/Dry: Shell Range £70 - £90Plus fit-out additions: Wet: add £40/m2 Dry: add £15/m2 Dry only: Range £80-100 overall, including dry fit addition at £15/m2. PB clubs with added inferior First Floors – max value £100 overall. APPLICABLE TO ALL MAIN FLOORS
5	London Fringe and other High Value Locations	Miscellaneous conversions with modest adaptation in secondary/tertiary locations e.g. car showrooms on poor estates, FF over shops. Will be dry only, or with very limited wet facilities	Up to £90, including fit of £10 - £15/m2, depending on quality. Compare with London basis. APPLICABLE TO ALL MAIN FLOORS
6	Provincial	Miscellaneous Conversions with modest adaptation in secondary/tertiary locations e.g. car showrooms on poor estates, FF over shops. Will be dry only, or with very limited wet facilities	Up to £70, including fit of £10-£15, dependent on quality. APPLICABLE TO ALL MAIN FLOORS

All main floors

No distinction should be made between inserted floors and those that were provided as part of the shell, unless the inserted floors are much smaller and of an inferior quality to the main floor. This will include large, open first floors, with reasonable eaves height, used wholly or in part for weight training, accessed by open stairways. An allowance from the full rate should only be made in exceptional circumstances where the accommodation is patently inferior and untypical compared to the rest of the leisure club. In the case of Fitness First where substantial, but inferior quality, first floors are often inserted into rented shells the property should be valued overall for both floors with no discount for the upper level; however analysis of the shell rent to obtain the “shell rate” for valuation should reflect that the rent reflects the ability to insert an upper level and the quality of that upper level.

Addition for fit-out

For top quality Clubs, the addition for fit-out, to be applied to wet areas (including sauna, steam, jacuzzi, regardless of where situated, but excluding changing rooms) is £40/m2, in addition to the shell rate adopted. Where wet areas in clubs of perhaps lesser quality overall are still of a high standard e.g. Cannons conversions, Bannatynes and LA Fitness, £40 should still be adopted.

Dry Clubs only, of the general quality of Fitness First, have a fit-out addition of £15/m2 (this will include a small area for sauna and steam room). For poorer quality Clubs at the bottom of the scale, especially where the changing rooms are inferior, fit-out should be added at £10-£12.50/m2.

There will also be large Clubs where the quality of the dry fit out is more comparable to the Fitness First standard, and the appropriate rate for dry fit out should then be adopted, but the addition for wet fit out should remain at £40/m2.

Before age adjustment baseline	Dry Fitted RV/m2 £75.00 and Below	Dry Fitted RV/m2 between £75.01 and £120.00	Dry Fitted RV/m2 £120.01 and above.
2005 +	Nil	Nil	Nil
2002-2004	4.00%	2.00%	Nil
1999-2001	6.00%	4.00%	2.00%
1994-1998	10.00%	7.50%	5.00%
Pre 1993	12.50%	10%	7.50%

Where a club has been completely refitted to contemporary standards since original construction the later date will form the starting point for any allowances to be granted. If there has been a partial refit the allowance may need adjustment to reflect this.

Regulation 15 Transitional Certificates are not to be issued to apply the A&O scheme to the 2005 List. This scheme is 2010 specific.

Further, this A&O scheme will not generally apply to the recent influx of budget clubs. The majority of these budget operators have been valued on the current rents passing suitably adjusted. Any age and obsolescence is therefore already reflected in the analysis of the rental evidence under consideration.

Factors to determine range point within a Band

It may be possible to fit clubs into the appropriate range by looking at rents, location (including part of the country), peak tariff, membership numbers/m2 (membership index), demographics, competition and any physical disabilities e.g. poor parking facilities. A Brand National tariff level may well apply, which will not assist in determining relative values however. Evidence from past and present shell rental levels will probably assist in relativities on a regional level, but new competition may well render some rents historic and unreliable.

Membership index should only be applied to similar style of operations, e.g. Fitness First attracts a mostly younger, single clientele, and in peak periods will be trading at a high density. Each member here counts as one – retention rates are approximately from 60-70%. Member index can be 1.00 and up to 3.00. Conversely, David Lloyd Clubs (especially with racquets) aim to attract a high proportion of family trade, and trade at peak times at lower densities, but also trade far better during the day, with mothers using the crèche facilities, and retired members enjoying a different social mix during this time – member index will be around 1.2.

