IRRV CERTIFICATE IN BUSINESS RATES
(England and Wales)
June 2014
Level 3
RATING VALUATION
England and Wales
Tuesday 3rd June 2014
9.25am-12.30pm (incl. 5 mins. for reading)
Time allowed: 3 hours
Answer FIVE questions
All questions carry equal marks
Where questions are divided into sections, marks will be allocated equally unless otherwise indicated.
Where there are regional variations within the question, answer in respect of the region where you
currently work. You should specify which region this is at the start of your answer.
Maximum marks: 300
SPECIAL NOTE
Candidates may use their own unmarked copy of Parry’s Valuation and Investment tables
(or similar) and a non-programmable calculator.
Rating Valuation, IRRV Certificate in Business Rates, June 2014
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1. A ratepayer (Mrs White) occupies, as owner, a self-contained retail property. The premises
comprise an 1895 built three storey and attic end-terraced stone building under a mansard slate roof.
There is a small basement accessed from the rear and two pavement vaults.
Selling vintage toy cars, Mrs White has found trade particularly difficult and now no longer uses the
basement as it has become damp over the years and the top two floors are empty as she finds
negotiating the single set of internal stairs at the rear of the premises difficult. The first floor is used
for some retail and part storage use.
a)
In the light of the above, discuss whether the uppermost two floors could be separately
assessed from the remainder of the accommodation and entered in the Rating List against
which empty property relief can be gained.
(25 marks)
b)
The basement suffers from damp. Using supporting case law, discuss whether the ratepayer
(Mrs White) could seek a reduction in Rateable Value for the condition of the basement.
(20 marks)
c)
If the premises had an external access to all floors independent of the accommodation on
each floor, assess with reasons whether the basement and upper two floors could be rated as
a single unit of assessment.
(15 marks)
2. The absence of a statutory valuation date to value has created issues for rating surveyors in the
past prior to the enacting the Local Government Finance Act 1988; its importance cannot be
underestimated. The prescribed antecedent valuation date (AVD) set for the 2010 Rating List was 1
April 2008.
a)
In the light of statutory provision and case law, examine why the AVD is important. (20 marks)
b)
Where there is a lack of comparable letting evidence at AVD, explain the process a rating
surveyor would go through to establish the correct rental tone where the comparable
approach to valuation is used (you may relate this by example to a retail property). (20 marks)
c)
Using the rental evidence below, analyse the transaction to determine what the base zone A
rate would be (the letting took place on the antecedent valuation date):
A new lease granted on 4 Hanover Street from 1 April 2008 at £106,000 pa on internal
repairing terms for 10 years with 7 months’ rent free. The tenant is also responsible for paying
an annual service charge. He installed a mezzanine floor of 75 sq. metres at the start of the
lease at his own expense. There is a 5-yearly upwards only rent review. The shop has a net
frontage of 8 metres and an overall shop depth of 27.5 metres. At the rear of the shop is a
small cloakroom of 4.5 sq. metres and stairs leading to the mezzanine floor being 1 metre
wide and 3.5 metres long. There is a valuable return frontage of 4 metres.
(20 marks)
Rating Valuation, IRRV Certificate in Business Rates, June 2014
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3. You have been asked to become a trainer for the day on rating valuations. Based on the following
scenario, provide a specimen rating valuation explaining what influences the nature of the inputs to
the calculation. In arriving at your opinion of value, you should use the base tone rate given below
but all other inputs can be based on your own figures.
(60 marks)
Scenario
The hereditament comprises a standalone purpose-built post office property of single storey brick and
block construction surmounted by a mock mansard zinc clad roof. It occupies a corner location with
frontages on two sides to pedestrianised shopping streets (affecting the retail space only), both
regarded as secondary pitch. The remaining two elevations front on to a service road and separate
secure yard respectively. The property has a structural brick frontage with tall and narrow windows.
Internally, the premises are fitted with demountable partitions to provide storage facilities, as well as a
counter and banking hall area. The building has solid brick walls to the rear of the main retail area,
behind which are small works offices, a staff room, male/female/disabled toilets, a cleaner’s cupboard
and strong room (see accommodation schedule below). The retail areas and staff room are fitted
with air conditioning.
The Post Office has installed an ATM machine in one of the front facades and also has two free
standing machines internally. There is CCTV throughout, 7 staff parking spaces and a secure yard of
285 sq. metres will rolling steel reinforced gates.
You may assume that the Zone A rate in this vicinity is £283.50 per sq. m.
