Rating Manual section 5a: valuation of all property classes - Hospitals and healthcare - Guidance

1. Scope

This section is intended to cover the following types of hereditament:

1.1 NHS hospitals

VOs will be familiar with these properties and they require no detailed description. They comprise a wide range of types and sizes, and normally contain buildings of various dates.

1.2 Ambulance stations

These are normally purpose built but can be adapted from existing buildings. They normally resemble small depots.

1.3 Outpatient clinics and trust health centres

These normally provide treatment and/or diagnostic services to patients who have been referred by General Practitioners. They may resemble category (d) health centres below - but may alternatively be purpose built and sui generis. Valuers concerned with surgeries and health centres as well as clinics and health centres occupied by health authorities and trusts should familiarise themselves with the RICS publication “The valuation of surgery premises used for medical or health services”. Valuation Information Paper 4.

1.4 Surgeries and health centres occupied by general practitioners

These are normally in the occupation of general practitioners rather than Health Authorities and comprise a range of types from the adapted dwelling to the purpose built group practice health centre.

1.5 Nursing homes, maternity homes, convalescent homes

This class of property ranges from converted dwelling houses to purpose built premises with all the facilities of a modern hospital. Nursing homes may be occupied by Health Authorities or privately by religious or other charitable organisations. They may be occupied for the care of the sick, the aged or the handicapped, or for the purposes of convalescence. They may be wholly domestic, composite, or wholly non-domestic.

1.6 Private hospitals and clinics

These include a variety of types of structure ranging from purpose built to adaptations of dwelling houses or of other institutional dwellings. Normally they will accommodate in-patients, although some private outpatient clinics are known to exist. Patients tend to be accommodated in single rooms and a high proportion of these may have private bathrooms/showers. Private hospitals tend to be significantly smaller than NHS Hospitals.

1.7 Private eye hospitals and clinics

The advancement in technology and the introduction and development of new procedures over the past 20 years has permitted a considerable widening in the scope and purpose of eye surgery. In particular the cost of laser surgery to improve the vision of persons otherwise requiring the wearing of spectacles or contact lenses has reduced substantially. This in turn has led to a substantial increase in the numbers of companies offering this and other eye related procedures, both by way of specialist departments within general private hospitals or by way of dedicated clinics, some of which refer to themselves as hospitals. The advice is concerned with the assessment of hereditaments occupied as dedicated eye clinics.

Some companies confine themselves to laser surgery and operate out of a number of relatively small specialist clinics throughout the UK, whereas others offer a full range of services which extend beyond laser surgery to include medical conditions such as glaucoma, cataracts and astigmatism. Some larger clinics will also offer cosmetic procedures designed to enhance the appearance of the eye. As referred to above some of the larger clinics (generally in excess of 1000m2 GIA) refer to themselves as hospitals, although they do not normally contain patient beds as the procedures and initial recovery are of a duration which will generally allow patients to return home on the day that surgery is carried out.

2. List description and special category code

List description	Primary description code	Scat	Suffix
Ambulance stations	MS2	010	G
Hospitals and clinics (NHS)	MH2	134	S
Hospitals and clinics (Private)	MH3	135	S
Nursing homes (inc Old People Homes)	MR1	201	G
Surgeries, clinics and health centres	MH and MH1	436 (contractors) 437 (rentals)	G G

3. Responsible teams

Responsibility for the referencing and valuation of Ambulance Stations, Nursing Homes, Surgeries & Health Centres lies with the Regional Valuation Units (RVU’s)

Responsibility for the referencing and valuation of all hospitals lies with the National Valuation Unit (NVU) Civic and Specialist Property Inspection Teams.

4. Co-ordination

Coordination is through the Primary Care Class Co-ordination team (CCT) and Hospital CCT which both report to the Valuation Panel (VP) 4.

5. Legal framework

There is no specific legal framework for these classes but caseworkers should be alert to correctly identifying the hereditament which can be particularly difficult within hospitals due to a number of let-outs. Reference should be made to the Rating Manual Section 3 Part 1 Hereditament.