Car-parking provision, whether on-site or public, may be inadequate. This will be demonstrated in membership levels or poor retention rates.

NUA/GIA (net usable area in relation to gross internal area)

This will be reflected in the shell rate adopted, but for modern designs a reduction is not expected.

Quantum

There is evidence to suggest that > 4000m2 Main Space, the shell rate should be reduced, at 1% per 100m2 up to a maximum 30% reduction at 7000m2. Areas in excess of this will require separate consideration. This allowance is also to be applied to “with racquets” Clubs e.g. David Lloyd, but calculated only on the main space area (excluding the area of the Tennis Hall). This allowance is also to be applied to the shell value of the Tennis Hall, up to a maximum of 20%, but not to the value of the ancillaries. The reduction applies to the shell value only and not to the fit-out addition, which should be applied in full.

Internal facilities

Squash courts

Where part of a converted squash club and within main space – up to 3, include at full rate. Each subsequent court take at 50% main space rate (or as an end adjustment adopt 32m2 x main space rate). For poor independent converted ex-squash Clubs, consider whether the proportion of space occupied by the courts justifies this approach – a more correct approach might be to value these all at £1500 - £2000 a court.

Squash Courts situated in Tennis Halls, or in other structures separate from the main space: – adopt rate of £1500 each.

Badminton halls

These may be of similar build style and quality to tennis halls, but will be much smaller and, with a sprung timber floor, will be capable of a variety of uses. To reflect quality, lower natural light levels and less control over heating, adopt 50% of overall main space rate. Where the quality is much better, although still below that of the main space, adopt up to 75%.

Additions for external facilities

Outside facilities e.g. swimming pools, tennis courts, will be added at the rates applied to the 2005 list (see below). This additional value will reflect patio areas, BBQs, kiosks etc. Additional facilities such as extensive grounds should not be considered a liability. These additions will also apply to “with racquets” Clubs, e.g. David Lloyd.

Tennis courts

Artificial surface, fenced, unlit - £1200/ court.

Artificial surface, fenced, floodlit - £1650/court

Permanent bubble-courts - £2500/court

Steel frame/plastic covered courts - £2500/court.

Five-a-side courts

Fenced, floodlit, plastic surface £1650/court

Outdoor Swimming Pools (excluding children’s splash pools)

Uncovered outdoor swimming pools – adopt water area x £65/m2, to include all associated features.

Covered by lightweight but permanent structure - adopt 50% of main overall space rate.

Car parking

The basis is inclusive of car parking.

With Racquets – David Lloyd / Next Generation – adopt same pricing as above, including additions for outside facilities. Quantum is to be reflected as above, where the main space exceeds 4000m2 GIA. These clubs are, it is understood, the most profitable in the Health & Fitness sector – lounge, bar, restaurant and function areas are larger than many “main space” only clubs to achieve higher spend from the targeted family membership. Extensive well-fitted changing areas are also an attraction for this type of trade, contributing towards the success of this style.

Tennis Halls are to be added at 12.5% of the adopted Dry floor rate per m2. Quantum adjustment, BASED ON MAIN SPACE ONLY, will be at the appropriate rate for the area of main space, on shell value only, subject to a cap of 20%.

Other matters:

Storm porches - At main entrance– external to the main structure and with minimal fit-out are to be taken at 50% of shell value, with no fit-out addition.

Fire Escapes - External - If external to the main shell of the structure, the area is not to be included in GIA.

Fire Escapes – Internal - If within the main structure but the exit is from the Upper Floors direct to the outside with no internal access to the Ground Floor, then exclude from GIA. If the Fire Escape has access to the Ground Floor, then include in GIA.

DW Sports (Ex JJB) – Soccerdomes - Where forming part of a health club assessment they are to be valued similarly to attached Tennis Halls, but at 20% of the adopted fitted Dry floor rate per m2. Similar provisions for quantum to Tennis Halls will apply.

DW Sports (Ex JJB) - Retail Units - Retail units within the club - if at ground floor level value at 100% of the unfitted dry rate, where located at first floor level then value at 75% of the dry unfitted rate. At GF level value at 100% of the unfitted rate. This is a return to the 2005 basis. Any quantum adjustment should apply to the whole of the hereditament including the retail element.

Poor performers

Following a meeting with representative agents acting on behalf of most of the major operators in the market (David Lloyd, Virgin Active, Nuffield Health, LA Fitness, Fitness First) a scheme has been agreed for those clubs highlighted by the industry which, evidenced by the sustainable AVD turnover, are accepted to be poor performers.

