Film and TV studios
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
1. Scope
This Section of the Rating Manual covers all film and TV studios whether converted buildings or purpose built. It also covers dedicated film sets.
The range of properties in this class is very diverse with substantial variations in the physical characteristics of film and television studios. They can range from purpose-built premises (with or without open air sets) through to adapted warehouse/factory or office accommodation or even a “real life” complex. Permanent purpose built outdoor ‘film sets’ are also included in this class.
In general there are two types of TV studio, production and non-production. Main production studios contain purpose-built and designed production studios where major television series are created. Non-production studios tend to be more concerned with regional news programmes and do not have extensive studio accommodation. It should be remembered that height is a critical factor for lighting and production purposes and sound proofing is also a major consideration.
Film studios no longer tend to be occupied solely by a single large film company making numerous films of their own. The modern approach is for film makers to hire the use of facilities such as film stages, rehearsal rooms, offices, cutting rooms, dubbing and preview theatres etc. in order to produce their own films.
Purpose built outdoor film sets vary, a standard layout may be used for years, or the land used may be subject to regular remodeling between productions. It is in the nature of film and TV sets to be subject to such change and this constant remodeling has to be envisaged within this particular mode and category of use.
2. List Description and Special Category Code
For film and TV studios, Special Category Code (SCat Code) 100 should be adopted. The relevant suffix letter will be S, as film and TV studios are a ‘specialist’ class. Responsibility for ensuring effective co-ordination of SCat 100 assessments rests with specialists.
The Special Category Code (SCat), Primary Description Code (P Desc Code) and primary description available for retail warehouses is as follows: * SCat Code: 100 – Film and TV Studios * P Desc Code: CX, overwriting the description as appropriate. This overwritten primary description should describe the nature of the hereditament adequately; suggestions include: ‘Film Studio and Premises’, ‘TV Studio and Premises’ or ‘Film Set and Premises’
The default primary description associated with the CX primary description code must not be used. It must be overwritten.
3. Responsible Teams
Film and TV studios are a specialist class and the responsibility of specialists in the National Valuation Unit (NVU).
In respect of TV Studios, requests for Information should be made on forms of return (FOR) as appropriate; FOR VO 6003 is sufficient to seek the information needed to make valuations, but follow-up with VO 6005 may be required to seek further and better particulars about fitting out, including specialised floor and wall finishes and other plant and machinery.
In respect of Film Studios, requests for information on FOR may be of assistance, particularly in respect of the costs of construction of sound stages and other specialised rateable elements. Assistance may be required from building surveyors where appropriate, and this should be considered by the Specialist responsible.
Film and TV sets should be considered with assistance from building surveyors and National Specialist Unit as considered appropriate, dependent on the size and complexity presented by the land in question.
4. Co-ordination
4.1 Generally
The Film and TV Studio Class Co-ordination Team (CCT) has high level responsibility for the co-ordination of this class. You can find contact details here. The CCT is responsible for examining the approach to making valuations for Film Studios, TV Studios and Film Sets. The CCT will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists.
The framework for co-ordination is shown in Rating Manual Section 6 Part 1. Additionally, and where available, this class is subject to the co-ordination procedures outlined in the appropriate practice notes attached to RM Volume 2:1.
4.2 Specifically
The Film and TV Studio Class deals with the ‘production’ sector of an industry that involves production, distribution and exhibition. All three sectors make up the ‘Film Industry’.
With that in mind, it is recommended that caseworkers consider Rating Manual guidance in respect of cinemas at Rating Manual Volume 5: Section 240.
5. Legal Framework
5.1 Generally
The guidance contained in Rating Manuals Volumes 1 to 4 should be consulted as appropriate. In particular, occupation and the hereditament at Rating Manual Volume 4: Section 2 and rental adjustment at Rating Manual Volume 4: Section 5.
5.2 Rateability
No difficulty should arise in establishing rateability of film and TV Studios and Sets. The four tenets of rateable occupation as set out in J Laing & Son v Kingswood AC [1949] 1KB 344.
6. Survey Requirements
6.1 Basis of Measurement - Overall GIA/NIA
For Film Studios, the basis of measurement is Gross Internal Area (GIA). For TV Studios the basis of measurement is Net Internal Area (NIA). land used for film sets should be measured overall as appropriate. Where measuring to GIA or NIA, reference should be made to the relevant Code of Measuring Practice for Rating Purposes in England and Wales.