6. Survey requirements

6.1 NHS hereditaments

In referencing NHS hereditaments the basis of measurement prescribed in the VO Code of Measuring Practice for Rating Purposes should be followed. For all properties valued using the contractors basis the surveys should be made to GIA.

6.2 GPs surgeries/health centres

For hereditaments valued on the rentals method the basis of measurement is NIA as defined in the VO Code of Measuring Practice for Rating Purposes. Surgeries in shopping parades should be zoned.

For those specialised hereditaments which are valued using a contractor’s basis, the property should be measured to GIA.

6.3 Nursing homes/maternity homes/convalescent homes

The basis of measurement for this class is GIA, as defined in the VO Code of Measuring Practice for Rating Purposes. It is however necessary to apportion the GIA in respect of non-domestic property within composite hereditaments.

6.4 Private hospitals

The basis of measurement for this class is GIA, as defined in the VO Code of Measuring Practice for Rating Purposes.

6.5 Private eye hospitals and clinics

For the majority of clinics and hospitals which fall to be assessed on the rentals basis measurement should be to NIA in accordance with the VOA Code of measuring practice, but where exceptionally the contractors method is employed measurement to GIA will be required.

6.6 Plant and machinery

Hospitals are likely to feature items of rateable plant and machinery such as the heating system, fire protection, cooling and ventilating equipment, lifts and standby generators, but since valuation will be by reference to costs which include these items, they should not be separately valued. Because the quality of these items of P & M vary considerably, it is nevertheless important to ensure that full details of such plants are recorded in order that they may be properly reflected in the valuation of the hereditament.

Air conditioning systems vary in terms of the range of facilities offered, their performance, and the degree of environmental control offered. A basic air conditioning system will usually incorporate facilities for heating, cooling and ventilating. More complex systems will also control humidity, monitor the through-flow of air, filter, purify and de-odorise the re-circulated air, and offer localised control in different parts of the premises and even in different parts of an open plan floor. The following features should be noted: - type (for example VAV, fan coil etc) provision (for example cleaning, cooling, humidification) extent (note the areas served) and details of ducting.

Details of the heating system should include type of fuel, type of system (for example radiators, ducts, underfloor) and extent.

For lifts determine type (for example manual/automatic), goods/passenger, capacity, floors served.

If standby-generating plant is provided, referencers should note voltage, power, rpm and age.

7. Survey capture

Rating surveys should be captured on the Rating Support Application (RSA) where a rental approach is taken. For those valued on the contractors basis surveys should be stored in the Property Folder of Electronic Document and Records Management (EDRM) together with plans.

8. Basis of valuation

8.1 Hospitals and in-patient clinics

The Contractors Basis will normally be the principle method of valuation except where rental evidence exists. For those valued on the contractors basis guidance can be found within the respective NHS and Private hospital practice notes.

8.2 Ambulance stations

It will normally be possible to value by reference to commercial properties which are rebus sic stantibus similar and for which rental evidence exists. Where no such comparison can be made the contractors basis should be used and guidance on the application of this basis is provided in Rating Manual: section 6 part 3 - section 65.

8.3 NHS and private out-patient clinics and health centres (not occupied by general practitioners)

The involvement of the private sector in some mainstream hospital services have resulted in the growth of specialised diagnostic and treatment centres (such as dialysis and renal units). These hereditaments may be on or nearby existing hospital sites or stand alone. Full investigation should be made as to whether any arms-length rents can be evidenced. Where insufficient rental evidence is available they will fall to be valued on the contractor’s basis. A cost FOR VO 6065 should be instigated for any newly built facilities.

Consideration of the cost to be applied at stage 1 of the contractor’s basis should be referred to NVU.

