Rating Manual section 5a: valuation of all property classes

1. Market Appraisal

The changes in the quality and specification of hospitals built since 2010 saw significant increases in costs. The limited evidence of wholly constructed hospitals demonstrates this level of quality and specification continues.

Health Care providers continue to seek efficiencies through strategic planning with specialist emergency care being provided centrally with patients remaining on site for a short period of time before moving to more local facilities. The provision of single en-suite bedrooms to reduce the risk of infection and improve the dignity of patients continues to be a feature.

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

2. Changes from the 2017 List Practice Note

2.1 The contractor’s approach remains broadly the same as the 2017 Memorandum of Agreement with updated Stage 1 costs, Stage 2 allowances and Stage 3 land values. In addition the flat roof allowance has been modified.

2.2 The guidance on long stay within hospitals can be found under the ‘Valuation Considerations’ at 9.4 of the Rating Manual section 840 that precedes this practice note.

3. Ratepayer Discussions

No discussions have so far been held either with ratepayers or their representatives and none are anticipated.

4. Method of Valuation

4.1 Rentals Method

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

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

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

4.2 The Contractor’s Basis

4.2.1 Stage 1

(i) Building Costs

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

(ii) External Works

The cost of external works is to be added in accordance with Appendix 2.

(iii) Location Factors

Location factors should be applied in accordance with Appendix 3 replicated from the 2023 VOA Cost Guide.

(iv) Contract Size Adjustment

An adjustment for contract size is to be made to the building cost in accordance with Appendix 4, replicated from the 2023 VOA Cost Guide.

(v) Professional Fees

Professional fees and charges are to be added for in accordance with Appendix 5.

4.2.2 Stage 2

The age and obsolescence allowances to be applied to the individual building blocks after addition for external works and fees are dependent upon the building classification. The majority of hospital buildings should reference the scale within Table 1 of Appendix 6. Stand-alone Workshops & Stores should reference Table 2 and the scale for Temporary Buildings is found in Table 3. For the avoidance of doubt the age of the building is to be taken as the date the building was completed.

Adjustments to the main hospital buildings for age and obsolescence should be made in accordance with Table 1 and take into account the following salient points;

a) The revised age and obsolescence scale represents the combined age related physical depreciation along with functional obsolescence and technological redundancy exhibited by buildings of each age typical for their quality/specification and condition. It is anticipated that the stated allowances will be adopted in the majority of cases and only either moderated or increased in exceptional circumstances.

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

c) In respect of physical depreciation, the above scales are intended to reflect normal wear and tear and/or deterioration due to the age of the building. The scales assume an average degree of cyclical refurbishment work will have been undertaken, to include whole or partial renewal of building sub-components, most particularly relating to mechanical and electrical services and internal fit-out, but also including periodic renewal of roof coverings and windows.

d) It follows from the above that no adjustment away from the scales is required in the majority of cases where older buildings have been subject to modernisation and refurbishment works, as these are explicitly assumed to have occurred. An exception to this would be for a building taken back to shell and reconstructed with significant renewal of structural elements, where an abatement of age-related physical obsolescence may be required.

e) An example of a building requiring an abatement of the allowances provided by the scales (due to the mitigation of physical depreciation) would be where a major renovation has occurred utilising the original building foundations, frame (including upper floors) but with comprehensive replacement of the external envelope (walls, windows), a complete internal refit and wholescale replacement of mechanical and electrical services.

f) Conversely, the above scales will be insufficient to reflect physical obsolescence in cases where buildings are substantially un-modernised and in any case, the scales do not apply in instances where the hereditament is not repairable at reasonable cost and where it falls to be valued rebus sic stantibus.