6.2 Value Sensitive Aspects
All features likely to have a bearing on value should be recorded in sufficient detail. Prominence of position is of particular relevance to the valuation. Also of significance are: * the age and type of the particular building, and of its surroundings * the size and shape of the film sets, sound stages, workshops and offices * the amount and position of the workshops relative to the sound stages or film set * the age, of the sound stages and the external height and internal clear working heights * the nature of the construction of the sound stages, including the quality of insulation, power supplies, lighting, lighting support rigs and other structures * the age, construction type and quality of any workshops * the age, construction and quality of any offices * the convenience of the access/loading facilities and the ease and adequacy of parking, for both loading, trailers, cars and associated movement of large items of film sets * individual characteristics which need noting include storage heights, varying floor levels, and the position of pillars or any other obstructions.
6.3 Surveys
Whilst carrying out the survey, the general inspection checklist should be used. Special attention should be given to the following features:
| Internal | ||
| 1. | Entrance | sole/shared, front/side/rear |
| 2. | Walls | structural/non-structural, finish, insulation |
| 3. | Floors | solid/ timber/ suspended/ screed/ floating |
| 4. | Ceilings | finish, suspended, floor to ceiling height |
| 5. | Power supply | for sound stages - number of phases, voltage and amps |
| 6. | Heating | air conditioning or space heating. Type of fuel, type of system (e.g. air handling unit and ducted air, cassette system, radiators, ducts, underfloor), extent |
| 7. | Fire Protection | Inside:- sprinklers, smoke detectors, internal procedures and precautions. |
| 8. | Lighting | natural/artificial, quality, lighting supports in sound stages |
| 9. | Toilets | extent, quality |
| 10 | Lifts | type (e.g. manual/automatic), hoist, goods, passenger, staff/customers, capacity (in persons and kilogrammes), floors served. |
| 11. | Security | e.g. CCTV (including numbers of cameras) and other security systems. |
| External | ||
| 1. | General description | construction, age, type (e.g. purpose built, converted), location. |
| 2. | Car Parking | allocated/communal, open/covered, number of spaces, space for catering and other large 'on location' support trailers. |
| 3. | Loading and site layout | Facilities for loading and unloading large items of set, and the general ease of moving around the site. |
| 4. | Fire Protection | Outside: - separate tanked supplies and other fire prevention systems. |
| 5. | Security | e.g. CCTV (including numbers of cameras) and other security systems. |
| 6. | Land | note the available land, to what extent it is surfaced and what it is used for. |
6.4 Plant and Machinery
Adequate information regarding all items of Plant & Machinery should be carefully recorded. There are particularly specialised wall, floor and ceiling finishes, together with other supports and structures that are found extensively in this class. These should be taken into consideration.
Details will be required not only to assess their effect on value but also in the event of particulars being sought by the ratepayers or their agents under the appropriate Plant & Machinery Regulations. Further information is provided in Rating Manual Volume 4: Section 3 and the appropriate VOA Rating Cost Guide.
7. Survey Capture
All relevant notes, plans and inspection checklists should be captured on EDRM as appropriate. Photographs should be placed on RSA.
8. Valuation Approach
8.1 General:
Having regard to the wide range and type of studio and set, no one method of valuation can be recommended. For the larger purpose-built studio of the type occupied by the major film companies a contractors basis may be appropriate. For the smaller occupations reliance will have to be placed on a rentals basis adapted as necessary.
8.2 Types of Film and TV Studios and Sets
Whenever possible studios should be valued using the rental basis and comparing like-with-like studios. Generally film studios should be compared with other film studios, and TV with similar TV studios.
Within these categories premises often fall into those which are more in the nature of offices, and those which are more akin to warehouses. In the absence of reliable rental evidence for this class, it may be necessary to have regard to rental values relating to the more appropriate of these two uses (based upon the prevailing characteristics of the hereditament and to the “rebus sic stantibus” doctrine).
An uplift should be applied to reflect any additional rateable improvements made to benefit the use of the premises as studios (or the land as a Film or TV ‘set’).
The value of some of the specialist purpose built premises may be driven by the cost of the entire structure(s).