8.4 Surgeries and health centres occupied by general practitioners

Where the premises occupied has been converted from its original purpose (such as residential or office) then rental evidence is normally available and the rental/comparative method is the normal approach to valuation. Reliable evidence relating to purpose built surgeries and health centres will be harder to find and thus valuation will generally be on the contractors basis. Further guidance is contained within the relevant Primary Care and Surgeries practice note.

8.5 Nursing homes, maternity homes, convalescent homes

Many nursing homes are likely to be wholly or predominantly domestic, but those receiving short stay patients, and in particular maternity/convalescent homes, are likely to be composite or wholly non-domestic.

The valuation of this type of property will normally fall to be made on either the rental method or the contractors basis. A profits basis of valuation will not be applicable.

The rental method should be adopted wherever there is sufficient evidence to provide a basis of valuation. It will be necessary to carefully examine the value derived from this method of valuation in order to be satisfied that it reasonably represents the rental value of the property and that assessments derived from the rental and contractors basis methods are not inconsistent with one another.

8.6 Private eye hospitals and clinics

Eye clinic/hospital operators will generally take either existing or new buildings and adapt them as necessary to make them fit for purpose. Many of these buildings particularly those located within town centres or on business parks will be taken on lease and rental evidence relating to the occupation will be available. As a consequence this class of property should, in the main, be valued by reference to the rentals method either directly by reference to passing rent (adjusted as necessary for tenants improvements, rent date etc) or by way of comparison. Exceptionally where there is no rent passing and the building is in such a location and of such a nature that comparison cannot be drawn with rented property in the same mode or category of use elsewhere then the contractors method may be utilised. Further advice on the adoption of the contractors method is given below.

Contractors method

Where, exceptionally, the contractors method is adopted regard should not be had to the guidance given in this practice note in relation to private hospitals. Reference should be made to the appropriate valuer in NVU in order to obtain guidance as to the costs to adopt and Rating Manual: section 4 part 3 for general advice and guidance on the application of the method.

The decapitalisation rate (decap rate) to be adopted within the valuation will differ according to the nature of the procedures carried out. In order to qualify for the lower decap rate the use must satisfy the provisions of “The Non –Domestic Rating (Miscellaneous Provisions (No 2) Amendment Regulations 1994 –SI1994” and in particular the definition of a healthcare hereditament set out in paragraph (6)

healthcare hereditament” means a hereditament constructed or adapted wholly or mainly either

a) for the reception or treatment of persons suffering from any illness, injury or infirmity, or
b) as a maternity home, and used for such a purpose

Laser eye surgery is mostly used to correct Myopia (Shortsightedness), it is a procedure that is not available on the NHS and is not considered to be an illness, injury or infirmity. Similarly cosmetic eye surgery used to enhance appearance is not treatment of an illness, injury or infirmity. Consequently the lower decap rate should not be employed when using the contractors method in the valuation of those clinics or hospitals where patients receiving laser eye or cosmetic surgery are in the majority. It is thought the majority of private eye clinics/hospitals will fall into this category although some may continue to concentrate on recognised medical conditions such as cataracts, glaucoma, optical nerve disorders, detached retinas etc and where these procedures are in the majority the application of the lower decap rate will be appropriate.

Further guidance can be obtained from the appropriate valuer in NVU.

This property is valued using the non-bulk server.

9. Valuation considerations

9.1 De-capitalisation rate in Contractor’s basis valuations

The decapitalisation rate to be used is set out in The Non-Domestic Rating (Miscellaneous Provisions) (No2) Regulations 1989 (as amended).

For hereditaments qualifying under the ‘healthcare’ definition the lower decapitalisation rate should be applied. Further guidance on the qualifying criteria should be sought from NVU.

9.2 Exemption - property used for the disabled

Under Para 16 Sch 5 LGFA 1988, property used for the disabled, including parts of a hereditament wholly used for qualifying purposes, are exempt. However in most instances within a hospital environment the service provision will include the provision of ‘treatment’ and exemption will not be applicable. Full guidance is available in the Rating Manual Section 6 Valuation Practice Part 6 Exemption Part A Property used for disabled persons. Areas of contention should be referred for technical advice.