g) To qualify as a substantially un-modernised building it is expected that the building will predominantly have the following:

single glazed windows;
original internal layout;
original ceiling height, with no suspended ceilings;
original external walls;
pre 1980 internal finishes (flooring, ceiling and walls, internal doors and fixtures and fittings)

h) In respect of functional and technological obsolescence, for buildings that remain in operational use, the scales include adjustments to reflect functional and technological deficiencies observable in buildings typical of their original period of construction but taking account of the level of assumed cyclical refurbishment reflected in the physical depreciation element of the scales.

i) The type of functional and technological obsolescence factors already reflected in the scales include the following:

poor energy efficiency and/or environmental sustainability;
inappropriate layout inhibiting flexible and efficient space utilization;
modern health & safety, fire or building regulations that preclude or limit the original purposes of the building;
dated design practices that restrict modern usage (such as lack of/or minimal floor and ceiling voids);
the absence of modern space heating or air conditioning systems within a building;

j) It follows that only where buildings display specific functional deficiencies or issues of technological redundancy, that are atypical for their age, consideration should be given to applying an additional allowance.

k) One indicator that additional functional obsolescence is present such that the allowance provided by the scales should be adjusted is the presence of new and/or replacement facilities making the existing building surplus. Such replacement or other material redundancy should be considered and may result in the total redundancy of the pre-existing building, i.e. 100% obsolescence.

l) Permanent system built structures should follow the same obsolescence scale as traditional buildings.

Flat roof allowance

Permanent buildings built prior to 2005 with a flat roof are to receive an additional allowance. The allowance is not to be applied to temporary buildings, stores, workshops or garages.

£80m2 ARC of the footprint of the flat roof for buildings constructed up to and including 2004
No allowance for flat roofs constructed from 2005 and onwards

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

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

Multi-Storey Building Allowances

This allowance is intended to reflect the operational difficulties of hospitals housed within multi-storey buildings. It reflects the advancement of modern lift provision and technology within a hospital setting and no allowance should be applied to buildings built in 2005 or thereafter.

On pre-2005 buildings the allowance should be applied to the footprint of multi-storey buildings only. Whilst it is recognised that operational difficulties may extend beyond the footprint areas on lower floors, equally upper floors put over to non-clinical/administrative purposes would not be unduly affected. This approach allows for a practical application over the current survey without recourse to use.

Table of allowances pre 2005 buildings:

Floors	Percentage Deduction
2 Main Floors	Nil
3 Main Floors	5% overall
4 Main Floors and above	10% overall

4.2.3 Stage 3

The value of the developed land and undeveloped land, apportioned in respect of the hospital hereditaments non- domestic use, shall be added in accordance with Appendix 7.

4.2.4 Stage 4

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

4.2.5 Stage 5

Appropriate adjustments may be made to the annual equivalent value to take account of any disabilities or attributes not reflected in the previous 4 stages of the valuation to arrive at the rateable value. Guidance on the application of stage 5 allowances is contained in** Appendix 8**.

5.0 Valuation Spreadsheet

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

Appendix 1

Stage 1 Build Costs

Item	Cost Guide Ref	£/m2	Remarks
Acute Hospitals completed post 1/4/2010	98H001	£3479	See guidance notes below.
Acute Hospitals built and completed prior to 1/4/2010	N/A	£2600
Community Hospitals and Mental Health Units completed post 1/4/2010	98H002 & 98H005	£2783	See guidance note (11) below.
Community Hospitals and Mental Health Units built and completed prior to 1/4/10	N/A	£2080
Operating theatre within community hospitals	98H003	£3481	Applicable to entire theatre suite including the recuperation ward not only the theatres themselves.
Education and nurse training buildings	98H004	£2200	Not to be applied to post graduate facilities
Temporary buildings-	98H006	£833	See note 10
Stores and other inferior buildings. (separate or distinct stores, plant rooms, workshops, offices of inferior construction and garages)	98H007	£897	Plant rooms are to be costed at the hospital main rate unless separate and distinct buildings. Energy centres and large boiler houses should be cost at the main rate whether a stand- alone building or not. See notes (6 & 7) below.
EMS (Second World War emergency medical services) buildings	98H008	£625
Multi-storey car parks	98H011	£561/m2 or £12622/space
Basement car parks	98H012	£975/m2 or £21937/space
Single deck (steel) car parks		£7778/space	See guidance note (13) below