8.3 Allowances
The size of the premises should be taken into account when rental comparisons are made. Allowances may be appropriate for the premises which do not cater for modern film making practices, including TV. With the development of improved technology more use has been made of direct on location filming, resulting in demand for many of the large old fashioned styles of studio falling away.
8.4 Rentals method
8.4.1 TV Studios: It is anticipated there will be adequate rental evidence to enable all TV Studios to be valued on the rental comparison valuation basis. These are expected to be comparable with typical offices.
8.4.2 Film Studios: Wherever rents are available, a rental analysis using the Gross Internal Area (GIA) basis of measurement should be adopted. Care should be taken to compare ‘like with like’.
8.4.3 Film Sets: Wherever rents are available, the rent should be adjusted as appropriate. A rental analysis should be performed using the appropriate areas (factorised where necessary). Care should be taken to compare ‘like with like’.
8.4.4 The factorised approach: Factorisation may prove to be helpful where the comparable rents providing the best assistance are somewhat dissimilar so as to require detailed adjustment before a proper comparison can be made.
8.5 Rental Approach
The adjustments required to the rent, if any, are covered in more detail in the appropriate Rental Adjustment Practice Note, at section 5 of Rating Manual Volume 4. The adjusted rent is expected to be analysed adopting the appropriate area (in terms of main space) to produce a £/m2. This will allow comparability with similar properties to be explored.
It is anticipated that a rentals approach will establish a relationship or pattern in comparable Film and TV Studios and Sets that confirms or underpins a locally derived scheme of valuation.
The VO is ascertaining a rateable value and there is a body of litigation to assist in marshalling the available evidence and attaching to it the appropriate weight. The following should also be considered:
8.5.1 Field of Rental Evidence Evidence in respect of TV Studios varies between locations, but in the main there is expected to be a correlation with the local offices basis. For Film Studios being considered on the rental comparison approach, the starting point will be industrial values, but there has to be a significant upwards adjustment to reflect the fact that this is the valuation of a Film Studio, which is a specialist property.
8.5.2 Full Facts Needed Rents which do not on first sight appear to support the levels of other comparables should be carefully investigated so as to ascertain the reason; they should not be discarded too readily.
8.5.3 Car Parks/Parking In making valuations, the importance of adequate parking facilities will need to be borne in mind. Any incremental value arising from the parking being within the same occupation may need to be isolated when comparison is being made with other occupations without such facilities.
9. Valuation Support
Where comparable to offices, valuations of TV Studios should be performed on the Rating Support Application (RSA). The local (or generalist) approach to offices is expected to form the basis of any Valuation Scheme, but it is essential that specialists remain ultimately responsible for the valuations of TV Studios.
Film Studios valued by reference to Industrial values should be performed on the Rating Support Application (RSA). The local (or generalist) approach to industrials is not expected to be appropriate. Whilst it may form the starting point for a Valuation Scheme, a significant uplift is anticipated to take into account of not only the specialised nature of the sound stages in particular but also the particular mode and category of occupation. This requires the direct involvement of specialists.
Film Studios valued by reference to costs (contractor’s basis) should be valued on the Non Bulk Server (NBS). The specialised nature of the sound stages should be properly reflected in the costs employed, and a sensitivity check should be made at Stage 5 to take into consideration the positive and negative factors affecting the Film industry at the antecedent valuation date and material day as appropriate. This requires the direct involvement of specialists.
1. Market appraisal
1.1 Introduction
At the antecedent valuation date (AVD) of 1 April 2021, Film and TV production in the United Kingdom has competed well on a global stage. Factors include:
- a wide variety of desirable outdoor locations and buildings for film shooting
- well-equipped studios with easy access to visual effects and post production facilities
- a pool of well-qualified technicians
- the exchange rate
This practice note concentrate on the production sector, but it is important to appreciate how the film industry in the UK works as a whole.
1.2 The British Film Industry
The film industry can be divided into three distinct but interdependent sectors: production, distribution and exhibition. Film and TV Studios are firmly in the ‘production’ sector, but an appreciation of the whole industry is provided to place ‘production’ in context.
1.2.1 Production
The British film industry is production led. This involves:
- development of the idea (script)
- pre-production (budget, locations and casting)
- production- which involves filming and ensuring everything runs to budget/schedule
- post-production- editing with addition of visual and sound effects
The British Film Industry is heavily dependent on inward investment, almost exclusively from the United States, and the major productions which this brings.