9.3 Unoccupied NHS property

NHS bodies are not entitled to any special exemption from unoccupied property rate and enjoy only the same specific exemptions available to other ratepayers contained in the Non-Domestic Rating (Unoccupied Property) Regulations (SI 1989 No 2261).

There should be a prima facie assumption that mere vacation of premises has no effect on their RV. The only exception to this rule is where the property is of a specialised type for which no demand exists rebus sic stantibus, and where one or both of the following conditions apply:

a) if the premises were vacated on or before the AVD, have not subsequently been occupied, and are not being held for future occupation,
b) if occupancy ceases because of material changes of circumstances post AVD, eg the completion of alternative premises in the locality, which would have eliminated demand for the subject property at the AVD.

Where a or b apply and there is no demand for alternative uses for the hereditament as a whole, the unused property should be treated as of no value and should be excluded from costing. Where clinical space is unused for the purpose for which it was designed, and is used solely for storage, the relevant block or portion thereof should be costed as storage space, unless at AVD storage use was temporary and clinical use was to be resumed.

Care should be taken to avoid double counting where unused space has been reflected in obsolescence allowances.

9.4 The boundary between domestic and Non-Domestic property

9.4.1 Identifying domestic and Non-Domestic property

9.4.1.1 Ward areas

Property is domestic if it is used wholly for the purposes of living accommodation [LGFA 1988 s66 (1)(a)].

Following a review of the legal principles around the consideration of domestic property within a healthcare setting it is considered unlikely that ward accommodation within mainstream hospitals will qualify as domestic. This is due to the incidence of active treatment being administered to patients within hospital wards that determines that the accommodation is not used wholly for domestic purposes.

“Treatment” means treatment in its normal sense and therefore includes, but is not limited to, any medical intervention, diagnostic care or observation undertaken by professional staff in hospitals, including doctors, nurses, midwives, therapists and psychologists, designed to improve or modify patients’ physical and/or mental abilities and social functions. This includes, but is not limited to nursing (which includes aiding convalescence), psychological interventions, physiotherapy and other sorts of therapy including habilitation and rehabilitation.

A period of 60 days remains a fair determinant of short-stay accommodation. Therefore for hospital ward space to qualify as domestic property within s66 of the Local Government Finance Act 1988 it will be necessary to establish that patient stays are in excess of 60 days while not receiving “treatment” for that period or more. This is thought to be extremely unlikely.

There may be some exceptions within specialised institutions such as psychiatric hospitals, where treatment is not administered in certain areas such as a patient bedroom. Where that patient’s stay is in excess of 60 days, then the bedroom area should be taken as domestic and the hereditament will be composite. The domestic consideration may be extended to kitchen, dining or lounge areas provided that any non-domestic use of such areas does not extend beyond the de-minimis principle.

9.4.1.2 Permanent living accommodation for staff

Permanent living accommodation for staff should be considered domestic. On hospital sites care should be exercised to determine whether such accommodation is still in the rateable occupation of the hospital Trust, rather than vested in a third party. This would affect the identification of the hereditament and could influence the composite status.

Staff on-call accommodation will likely be non-domestic by virtue of s66(2) LGFA 1988.

9.4.1.3 Visitors accommodation

Some institutions provide accommodation for patients’ visitors. While in principle this should be regarded as non-domestic property, the de minimis rule should be applied so as to disregard any such non-domestic use where the hereditament is otherwise wholly domestic.

9.4.1.4 Accommodation for the terminally ill - respite care

Accommodation in hospices and other institutions which is provided for terminally ill patients should be treated as non-domestic.

9.4.2 Valuation by reference to general patterns of use

If the hereditament has been identified as comprising both domestic and non-domestic property, it is composite and should be valued on the basis of a notional distribution of uses. Since institutional hereditaments are not a bulk class, it is unlikely there will be sufficient information from other hereditaments on which to base a notional distribution of uses. Instead the objective should be to adopt the distribution of uses, which is the norm for the actual hereditament at the AVD; minor fluctuations in the proportion of non-domestic to domestic use and its distribution within the hereditament may therefore be ignored.

