Choice of method for rating valuation - Revision history

Designing Buildings at 16:02, 3 October 2022

2022-10-03T16:02:32Z

← Older revision		Revision as of 16:02, 3 October 2022
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	\|-		\|-
	\| @ 5.0% (1)		\| @ 5.0% (1)
−	\|	+	\| 0.050 RV
−	0.050	+	\| 1,000 1,000
−	RV	+
−	\|	+
−	1,000	+
−	1,000	+
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	This article was created by --[[User:University_College_of_Estate_Management_(UCEM)\|University College of Estate Management (UCEM)]] 17:10, 6 December 2012 (UTC)		This article was created by --[[User:University_College_of_Estate_Management_(UCEM)\|University College of Estate Management (UCEM)]] 17:10, 6 December 2012 (UTC)

−	~~= Find out more =~~	+	= Related articles on Designing Buildings =
−		+
−	=== Related articles on Designing Buildings ~~Wiki ==~~=	+

	* Rating valuation		* Rating valuation

Designing Buildings at 07:54, 23 October 2020

2020-10-23T07:54:11Z

← Older revision		Revision as of 07:54, 23 October 2020
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	{\|		{\|
−	\|width="33%"\|Valuation	+	\|width="33%"\| Valuation
−	\|width="33%"\|£	+	\|width="33%"\| £
−	\|width="33%"\|£	+	\|width="33%"\| £
	\|-		\|-
−	\|Land - net rent paid (close to antecedent valuation date)	+	\| Land - net rent paid (close to antecedent valuation date)
	\|		\|
−	\|20,000	+
		+	\| 20,000
	\|-		\|-
−	\|Pavilion - ECV, say cost	+	\| Pavilion - ECV, say cost
−	\|2,000	+	\| 2,000
	\|		\|
		+
	\|-		\|-
−	\|@ 5.0% (1)	+	\| @ 5.0% (1)
−	\|0.050	+	\|
		+	0.050
	RV		RV
−	\|1,000	+	\|
		+	1,000
	1,000		1,000
	\|}		\|}
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	* Yield.		* Yield.

−	[[Category:Property_law]] [[Category:Taxation]] [[Category:Cost_/_business_planning]] [[Category:Property_development]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Property_law]] [[Category:Taxation]] [[Category:Cost_/_business_planning]] [[Category:Property_development]]

Designing Buildings at 14:57, 25 May 2017

2017-05-25T14:57:11Z

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	\|@ 5.0% (1)		\|@ 5.0% (1)
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	RV		RV
	\|1,000		\|1,000
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	1,000		1,000
	\|}		\|}
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−	This article was created by --[[User:~~The_College_of_Estate_Management~~\|~~The~~ College of Estate Management]] 17:10, 6 December 2012 (UTC)	+	This article was created by --[[User:University_College_of_Estate_Management_(UCEM)\|University College of Estate Management (UCEM)]] 17:10, 6 December 2012 (UTC)

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Editor at 15:15, 5 December 2016

2016-12-05T15:15:05Z

Show changes

Designing Buildings at 06:59, 30 July 2014

2014-07-30T06:59:11Z

← Older revision		Revision as of 06:59, 30 July 2014
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	Value for rating purposes the local cricket club ground. A rent of £2000 pa exclusive of all outgoings (agreed in 2003) is paid for the land, and the club erected a pavilion in the same year at a cost of £20,000.		Value for rating purposes the local cricket club ground. A rent of £2000 pa exclusive of all outgoings (agreed in 2003) is paid for the land, and the club erected a pavilion in the same year at a cost of £20,000.

−	{\| border="1" cellspacing="1" cellpadding="1"	+	{\| border="1" cellspacing="1" cellpadding="1"
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	*Case notes for rating valuation (Garton V Hunter).		*Case notes for rating valuation (Garton V Hunter).

−	~~[[Category:Other_legislation]]~~
	[[Category:Property_law]]		[[Category:Property_law]]
	[[Category:Taxation]]		[[Category:Taxation]]
	[[Category:Cost_/_business_planning]]		[[Category:Cost_/_business_planning]]
	[[Category:Property_development]]		[[Category:Property_development]]

Designing Buildings at 06:44, 21 July 2014

2014-07-21T06:44:02Z

← Older revision		Revision as of 06:44, 21 July 2014
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	Value for rating purposes the local cricket club ground. A rent of £2000 pa exclusive of all outgoings (agreed in 2003) is paid for the land, and the club erected a pavilion in the same year at a cost of £20,000.		Value for rating purposes the local cricket club ground. A rent of £2000 pa exclusive of all outgoings (agreed in 2003) is paid for the land, and the club erected a pavilion in the same year at a cost of £20,000.

