Contractor’s basis for rating valuation - Revision history

Designing Buildings at 06:39, 13 October 2020

2020-10-13T06:39:52Z

← Older revision		Revision as of 06:39, 13 October 2020
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	{\|		{\|
−	\|~~width="25%"\|~~	+	\|
−	~~\|width="25%"~~\|1990 list	+
−	~~\|width="25%"~~\|1995 and 2000 lists	+	\| 1990 list
−	~~\|width="25%"~~\|2005 list	+	\| 1995 and 2000 lists
		+	\| 2005 list
	\|-		\|-
−	\|Educational hereditaments and hospitals (including maternity homes)	+	\| Educational hereditaments and hospitals (including maternity homes)
−	\|4%	+	\| 4%
−	\|3.67%	+	\| 3.67%
−	\|3.33%	+	\| 3.33%
	\|-		\|-
−	\|All other hereditaments	+	\| All other hereditaments
−	\|6%	+	\| 6%
−	\|5.5%	+	\| 5.5%
−	\|5.0%	+	\| 5.0%
	\|}		\|}

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	{\|		{\|
	\|width="33%"\|		\|width="33%"\|
−	\|width="33%"\|£	+
−	\|width="33%"\|£	+	\|width="33%"\| £
		+	\|width="33%"\| £
	\|-		\|-
−	\|ECV of site and improvements: Say, net	+	\| ECV of site and improvements: Say, net
−	\|100,000	+	\| 100,000
−	\|100,000*	+	\| 100,000*
	\|-		\|-
−	\|ECV of buildings: 4000 m² at £215 per m²	+	\| ECV of buildings: 4000 m² at £215 per m²
−	\|860,000	+	\| 860,000
	\|		\|
−	\|-
−	~~\|Less age and obsolescence~~

		+	\|-
		+	\|
		+	Less age and obsolescence
	Say 27%		Say 27%
−	\|232,200	+	\| 232,200
−	\|627,800	+	\|
−		+	627,800
	727,800		727,800
	\|-		\|-
−	\|@ 5.0% (ie 727,800 × 0.050)	+	\| @ 5.0% (ie 727,800 × 0.050)
	\|		\|
−	\|36,390	+
		+	\| 36,390
	\|-		\|-
−	\|RV	+	\| RV
−	\|say	+	\| say
−	\|£36,400	+	\| £36,400
	\|}		\|}

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	This article was created by --[[User:University_College_of_Estate_Management_(UCEM)\|University College of Estate Management (UCEM)]] 17:08, 6 December 2012 (UTC)		This article was created by --[[User:University_College_of_Estate_Management_(UCEM)\|University College of Estate Management (UCEM)]] 17:08, 6 December 2012 (UTC)

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

	* Rating valuation.		* Rating valuation.
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	* Case notes for rating valuation (Garton V Hunter).		* Case notes for rating valuation (Garton V Hunter).

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

Designing Buildings at 15:05, 25 May 2017

2017-05-25T15:05:40Z

Show changes

Designing Buildings at 07:01, 30 July 2014

2014-07-30T07:01:20Z

← Older revision		Revision as of 07:01, 30 July 2014
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	The rate is related to the use made of the hereditament, irrespective of the type of occupier. The prescribed rates (all to rateable value) are:		The rate is related to the use made of the hereditament, irrespective of the type of occupier. The prescribed rates (all to rateable value) are:

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	Site values and building costs will be based on 2003 figures.		Site values and building costs will be based on 2003 figures.

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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

2014-07-21T06:44:31Z

← Older revision		Revision as of 06:44, 21 July 2014
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	The rate is related to the use made of the hereditament, irrespective of the type of occupier. The prescribed rates (all to rateable value) are:		The rate is related to the use made of the hereditament, irrespective of the type of occupier. The prescribed rates (all to rateable value) are:

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	Site values and building costs will be based on 2003 figures.		Site values and building costs will be based on 2003 figures.

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

Designing Buildings at 12:03, 12 December 2012

2012-12-12T12:03:18Z

← Older revision		Revision as of 12:03, 12 December 2012
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	= Principles =		= Principles =

−	The contractor’s method relies on the theory that the hypothetical tenant might consider erecting a suitable alternative building for ~~his~~ own purposes if there is none to rent, or if ~~he feels~~ the landlord is asking an excessive rent for ~~his~~ present premises. It is assumed that the tenant would charge ~~himself~~ a ‘rent’ based upon a percentage of the cost (including land and rateable plant) of the property. The valuer is required to find what has been termed the ‘effective capital value’ of a suitable alternative site and equivalent buildings.	+	The contractor’s method relies on the theory that the hypothetical tenant might consider erecting a suitable alternative building for their own purposes if there is none to rent, or if they feel the landlord is asking an excessive rent for their present premises. It is assumed that the tenant would charge themselves a ‘rent’ based upon a percentage of the cost (including land and rateable plant) of the property. The valuer is required to find what has been termed the ‘effective capital value’ of a suitable alternative site and equivalent buildings.

	In Eastbourne BC and Wealden DC v Allen (VO) (2001), the Lands Tribunal explained the concept of the contractor’s test:		In Eastbourne BC and Wealden DC v Allen (VO) (2001), the Lands Tribunal explained the concept of the contractor’s test:

−	‘Rateable value is established through the assumption of a hypothetical tenancy; and the contractor’s basis is founded on a further hypothetical assumption - that the tenant has an alternative to leasing the hereditament because he can build similar premises; so that in the hypothetical transaction he would not pay more in rent, and might well pay somewhat less, than the interest charged or foregone on the capital sum employed in providing the “tenant’s alternative”.’	+	‘Rateable value is established through the assumption of a hypothetical tenancy; and the contractor’s basis is founded on a further hypothetical assumption - that the tenant has an alternative to leasing the hereditament because they can build similar premises; so that in the hypothetical transaction they would not pay more in rent, and might well pay somewhat less, than the interest charged or foregone on the capital sum employed in providing the “tenant’s alternative”.’