LGFA 1988 (Sch 6 para 2(1)A) provides that the RV of a composite shall be the amount which would reasonably be attributable to the non-domestic use of the property. In the case of non-domestic property within composite hereditaments, this may be taken to be full value of that property.

Areas wholly used for domestic purposes shall be assessed to Council Tax and be excluded from the non-domestic assessment. However it is important that the survey of the whole hereditament is captured and entered into any contractors valuation in order for the correct contract size adjustment to be calculated. The line entry and GIA of the domestic accommodation can then be identified and excluded from the valuation after the calculation of the CSA has been made. The hereditament (and thus both the non-domestic rating list entry and council tax entry) should be flagged as composite.

10. Valuation support

Non-Bulk Server (NBS)
Rating Support Application (RSA)
Survaid
Valuation Panel (VP4) and Class Co-ordination team (CCT) Members
National Valuation Unit (NVU)

Practice note 1: 2017 - NHS hospitals

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 Stage 2 Obsolescence allowances and guidance notes for main hospital buildings has been revised.

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

3. Ratepayer discussions

Full discussions have taken place with Hospital Trusts representatives Avison Young, Montagu Evans, Deloitte LLP, GL Hearn, Gerald Eve and Cushman Wakefield as part of the Group Pre Challenge Review (GRCR) 34075436. This Memorandum of Agreement reflects in-depth cost analysis and consideration of all aspect of the contractors basis as it relates to the valuation of NHS hospitals in England and Wales for the 2017 rating list.

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 contractors basis should be applied in accordance with the following guidance.

4.2 The Contractors 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 2017 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 2017 VOA Cost Guide.

(iv) 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 and 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 has been agreed to represent 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 and 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 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.
£60m2 ARC of the footprint of the flat roof for buildings constructed after 2004.

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. Valuation Spreadsheet

Contractors 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.

Practice note 1: 2017 - NHS hospitals appendix 1

Stage 1 Build Costs

Item	Cost Guide Ref	£/m2	Remarks
Acute Hospitals completed post 1/4/2010	98H001	£2750	See guidance notes below.
Acute Hospitals built and completed prior to 1/4/2010	N/A	£2000
Community Hospitals and Mental Health Units completed post 1/4/2010	98H002	£2200	See guidance note (10) below.
Community Hospitals and Mental Health Units built and completed prior to 1/4/10	N/A	£1600
Operating theatre within community hospitals	98H003	£600	This is an additional sum to be added to the basic £/m2 applicable to the community hospital. It should be applied to the entire theatre suite including the recuperation ward not only the theatres themselves
Education and nurse training buildings	98H004	£1780	Not to be applied to post graduate facilities
Temporary buildings-	98H006	£684
Stores and other inferior buildings. (separate or distinct stores, plant rooms, workshops, offices of inferior construction and garages)	98H007	£505	Plant rooms are to be cost 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.
EMS (Second World War emergency medical services) buildings	98H008	£496
Multi-storey car parks	98H011	£458/m2 or £10300/space
Basement car parks	98H012	£786/m2 or £17669/space
Single deck (steel) car parks		£6350/space	See guidance note (12) 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 and 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 for the purposes of this Memorandum of Agreement and the appropriate cost from the table within Appendix 1 should be applied, dependent upon the hospital classification.

10) 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.

11) 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.

12) 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.

Practice note 1: 2017 - NHS hospitals 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

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.
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.