−	{\| ~~style="width: 600px;"~~ border="1" cellspacing="1" cellpadding="1"	+	{\| border="1" cellspacing="1" cellpadding="1"
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	\| Valuation		\| Valuation
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	[[Category:Taxation]]		[[Category:Taxation]]
	[[Category:Cost_/_business_planning]]		[[Category:Cost_/_business_planning]]
		+	[[Category:Property_development]]

Designing Buildings at 12:08, 12 December 2012

2012-12-12T12:08:13Z

← Older revision		Revision as of 12:08, 12 December 2012
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	If the rental method is the best method of valuation, which is the second best? There is no absolute answer to this question. However, remember that the contractor’s method is based on the major fallacy that the cost of property is necessarily equal to its value. For example, if it cost a large sum of money to buy a piece of land and erect a building, the contractor’s method would presuppose that the completed building would let for a high rent - but this is not necessarily so. Many buildings would cost a great deal of money to build (or rebuild) but would not command a proportionately high rent. Property developers frequently have financial difficulties because a project has cost more than it can be sold for.		If the rental method is the best method of valuation, which is the second best? There is no absolute answer to this question. However, remember that the contractor’s method is based on the major fallacy that the cost of property is necessarily equal to its value. For example, if it cost a large sum of money to buy a piece of land and erect a building, the contractor’s method would presuppose that the completed building would let for a high rent - but this is not necessarily so. Many buildings would cost a great deal of money to build (or rebuild) but would not command a proportionately high rent. Property developers frequently have financial difficulties because a project has cost more than it can be sold for.

−	Although the contractor’s method may make allowance for the age and obsolescence of a building, it is based on this assumption: that cost and value are equal. The method makes no allowance for the fact that the value of any item is determined by its supply and demand. The profits or accounts method assumes that the rent a tenant will pay for a property depends on the profit he can make. This is probably a more reasonable assumption than that on which the contractor’s method is based, but it is not necessarily correct. In general, however, the profits or accounts method will produce a more correct assessment than the contractor’s method, though less accurate than the rental method.	+	Although the contractor’s method may make allowance for the age and obsolescence of a building, it is based on this assumption: that cost and value are equal. The method makes no allowance for the fact that the value of any item is determined by its supply and demand. The profits or accounts method assumes that the rent a tenant will pay for a property depends on the profit they can make. This is probably a more reasonable assumption than that on which the contractor’s method is based, but it is not necessarily correct. In general, however, the profits or accounts method will produce a more correct assessment than the contractor’s method, though less accurate than the rental method.

	Sometimes the profits method either cannot be used or will not result in an accurate answer - for example, where there are no profits or accounts on which a valuation can be based, such as a town hall or sewage disposal works. In other cases, despite the existence of a set of accounts or even a profit, profit-making is not the sole reason for occupying the hereditament. A local authority may operate a seaside pier, not primarily to make a profit but in order to attract visitors to the town. The pier may make a loss, but the local authority might be prepared to pay a rent for it in order to attract visitors. At one time the courts considered the profits method of valuation only if there was no rental evidence and if the hereditament enjoyed some element of monopoly. (See Robinson Bros (Brewers) Ltd v Houghton and Chester-le-Street AC (1937).) Those days have passed, following the case of Garton v Hunter (VO) (1968) already mentioned.		Sometimes the profits method either cannot be used or will not result in an accurate answer - for example, where there are no profits or accounts on which a valuation can be based, such as a town hall or sewage disposal works. In other cases, despite the existence of a set of accounts or even a profit, profit-making is not the sole reason for occupying the hereditament. A local authority may operate a seaside pier, not primarily to make a profit but in order to attract visitors to the town. The pier may make a loss, but the local authority might be prepared to pay a rent for it in order to attract visitors. At one time the courts considered the profits method of valuation only if there was no rental evidence and if the hereditament enjoyed some element of monopoly. (See Robinson Bros (Brewers) Ltd v Houghton and Chester-le-Street AC (1937).) Those days have passed, following the case of Garton v Hunter (VO) (1968) already mentioned.
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	= One valuation but more than one method =		= One valuation but more than one method =