The UK’s ability to attract inward film investment depends on several factors. Arguably, the four most important are:
- the availability of tax relief
- the high quality of the workforce
- the exchange rate. The value of the Pound can impact on production costs for foreign companies
- wealth of outdoor scenic filming locations
1.2.2 Distribution
The distribution sector has always been comprised largely of the American multi-national film companies. This is a characteristic of the British film industry.
Films are distributed and consumed in a variety of ways: cinema release, retail sales of DVDs, rental of DVDs, films on television and video on demand. The first revenue from a film comes from cinema presentation, but this accounts for only a small proportion of the total. Cinema revenues grew significantly in the late 1990s, but have levelled out since then. Distribution remains dominated by the UK-based subsidiaries of the American studios.
Few if any films make a profit from cinema revenues alone. Instead, they rely on the remaining sources, or ‘tail’ revenues, including merchandising, for real returns. Whilst overall revenue has been stable, at AVD the retail sales of physical video retail and physical video rental (DVDs) had declined, whilst digital video on demand and pay TV was increasing and is now the leading method for people to access content in their own homes.
1.2.3 Exhibition
The exhibition sector is similarly characterised by a few large companies, though in this sector they are not American-owned.
1.3 Film studios
The UK has three large film studios, all in the south east of England. All have world class facilities and are able to accommodate the filming of large budget films at any one time. There is a wide variety of studios around the country from old aircraft hangars to modern purpose built studios in rural areas. They all carry out film work as well as other activities, such as television and advertising.
A lot of film studios in the UK are in, or in very close proximity to London. There are certain areas of the UK which are seen as preferred and this may be due to a concentration of production expertise.
It is acknowledged there is a supply shortage of large purpose-built film studios in the UK to satisfy market demand. There are multiple proposals for new studio developments across the UK, however these are unlikely to make up the current supply shortfall and are long term projects that may take years to complete.
The supply shortage for purpose-built studios has seen new studios being created out of existing large shed warehouses. The conversion to studio will either be undertaken by the studio operators but it is not uncommon to see specialist companies convert the warehouse to studio market specification before letting the space on short or longer term leases.
In addition to these potential new studio projects, many of the UK’s existing major studios are in the process of expanding their sites/buildings on site.
1.4 Production companies
The British production sector contains several large international companies making films and series with substantial budgets for cinema viewing or home streaming. There is also a long tail of smaller companies competing in the market.
1.5 Post-production
The post-production sector is an integral part of the film production process, though it also serves other industries, n tably television and advertising. Post-production companies in the UK tend to cluster around centres of production, this is the South East of England, with activity predominantly in and around London.
Post-production work is easily tradable: firms can work for clients anywhere in the world, regardless of distance. That means firms that produce high quality work are well placed to compete successfully for export business.
1.6 UK Film tax relief
Tax relief continues to be available for film making in the UK. As at summer 2021: * for all British qualifying films of any budget level, the film production company can claim a payable cash rebate, being a proportion of UK qualifying expenditure * the tax relief is capped * tax relief is available for British qualifying films. * films must either pass a cultural test or qualify as an official co-production * films must be intended for theatrical release * films, including those made under official co-production treaties, must reach a minimum UK spend requirement * the UK has to date used a specialist government team to deal with the corporation tax affairs of companies which are eligible for Film Tax Relief * from a valuation viewpoint it is necessary to understand the fact that the UK film industry has tax relief affects the attraction or otherwise of making films in the UK
1.7 UK employment market
Approximately 239,000 people were employed in the film and TV industry in 2021, according to the Office for National Statistics data. This is an increase from 196,000 in 2015, with the majority of growth coming in the film production sector. The workforce is heavily concentrated in London and the South East, with the BFI estimating that 57% of film industry employment is in this region.
1.8 Future trends
The Film and TV production sector is strong in the UK at the time of writing, and this looks set to continue. The clear advantages the UK has to offer in terms of creative expertise, English language, production facilities, attractive outdoor locations and favourable tax environment are positive aspects of British film and TV production.
The COVID Pandemic did impact on the ability of filming to continue in the UK but it also increased the demand for content that could be streamed at home.