Guidance notes

1. Definition of Acute Hospital

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

The distinguishing features of these hospitals usually include:

major operating theatres, full A&E, ICU & HDU facilities
of significant importance within the Trust
substantial general wards

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

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

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

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

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

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

7) Roof top plant rooms which were part of the original design should be valued at the appropriate Stage 1 cost as applied to the remainder of the building, irrespective of construction type. However basic metal plant buildings which have been added retrospectively should be valued at the workshop rate.

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

9) Separate costs for permanent** modular **construction have been dispensed with and the appropriate cost from the table within Appendix 1 should be applied, dependent upon the hospital classification.

10) The cost code for temporary buildings is intended to be applied to non-medical use such as office and administration. Temporary or terrapin buildings that are fitted out for medical facilities (including the use as wards) should apply the appropriate permanent hospital building rate

11) It is recognised that some ‘system built’ construction methods have in the past delivered sub-standard buildings with an excessive repairing liability (i.e. Oxford method). On such buildings the appropriate Stage 1 cost should be reduced by 20%. Other types of system build should be considered on their merits but when it is evident that they are inferior to other buildings built typically within that period then the allowance should be considered. Note that ‘best-buy’ designed hospitals, which were built using traditional building methods and components, are not inferior construction and should not receive this allowance. However, where a ‘best-buy’ hospital suffers from the maintenance and safety problems associated with reinforced autoclaved aerated concrete (RAAC) panels to the roof and elevations for example, then the 20% deduction on the Stage 1 cost should be adopted. Areas of contention should be referred to NVU for advice.

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

13) Substantial multi-storey car parks should have a construction cost as per the above table. An additional cost code has been introduced to cover simple ‘meccano’ style car parks that consist of a single upper storey/deck. Consideration should be given to whether the cost should be applied to both the ground and upper deck. Where the single deck has been constructed over an existing concrete/tarmac car park with minimal alteration to the bottom storey then the cost should only be applied to the upper deck. In such circumstances the lower car park element will form part of the consideration to the external works addition.

Appendix 2

External Works

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

2%	Town centre or island site with 90% or greater building ratio, typically with no more than a small yard or garden area, and either no car parking, or a very limited number of spaces within the hereditament
2.5%	As above, but typically with an 80% to 90% building ratio, limited parking, external lighting and landscaping and some boundary fencing.
5%	Site typically with 50% to 75% building ratio, some landscaping around buildings, secure boundary fencing, adequate staff parking, external lighting and landscaping with limited general parking within the hereditament and boundary fencing.
7.5%	As above, but typically with 25% to 50% building ratio, landscaping around buildings secure boundary fencing, external lighting, adequate parking within the hereditament which falls short of full requirements
10%	Site typically with 12.6% to 25% building ratio, landscaping around buildings, secure boundary fencing, external lighting and adequate parking within the hereditament for all staff and other users.
12.5%	As above, but typically with 12.5% or less building ratio, landscaping around buildings, secure boundary fencing, external lighting and adequate parking within the hereditament for all staff and other users.

Guidance Notes

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

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

Appendix 3

Location Factors

N.B. The Regions referred to are administrative areas and are not significant boundaries.