	For the purposes of a rating valuation using the contractor’s basis, it is assumed that the hypothetical tenant has contracted for the hereditament to be ready for occupation, complete and fitted out with all rateable plant installed as at the AVD. Costs and values are therefore to be calculated at the AVD.		For the purposes of a rating valuation using the contractor’s basis, it is assumed that the hypothetical tenant has contracted for the hereditament to be ready for occupation, complete and fitted out with all rateable plant installed as at the AVD. Costs and values are therefore to be calculated at the AVD.
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	Where it is difficult or impossible to envisage the reconstruction of the existing building in its present form, the cost of providing a simple modern building, capable of performing the functions of the actual building, is taken. This figure will be reduced to take account of the difference between the substitute building and the actual building. In Hoare (VO) v National Trust (1998), reiterated in the Wealden and Eastbourne v Allen (2001) cases, it was held that, when valuing a hereditament, it is necessary ‘to adhere to reality subject only to giving full effect to the statutory hypothesis’.		Where it is difficult or impossible to envisage the reconstruction of the existing building in its present form, the cost of providing a simple modern building, capable of performing the functions of the actual building, is taken. This figure will be reduced to take account of the difference between the substitute building and the actual building. In Hoare (VO) v National Trust (1998), reiterated in the Wealden and Eastbourne v Allen (2001) cases, it was held that, when valuing a hereditament, it is necessary ‘to adhere to reality subject only to giving full effect to the statutory hypothesis’.

−	The actual cost of the simple substitute hereditament, less the depreciation for obsolescence of the actual premises, produces the ‘effective capital value’. This may be thought of as the price which the hypothetical tenant would be prepared to pay for the hereditament if he were buying instead of renting it.	+	The actual cost of the simple substitute hereditament, less the depreciation for obsolescence of the actual premises, produces the ‘effective capital value’. This may be thought of as the price which the hypothetical tenant would be prepared to pay for the hereditament if they were buying instead of renting it.

	= Rate percent on effective capital value =		= Rate percent on effective capital value =

−	In the past, the choice of an appropriate decapitalisation rate was the source of much litigation. The general principle which evolved from the courts was that the appropriate rate should be related to the rate at which the occupier (or occupiers of a similar type) could borrow capital to finance ~~his~~ outlay.	+	In the past, the choice of an appropriate decapitalisation rate was the source of much litigation. The general principle which evolved from the courts was that the appropriate rate should be related to the rate at which the occupier (or occupiers of a similar type) could borrow capital to finance their outlay.

	However, the problem of choosing a decapitalisation rate has been solved. The rate was prescribed by the Non-Domestic Rating (Miscellaneous Provisions) (No 2) Regulations 1989 para.2 for the 1990 rating list. Amendment Regulations in 1994 and 1999 fixed the rates for the 1995 and 2000 rating lists.		However, the problem of choosing a decapitalisation rate has been solved. The rate was prescribed by the Non-Domestic Rating (Miscellaneous Provisions) (No 2) Regulations 1989 para.2 for the 1990 rating list. Amendment Regulations in 1994 and 1999 fixed the rates for the 1995 and 2000 rating lists.

Designing Buildings at 10:38, 7 December 2012

2012-12-07T10:38:13Z

← Older revision		Revision as of 10:38, 7 December 2012
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	*Choice of method for rating valuation.		*Choice of method 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 10:15, 7 December 2012

2012-12-07T10:15:29Z

← Older revision		Revision as of 10:15, 7 December 2012
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	----		----

−	This article was created by --[[User~~:The College of Estate Management~~\|The College of Estate Management]] 17:08, 6 December 2012 (UTC)	+	This article was created by --[[User%3AThe%20College%20of%20Estate%20Management\|The College of Estate Management]] 17:08, 6 December 2012 (UTC)

	= Find out more =		= Find out more =

The College of Estate Management at 17:08, 6 December 2012

2012-12-06T17:08:22Z

← Older revision		Revision as of 17:08, 6 December 2012
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	#Replacement costs of buildings would be based on 2003 prices.		#Replacement costs of buildings would be based on 2003 prices.
	#The figures in these examples have been chosen purely for illustration purposes.		#The figures in these examples have been chosen purely for illustration purposes.
		+
		+	----
		+
		+	This article was created by --[[User:The College of Estate Management\|The College of Estate Management]] 17:08, 6 December 2012 (UTC)

	= Find out more =		= Find out more =

Designing Buildings at 17:02, 6 December 2012

2012-12-06T17:02:05Z

← Older revision		Revision as of 17:02, 6 December 2012
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	#The figures in these examples have been chosen purely for illustration purposes.		#The figures in these examples have been chosen purely for illustration purposes.

−	~~----~~	+	= Find out more =
		+
		+	=== '''Related articles on Designing Buildings Wiki''' ===
		+	*Rating valuation.
		+	*Rental method of rating valuation.
		+	*Profits method of rating valuation.
		+	*Statutory formulae for rating valuation.
		+	*Choice of method for rating valuation.
		+	*Case notes for rating valuation (Garton V Hunter).

Designing Buildings: moved The contractor’s basis for rating valuation to Contractor’s basis for rating valuation

2012-12-06T16:32:13Z

moved The contractor’s basis for rating valuation to Contractor’s basis for rating valuation

← Older revision

Revision as of 16:32, 6 December 2012