The agreement sets a value to RV at 21% of sustainable AVD turnover. However, this is subject to an absolute minimum price rental basis of £60 per m2 for dry fitted (20% uplift for wet). Any mezzanines, first floors valued at lower than fitted dry price, tennis halls etc all to be devalued at same ratio as in original valuation eg if mezzanine originally 75% of dry fitted, the revised approach would be to take 75% of £60 ie £45. Tennis halls will be £7.50 (ie 12.50% of fitted price)

Worked Example -

AnyGym - Total Size 9746m2 (AVD Turnover £2m)

GF Dry 5819m2, Wet 1182m2, Tennis Hall 2745m2 plus 5 outdoor tennis courts and outdoor 160m2 swimming pool.

All externals such as squash courts, outdoor tennis courts, outdoor pools, 5-a-side pitches, should have prices applied as stated above.

Valuation based on sustainable AVD turnover for AnyGym say, £2m X 21% = £420,000 RV - this will be the RV, subject to the absolute minimum RV from the check valuation.

Check valuation @ £60 per m2 (fitted)

Fit-out - Age and Obsolescence Scale

There is a general acceptance that for the modern health and fitness club, subject to the same physical circumstances existing as at the 31.3.2010 regarding the hereditament and the locality within which it is located, the starting basis for the 2010 RV will be parity with the 2005 List RV.

However it is accepted that the fit out within these clubs is now 5 years older and therefore to reflect this the following age and obsolescence (A&O) scheme detailed below should be incorporated into the 2010 basis - this has been discussed with, and accepted by, representatives of the Private Sports and Leisure Clubs:

GF Dry	5819m2 @ £60	=	£349,140
Wet	1182m2 @ £72	=	£85,104
Tennis Hall	2745m2 @ £7.50	=	£20,587
Plus - Outdoor Pool	160m2 @ £65	=	£10,400
Tennis Courts	5 X £1650	=	£8,250
	Total		£473,481	Say, £472,500 RV

In the example of AnyGym the floor area based RV is higher than the value based on the sustainable AVD trade and should therefore be adopted. However, in the majority of cases the turnover valuation will prevail, but the floor valuation should always be checked and the higher of the two figures adopted as the RV.

To qualify for consideration as a ‘poor performer’ the health and fitness hereditament must have existed at the AVD and meet the following criteria:

• include wet and dry facilities
• minimum GIA of greater than 2000m2, or if less, consideration will be given to extending the scheme if the hereditament is in the nature of a corporate health and fitness club and typically offers the type of facilities generally found in those clubs.
• wet (pool and surround to exclude changing areas) must exceed 174.99m2

Any queries from agents challenging the exclusion of a club from the scheme should be referred to the Fitness Class Co-ordination Team facilitator or the NSU.

The onus for providing AVD turnover is with the agent. Care must be taken to ensure the AVD turnover provided is indicative of AVD fair maintainable trade. There are examples of operators who at AVD were under trading evidenced by the fact that a new operator has acquired the club post AVD and is now trading better in recessionary times, compared with April 2008. In those cases the post AVD turnover should be adopted.

Total Fitness - Due to size and layout of these clubs a revised sustainable AVD turnover at 17% is applicable subject to a check valuation at £50.00/m2

Confidentiality - Under no circumstances should the turnover of an operator be discussed with anyone other than the agent acting for that operator who initially supplied the information. The information is commercially sensitive and confidential to the operator concerned.

RSA - For the purposes of RSA the allowance for poor performance, whether arrived at using a percentage of the sustainable AVD trade or a price per m2, should be shown in the rate per m2 and not as an end allowance. Also ensure case remarks are entered to show that this hereditament has been agreed as a poor performer and the revised rate per m2 is not indicative of tone within the area.

Both floor values of £60.00/m2 and £50.00/m2 are as at 1.4.2010. Post compilation Schedule 6 para 2 (7) mentioned matters (MCCs) may lead to this basis being reduced during the life of the 2010 List.

Transitional Certificates - Poor Performers

Unless there is an MCC that has been missed in the 2005 List under no circumstances should a Regulation 15 Transitional Certificate be issued. The fact that the 2010 RV is now substantially less in some cases than the 2005 RV is not a reason in isolation to issue a Regulation 15 Certificate. This scheme is 2010 specific. Case remarks should be added to confirm why a TR certificate has not been issued.