NORTH EAST REGION		NORTH WEST REGION
Durham County	0.91	Cheshire	0.97
Northumberland	0.95	Greater Manchester	0.97
Tees Valley	0.94	Lancashire	0.97
Tyne and Wear	0.91	Merseyside	0.97
		Cumbria	0.98

YORKSHIRE and HUMBERSIDE REGION		SOUTH WESTERN REGION
East Riding and North Lincolnshire	0.92	Cornwall	1.05
North Yorkshire	0.98	Devon	1.01
South Yorkshire	0.94	Dorset	1.04
West Yorkshire	0.92	Gloucestershire	1.03
		North Somerset	1.02
		Somerset	1.01
		Wiltshire	1.03

EAST MIDLANDS REGION		WEST MIDLANDS REGION
Derbyshire	1.05	Herefordshire	0.92
Leicestershire and Rutland	1.04	Shropshire	0.95
Lincolnshire	1.03	Staffordshire	0.94
Northamptonshire	1.09	Warwickshire	0.98
Nottinghamshire	1.03	West Midlands	0.95
		Worcestershire	0.98

EAST OF ENGLAND REGION		SOUTH EAST REGION (EXCL. LONDON)
Bedfordshire	1.04	Berkshire	1.08
Cambridgeshire	1.00	Buckinghamshire	1.07
Essex	1.03	East Sussex	1.09
Hertfordshire	1.07	Hampshire	1.05
Norfolk	0.96	Isle of Wight	1.05
Suffolk	0.97	Kent	1.09
		Oxfordshire	1.04
		Surrey	1.13
		West Sussex	1.08

WALES		CENTRAL LONDON SOUTH
North Wales		Lambeth	1.28
Flintshire	0.89	Southwark	1.28
Conwy	0.93	Wandsworth	1.30
Denbighshire	0.90
Gwynedd	0.97	GREATER LONDON NORTH EAST
Isle of Anglesey	0.95	Hackney	1.25
Wrexham	0.91	Haringey	1.31
		Newham	1.18
Mid Wales		Tower Hamlets	1.26
Carmarthenshire	0.98	Barking and Dagenham	1.18
Ceredigion	0.99	Enfield	1.18
Powys	0.97	Havering	1.09
Pembrokeshire	0.92	Redbridge	1.15
		Waltham Forest	1.18

South Wales		GREATER LONDON NORTH WEST
Blaenau Gwent	0.96	Barnet	1.23
Bridgend	0.93	Brent	1.22
Caerphilly	0.93	Ealing	1.27
Cardiff	0.94	Harrow	1.18
Monmouthshire	0.99	Hillingdon	1.16
Neath Port Talbot	0.88	Hounslow	1.16
Newport	0.95
Rhondda, Cynon, Taff	0.93	GREATER LONDON SOUTH EAST
Swansea	0.93	Bexley	1.25
Torfaen	0.91	Bromley	1.21
Vale of Glamorgan	0.97	Croydon	1.24
		Greenwich	1.24
CENTRAL LONDON NORTH		Lewisham	1.21
Camden	1.32
City of London	1.24	GREATER LONDON SOUTH WEST
Hammersmith and Fulham	1.32	Kingston Upon Thames	1.26
Islington	1.29	Merton	1.24
Kensington and Chelsea	1.34	Richmond Upon Thames	1.22
Westminster	1.30	Sutton	1.20

Appendix 4

Contract Size Adjustment

The adjustment for contract size should be made having regard to the total ERC (after adjustment for location but before the addition for fees) in accordance with the following scales:

ERC £	% Adjustment
Up to 0.25 million	+ 10% max
0.5 million	8%
0.75 million	6%
1.0 million	4%
1.5 million	3%
2.0 million	2%
3.0 million	1%
4.0 million	0%
5.0 million	-0.5%
6.0 million	-1%
8.0 million	-1.5%
10.0 million	-2%
15.0 million	-3%
18.0 million	-4%
20.0 million	-5%
25.0 million	-6%
35.0 million	-9%
Over 40.0 million	- 10% MAX

NB. Intermediate figures may be interpolated.

Appendix 5

Fees should be added at the percentages shown in the VOA published Cost Guide at Section 7. For convenience these are shown below inclusive of the 3% complexity addition. Note that minimum fees may apply to counter inversion.