2. Changes from the last practice note
As at the AVD of 1st April 2021, there was huge demand for film studio space in the UK. Alongside a severe supply shortage, it is anticipated that rental values have increased significantly and that rateable values will increase in the same manner between the 2017 and 2023 lists.
As at the AVD of 1 April 2021 COVID was in existence. It was anticipated that the vaccine rollout which commenced in December 2020 would reduce its impact on society.
3. Ratepayer discussions
Discussions with industry representatives commenced in September 2021 and are ongoing.
4. Valuation scheme
4.1 General
4.1.1 A prescribed ‘valuation scheme’ for film studios, TV studios and film sets does not emerge from the information and evidence that is available.
Instead, there is guidance provided to assist the Valuation Officer in making his or her valuation for 2023 purposes. The guidance provided below should be considered on the understanding that Film Studios (and to a lesser extent TV Studios) represent a particular use or purpose that is distinctive and distinguishable from other uses and often requires particular features and adaptations. It is important not to lose sight of this when using information (rents or otherwise) available in respect of premises which, whilst similar in basic construction to Film or TV Studios, are in fact used for other purposes, such as industrial and office uses. The effect on rental value at AVD will be different if the economic circumstances impacting on the Film and TV industry at AVD is not in line with the economic circumstances impacting normal industrial or office hereditaments.
4.1.2 Whenever possible studios should be valued using the rental basis and comparing like-with-like studios. Generally film studios should be compared with other film studios, and TV with similar TV studios.
4.1.3 Within these categories, certain premises often fall into those which are more in the nature of offices, and some which are more akin to warehouses. In the absence of reliable rental evidence for this class, it may be necessary to have regard to rental values relating to the more appropriate of these two uses (based upon the prevailing characteristics of the hereditament and to the ‘rebus sic stantibus’ doctrine). An uplift should be applied to reflect any additional rateable improvements made to benefit the use of the premises as studios (or the land as a Film or TV ‘set’). However, for the 2023 Rating List, the VOA are of the opinion that given the lack of supply and huge demand at 1st April 2021 AVD, a greater uplift is required than just for the rentalised cost of the additional rateable improvements and the Valuer must have regard to rental evidence for studios fitted to a comparable standard.
4.2 Film studios
There is no 2023 scheme of value recommended in respect of film studios. Comparisons should be made to other classes with caution. The specific physical characteristics of the property, such as the quality of buildings and the location, must be taken into consideration. In addition to this, it is important to ‘stand back and look’, to ensure the particular physical attributes and economic forces that impact on the British Film Industry are reflected. Finally, co-ordination between case workers at National Valuation Unit and Regional Valuation Units is essential.
4.3 TV studios
It is anticipated that generally TV Studios will be valued by comparison with the prevailing office values in the locality.
4.4 Film sets
Film Sets come in all shapes, sizes and configurations and each must be looked at on its own merits, taking coordinated specialist guidance in each case.
1. Co-ordination Arrangements
This is a SRU Class. Co-ordination responsibilities are set out in Rating Manual : section 6 part 1 - practice note 1 : 2000.
The R2000 Special category Code 100 should be used. As an SRU Class the appropriate suffix letter should be S.
2. Valuation guidance
Valuation guidance on this class is outlined in Para 4 of this section RM5:390.
Whenever possible studios should be valued using the rental basis and comparing like-with-like studios. Generally film studios should be compared with other film studios, and TV with similar TV studios.
Within these categories premises often fall into those which are more in the nature of offices, and those which are more akin to warehouses. In the absence of reliable rental evidence for this class, it may be necessary to have regard to rental values relating to the more appropriate of these two uses (based upon the prevailing characteristics of the hereditament and to the “rebus sic stantibus” doctrine). An uplift should be applied to reflect any additional rateable improvements made to benefit the use of the premises as studios.
The value of some of the specialist purpose built premises may be driven by the cost of the entire structure(s).
3. Allowances
The size of the premises should be taken into account when rental comparisons are made. Allowances may be appropriate for the premises which do not cater for modern film making practices, including TV. With the development of improved technology more use has been made of direct on location filming, resulting in demand for many of the large old fashioned styles of studio falling away.
1. Co-ordination Arrangements
This class is subject to Regional Co-ordination.
Special Category Code 091 should be used for such hereditaments. The relevant suffix will be computer generated.