Practice note 1: 2017 - NHS hospitals 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	0.98	Cheshire	0.91
Northumberland	1.02	Greater Manchester	0.91
Tees Valley	1.01	Lancashire	0.91
Tyne and Wear	0.98	Merseyside	0.91
		Cumbria	0.91

Yorkshite and Humberside Region		South Western Region
East Riding and North Lincolnshire	0.91	Cornwall	1.03
North Yorkshire	0.97	Devon	1.01
South Yorkshire	0.93	Dorset	1.03
West Yorkshire	0.91	Gloucestershire	1.02
		North Somerset	1.01
		Somerset	1.00
		Wiltshire	1.02

East Midlands Region		West Midlands Region
Derbyshire	1.06	Herefordshire	0.91
Leicestershire and Rutland	1.04	Shropshire	0.93
Lincolnshire	1.05	Staffordshire	0.92
Northamptonshire	1.10	Warwickshire	0.96
Nottinghamshire	1.04	West Midlands	0.94
		Worcestershire	0.96

East of England Region		South East Region (Excl. London)
Bedfordshire	1.03	Berkshire	1.12
Cambridgeshire	0.99	Buckinghamshire	1.11
Essex	1.04	East Sussex	1.14
Hertfordshire	1.07	Hampshire	1.09
Norfolk	0.96	Isle of Wight	1.08
Suffolk	0.98	Kent	1.13
		Oxfordshire	1.08
		Surrey	1.17
		West Sussex	1.12

Wales		Central London South
North Wales		Lambeth		1.17
Flintshire	0.90	Southwark		1.17
Conwy	0.94	Wandsworth		1.19
Denbighshire	0.91
Gwynedd	0.98	Greater London North East
Isle of Anglesey	0.96	Hackney		1.15
Wrexham	0.93	Haringey		1.18
Mid Wales		Newham		1.08
Carmarthenshire	0.98	Tower Hamlets		1.15
Ceredigion	1.01	Barking and Dagenham		1.06
Powys	0.99	Enfield		1.08
Pembrokeshire	0.93	Havering		0.98
South Wales		Redbridge		1.05
Blaenau Gwent	0.97	Waltham Forest		1.07
Bridgend	0.95
Caerphilly	0.95	Greater London North West
Cardiff	0.96	Barnet		1.09
Monmouthshire	1.01	Brent		1.11
Neath Port Talbot	0.90	Ealing		1.16
Newport	0.96	Harrow		1.06
Rhondda, Cynon, Taff	0.94	Hillingdon		1.07
Merthyr Tydfil	0.95	Hounslow		1.06
Swansea	0.94
Torfaen	0.94	Greater London South East
Vale of Glamorgan	0.98	Bexley	1.12
		Bromley		1.09
		Croydon		1.12
Central London North		Greenwich		1.13
Camden	1.19	Lewisham		1.10
City of London	1.11
Hammersmith and Fulham	1.18	Greater London South West
Islington	1.16	Kingston Upon Thames		1.14
Kensington and Chelsea	1.23	Merton		1.13
Westminster	1.19	Richmond Upon Thames		1.12
		Sutton		1.10

Practice note 1: 2017 - NHS hospitals 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	+2%
2.0 million	+1%
3.0 million	ZERO
4.0 million	-1%
5.0 million	-2%
7.0 million	-3%
10.0 million	-4%
15.0 million	-5%
18.0 million	-6%
20.0 million	-7%
25.0 million	-8%
35.0 million	-9%
Over 40.0 million	- 10.0% MAX
NB. Intermediate figures may be interpolated.

Practice note 1: 2017 - NHS hospitals appendix 5

Professional Fees and charges

Size of contract	% Adjustment
Sums up to £750,000	15%
£750,000 to £1,499,000	14%
£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%