Professional Fees and charges

Size of Contract	% Adjustment
Sums up to £750,000	15%
£750,000 to £1,499,000	14.5%
£1,500,000 to £3,999,999	12.5%
£4,000,000 to £7,499,999	11.5%
£7,500,000 to £14,999,999	10.5%
Over £15,000,000	10%

Appendix 6

Age and Obsolescence Allowances

Table 1: Main Hospital Buildings Obsolescence Allowances

Age	% Obsolescence	Age	% Obsolescence
2023	0.00%	1986	43.75%
2022	0.75%	1985	44.50%
2021	1.50%	1984	45.00%
2020	2.50%	1983	48.00%
2019	3.50%	1982	51.00%
2018	4.75%	1981	54.00%
2017	6.00%	1980	56.75%
2016	7.25%	1979	57.25%
2015	8.50%	1978	57.50%
2014	10.00%	1977	58.00%
2013	11.25%	1976	58.25%
2012	12.75%	1975	58.50%
2011	14.25%	1974	58.50%
2010	15.75%	1973	58.75%
2009	17.25%	1972	59.00%
2008	18.75%	1971	59.00%
2007	20.25%	1970	59.25%
2006	21.75%	1969	59.25%
2005	23.25%	1968	60.00%
2004	24.50%	1967	60.00%
2003	26.00%	1966	60.00%
2002	27.50%	1965	60.00%
2001	28.75%	1964	60.00%
2000	30.00%	1963	60.00%
1999	31.25%	1962	60.00%
1998	32.50%	1961	60.00%
1997	33.75%	1960	60.00%
1996	35.00%	1959	57.50%
1995	36.00%	1958	55.00%
1994	37.00%	1957	55.00%
1993	38.00%	1956	55.00%
1992	39.00%	1955	55.00%
1991	40.00%	1954	55.00%
1990	40.75%	1953 and earlier	55.00%
1989	41.50%
1988	42.25%
1987	43.00%

Table 2 – Workshops & Stores Obsolescence Allowances

Age	% Obsolescence	Age	% Obsolescence
2023	0.00%	1994	24.00%
2022	0.50%	1993	25.00%
2021	1.00%	1992	26.00%
2020	1.50%	1991	27.00%
2019	2.00%	1990	28.00%
2018	2.50%	1989	29.00%
2017	3.00%	1988	30.00%
2016	3.50%	1987	31.00%
2015	4.00%	1986	32.00%
2014	4.50%	1985	33.00%
2013	5.00%	1984	34.00%
2012	6.00%	1983	35.00%
2011	7.00%	1982	36.00%
2010	8.00%	1981	37.00%
2009	9.00%	1980	38.00%
2008	10.00%	1979	39.00%
2007	11.00%	1978	40.00%
2006	12.00%	1977	41.00%
2005	13.00%	1976	42.00%
2004	14.00%	1975	43.00%
2003	15.00%	1974	44.00%
2002	16.00%	1973	45.00%
2001	17.00%	1972	46.00%
2000	18.00%	1971	47.00%
1999	19.00%	1970	48.00%
1998	20.00%	1969	49.00%
1997	21.00%	1968 and earlier	50.00% Max
1996	22.00%
1995	23.00%

Table 3 - Temporary Buildings Obsolescence Allowances

Age	% Obsolescence	Age	% Obsolescence
2023	0.00%	2002	31.50%
2022	1.50%	2001	33.00%
2021	3.00%	2000	34.50%
2020	4.50%	1999	36.00%
2019	6.00%	1998	37.50%
2018	7.50%	1997	39.00%
2017	9.00%	1996	40.50%
2016	10.50%	1995	42.00%
2015	12.00%	1994	43.50%
2014	13.50%	1993	45.00%
2013	15.00%	1992	46.50%
2012	16.50%	1991	48.00%
2011	18.00%	1990	49.50%
2010	19.50%	1989	51.00%
2009	21.00%	1988	52.50%
2008	22.50%	1987	54.00%
2007	24.00%	1986	55.50%
2006	25.50%	1985	57.00%
2005	27.00%	1984	58.50%
2004	28.50%	1983 and earlier	60.00% Max
2003	30.00%