Floor
Ground
Ground
Ground
Ground
Ground
Ground
Ground
Ground
Ground
Basement
Description
Retail Zone A
Retail Zone B
Internal Storage
Mess/Staff Room
Office
Time Lock Safe
Counter Safes
Counter Balance Office
Mail Dispatch
Storage
Area (sq. metres)
95.58
47.82
8.79
18.39
9.21
2.96
3.29
9.51
6.54
10.70
Rating Valuation, IRRV Certificate in Business Rates, June 2014
Page 3 of 7
4.
a)
With reference to case law, describe what is meant by ‘plant and machinery’.
b)
Even though an item of plant or machinery may not be mentioned in The Valuation for Rating
(Plant and Machinery) (England) Regulations 2000 or The Valuation for Rating (Plant and
Machinery) (Wales) Regulations 2000, the item (chattel) may still be rateable. Discuss this
position for correctness supporting your answer with appropriate case law.
(20 marks)
c)
Discuss whether partitioning in an office or a mezzanine floor in an industrial unit would be
rateable.
(25 marks)
(15 marks)
5. Keeble (UK) Ltd owns a shopping centre in a provincial town and have been looking to increase
revenue streams as part of an assessment management strategy. With the use of your own rates
and values, discuss your approach to ascertaining Rateable Value in relation to the following assets:
a)
A fixed position illuminated and scrolling advertising hoarding.
b)
A flower stall which can move around the internal malls of the shopping centre (the stall is
held rigid against the mall’s walls using secure metal anchors although the stall otherwise
rests on the floor surface of the shopping mall by its own weight).
(15 marks)
c)
A ‘mini-market’ of 25 free standing stalls resting on timber sleepers within part of the car park
of the shopping mall and set up to sell Christmas gifts, other seasonal items and mulled wine
between 15 November and 31 December (commencing in 2013).
(15 marks)
d)
A 12-month exhibition of sculptures (some 25 in number, standing some 2 metres tall and all
based on a ‘god’ or ‘goddess’ theme) to mark a celebration of Greek mythology. The statues
are to be displayed on a paved area immediately to the front entrance of the shopping centre
on land owned by Keeble Ltd.
(15 marks)
Rating Valuation, IRRV Certificate in Business Rates, June 2014
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(15 marks)
6. You have been asked to write an article for a professional journal of a learned rating society. The
editor has asked that you keep the article to no more than 2 - 3 pages of writing and which must
include some practical examples. The article is entitled: Zoning and all that jazz.
Compose the article under the following 4 headings bearing in mind that the readers are an informed
audience of rating practitioners and students.
a)
The historical context of traditional zoning patterns and why retail premises are typically
valued using the arithmetical zoning convention.
(15 marks)
b)
The valuation of basement accommodation and pavement vaults.
(15 marks)
c)
The use of spot rates or relativities in valuing ancillary accommodation.
(15 marks)
d)
Some practical examples (please see below the three different retail units and by reproducing
the drawings, explain TWO different ways each unit could be zoned using conventional zoning
practice based on a primary Zone A rate of £500 per sq. metre – on Case Study 3 you may
decide which is the primary frontage).
(15 marks)
Case Study 1:
Rating Valuation, IRRV Certificate in Business Rates, June 2014
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Case Study 2:
Case Study 3:
Rating Valuation, IRRV Certificate in Business Rates, June 2014
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7. Using case law and your own numerical examples where necessary, explain what each of
the following rating terms mean:
a)
The hypothetical tenancy. (15 marks)
b)
Rebus sic stantibus.
(15 marks)
c)
De minimis.
(15 marks)
d)
Rateable chattel.
(15 marks)
8. The Fire Department of Cuttlefish County Council (CCC) is reviewing its rating
assessments on several operational fire stations. One of these at Diplock Marsh has a small
operational building for housing a single appliance but has two flats over the unit used by 2 of
the retained full time fire fighters. The small yard area which comes with the unit is used part
for cleaning and maintaining the fire appliance and part for the parking of staff cars (6 spaces
– one each for the flats and four for visitors or other fire fighters when on duty).
a)
Explain what is meant by domestic property and a composite hereditament in the
context of the fire station premises.
(20 marks)
b)
Using relevant case law, explain how you would approach the valuation of the
operational fire station building.
(10 marks)
c)
Adopting your own accommodation and site sizes, provide a rating assessment using
your own values (rates) stating any assumptions or reasons for your choice of
valuation inputs.
(30 marks)
Rating Valuation, IRRV Certificate in Business Rates, June 2014
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