−	It is sometimes possible and even necessary to use more than one method within a single valuation. For example, a non-profit-making sports ground commonly comprises the land on which the sport takes place, together with a pavilion. The valuer may find rental evidence which he can use to value the land, but there will seldom be any evidence of the additional value created by the pavilion. This is because sports grounds are commonly let on terms that the tenant will erect a pavilion ~~himself~~. In such a case the value of the land might be deducted from the rent paid (because rental evidence is available and because the rental method is the best method), and the pavilion might be valued by the contractor’s method (based on the cost of construction). See Example 6.	+	It is sometimes possible and even necessary to use more than one method within a single valuation. For example, a non-profit-making sports ground commonly comprises the land on which the sport takes place, together with a pavilion. The valuer may find rental evidence which they can use to value the land, but there will seldom be any evidence of the additional value created by the pavilion. This is because sports grounds are commonly let on terms that the tenant will erect a pavilion themselves. In such a case the value of the land might be deducted from the rent paid (because rental evidence is available and because the rental method is the best method), and the pavilion might be valued by the contractor’s method (based on the cost of construction). See Example 6.

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	*If there is no statutory formula, and the class of hereditament is seldom if ever let in the open market, and there is no rental evidence, then the valuation must be made by the profits and/or the contractor’s method. The profits method is more likely to be appropriate where there is an element of monopoly attached to the hereditament - either a statutory or factual monopoly. The profits method is also likely to be appropriate when one of the main objects of the occupier is to make a profit. The contractor’s method will be used if there are no suitable profits or accounts.		*If there is no statutory formula, and the class of hereditament is seldom if ever let in the open market, and there is no rental evidence, then the valuation must be made by the profits and/or the contractor’s method. The profits method is more likely to be appropriate where there is an element of monopoly attached to the hereditament - either a statutory or factual monopoly. The profits method is also likely to be appropriate when one of the main objects of the occupier is to make a profit. The contractor’s method will be used if there are no suitable profits or accounts.

−	If there is doubt as to the correct method in the light of the decision in Garton v Hunter (VO) (1969), the valuer would produce more than one valuation, using a different method for each. He should, however, place greater reliance on the rental method where there is genuine rental evidence available.	+	If there is doubt as to the correct method in the light of the decision in Garton v Hunter (VO) (1969), the valuer would produce more than one valuation, using a different method for each. They should, however, place greater reliance on the rental method where there is genuine rental evidence available.

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Designing Buildings at 10:40, 7 December 2012

2012-12-07T10:40:25Z

← Older revision		Revision as of 10:40, 7 December 2012
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	*Statutory formulae for rating valuation.		*Statutory formulae for rating valuation.
	*Case notes for rating valuation (Garton V Hunter).		*Case notes for rating valuation (Garton V Hunter).
		+
		+	[[Category:Other_legislation]]
		+	[[Category:Property_law]]
		+	[[Category:Taxation]]
		+	[[Category:Cost_/_business_planning]]

Designing Buildings at 10:22, 7 December 2012

2012-12-07T10:22:58Z

← Older revision		Revision as of 10:22, 7 December 2012
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	If there is doubt as to the correct method in the light of the decision in Garton v Hunter (VO) (1969), the valuer would produce more than one valuation, using a different method for each. He should, however, place greater reliance on the rental method where there is genuine rental evidence available.		If there is doubt as to the correct method in the light of the decision in Garton v Hunter (VO) (1969), the valuer would produce more than one valuation, using a different method for each. He should, however, place greater reliance on the rental method where there is genuine rental evidence available.

−	This article was created by --[[User~~:The College of Estate Management~~\|The College of Estate Management]] 17:10, 6 December 2012 (UTC)	+	----
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		+	This article was created by --[[User%3AThe%20College%20of%20Estate%20Management\|The College of Estate Management]] 17:10, 6 December 2012 (UTC)

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The College of Estate Management at 17:10, 6 December 2012

2012-12-06T17:10:32Z

← Older revision		Revision as of 17:10, 6 December 2012
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	If there is doubt as to the correct method in the light of the decision in Garton v Hunter (VO) (1969), the valuer would produce more than one valuation, using a different method for each. He should, however, place greater reliance on the rental method where there is genuine rental evidence available.		If there is doubt as to the correct method in the light of the decision in Garton v Hunter (VO) (1969), the valuer would produce more than one valuation, using a different method for each. He should, however, place greater reliance on the rental method where there is genuine rental evidence available.
		+
		+	This article was created by --[[User:The College of Estate Management\|The College of Estate Management]] 17:10, 6 December 2012 (UTC)

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