Appendix 7

Developed Land Values

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

Region	Acute Built post 1/4/10	Acute Built pre 1/4/10	Non-Acute Built post 1/4/10	Non- Acute Built pre 1/4/10
Central London N	6.50%	8.75%	8.00%	10.75%
Central London S	5.00%	6.75%	6.25%	8.25%
GLNW	13.50%	18.00%	16.25%	21.75%
GLSW	8.75%	11.75%	10.50%	14.25%
GLNE	10.00%	13.25%	12.00%	16.25%
GLSE	8.75%	11.75%	10.50%	14.25%
North East	1.00%	1.25%	1.00%	1.50%
North West	1.50%	2.00%	1.75%	2.50%
Yorkshire and Humberside	1.50%	2.00%	2.00%	2.50%
East Midlands	1.25%	1.75%	1.50%	2.00%
West Midlands	2.00%	2.50%	2.25%	3.25%
East of England	2.50%	3.25%	3.00%	4.00%
South East	3.75%	5.00%	4.50%	6.00%
South West	2.00%	2.75%	2.50%	3.50%
North Wales	0.75%	1.00%	1.00%	1.25%
South Wales	1.25%	1.50%	1.50%	1.75%
Cardiff	2.00%	2.50%	2.25%	3.00%

Guidance Note

The definition of the geographic areas referred to above can be found in the 2023 Practice Note: Land Values for Contractor’s Basis Valuations within the Rating Manual.

Undeveloped Land Value

Where present apply amenity land values as given in the 2023 Practice Note relating to land values.

Appendix 8

Stage 5 End Allowances

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

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

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

It should be noted that:

It is not necessarily considered to be a disadvantage to have distinct single separate blocks for mental health units, EMI, paediatric care, maternity, workshops/boiler house/storage provided that where appropriate, these have good quality links with relevant blocks e.g. paediatric wards with operating theatres
The presence of a number of dispersed small, low value ancillary buildings (e.g. Nissen huts) should have little impact on the overall percentage end allowance
University Teaching Hospital sites will inevitably be split into various units of assessment to reflect shared and exclusive occupations by the respective hospital trust and University. Their co-location is of mutual benefit and should not result in end allowances for matters relating to shared use or fragmentation

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

a hospital that is constructed on a gently sloping site
where a hospital is “as designed”, where all buildings are linked and are of a similar age
for large acute hospitals, piecemeal development up to 10 separate buildings (more extensive piecemeal development would however be likely to warrant an end allowance)

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

1. Market Appraisal

Reports indicate that since 2010 the income earned from NHS referrals increased from 10% to 25% of total income in this sector. Since 2016 however there has been a decline of circa 4% following revisions within the NHS. It is also reported that the numbers of private healthcare provided by businesses to employers has reduced. The increase in new private hospital builds experienced since 2010 has slowed and there is little evidence of new builds since 2015.

Specialist Care Private Hospitals

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

2. Changes from the 2017 List Practice Note,

2.1 The contractor’s approach remains broadly the same as the 2017 Memorandum of Agreement with updated Stage 1 costs, Stage 2 allowances and Stage 3 land values. In addition the flat roof allowance has been modified

2.2 The guidance on long stay within hospitals can be found under the ‘Valuation Considerations’ at 9.4 of the Rating Manual section 840 that precedes this practice note.

3. Ratepayer Discussions

No discussions have so far been held either with ratepayers or their representatives and none are anticipated.

4. Method of Valuation

4.1 Rentals Method

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

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

Rental evidence of a broader nature including that relating to larger private hospitals may exist in central London and should be fully investigated and applied where appropriate. However, it is expected that no rental evidence will exist to assist in the assessment of the majority of hospitals where the Contractor’s basis should be applied in accordance with the following guidance.

4.2 The Contractor’s Basis

4.2,1 Stage 1