Practice note 1: 2017 - NHS hospitals appendix 6

Table 1: main hospital buildings obsolescence allowances

Age	% Obsolescence	Age	% Obsolescence
2017	0.00%	1985	40.00%
2016	0.75%	1984	40.75%
2015	1.50%	1983	44.00%
2014	2.50%	1982	47.25%
2013	3.50%	1981	50.50%
2012	4.75%	1980	53.75%
2011	6.00%	1979	54.50%
2010	7.25%	1978	55.00%
2009	8.50%	1977	55.50%
2008	10.00%	1976	56.00%
2007	11.25%	1975	56.50%
2006	12.75%	1974	56.75%
2005	14.25%	1973	57.25%
2004	15.75%	1972	57.50%
2003	17.25%	1971	58.00%
2002	18.75%	1970	58.25%
2001	20.25%	1969	58.50%
2000	21.75%	1968	58.50%
1999	23.25%	1967	58.75%
1998	24.50%	1966	59.00%
1997	26.00%	1965	59.00%
1996	27.50%	1964	59.25%
1995	28.75%	1963	59.25%
1994	30.00%	1962	60.00%
1993	31.25%	1961	60.00%
1992	32.50%	1960	60.00%
1991	33.75%	1959	57.50%
1990	35.00%	1958	55.00%
1989	36.00%	1957	55.00%
1988	37.00%	1956	55.00%
1987	38.00%	1955 and earlier	55.00%
1986	39.00%

Table 2: workshops and stores obsolescence allowances

Age	% Obsolescence	Age	% Obsolescence
2017	0.00%	1985	27.00%
2016	0.50%	1984	28.00%
2015	1.00%	1983	29.00%
2014	1.50%	1982	30.00%
2013	2.00%	1981	31.00%
2012	2.50%	1980	32.00%
2011	3.00%	1979	33.00%
2010	3.50%	1978	34.00%
2009	4.00%	1977	35.00%
2008	4.50%	1976	36.00%
2007	5.00%	1975	37.00%
2006	6.00%	1974	38.00%
2005	7.00%	1973	39.00%
2004	8.00%	1972	40.00%
2003	9.00%	1971	41.00%
2002	10.00%	1970	42.00%
2001	11.00%	1969	43.00%
2000	12.00%	1968	44.00%
1999	13.00%	1967	45.00%
1998	14.00%	1966	46.00%
1997	15.00%	1965	47.00%
1996	16.00%	1964	48.00%
1995	17.00%	1963	49.00%
1994	18.00%	1962	50.00%
1993	19.00%	1961	50.00%
1992	20.00%	1960	50.00%
1991	21.00%	1959	50.00%
1990	22.00%	1958	50.00%
1989	23.00%	1957	50.00%
1988	24.00%	1956	50.00%
1987	25.00%	1955 and earlier	50.00%
1986	26.00%

Table 3: temporary buildings and huts obsolescence allowances

Age	% Obsolescence	Age	% Obsolescence
2017	0.00%	1996	31.50%
2016	1.50%	1995	33.00%
2015	3.00%	1994	34.50%
2014	4.50%	1993	36.00%
2013	6.00%	1992	37.50%
2012	7.50%	1991	39.00%
2011	9.00%	1990	40.50%
2010	10.50%	1989	42.00%
2009	12.00%	1988	43.50%
2008	13.50%	1987	45.00%
2007	15.00%	1986	46.50%
2006	16.50%	1985	48.00%
2005	18.00%	1984	49.50%
2004	19.50%	1983	51.00%
2003	21.00%	1982	52.50%
2002	22.50%	1981	54.00%
2001	24.00%	1980	55.50%
2000	25.50%	1979	57.00%
1999	27.00%	1978	58.50%
1998	28.50%	1977	60.00%
1997	30.00%	Pre 1976	By agreement

Practice note 1: 2017 - NHS hospitals 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 April 2010	Acute built pre: 1 April 2010	Non-acute built post: 1 April 2010	Non-acute built pre 1 April 2010

Central London N	12.85%	17.50%	16.00%	22.00%
Central London S	6.00%	8.10%	7.50%	10.30%
GLNW	10.15%	13.50%	12.50%	16.60%
GLSW	5.80%	7.75%	7.15%	9.50%
GLNE	7.35%	9.75%	9.10%	12.00%
GLSE	5.20%	6.90%	6.40%	8.50%
North East	0.93%	1.25%	1.15%	1.55%
North West	1.55%	2.05%	1.95%	2.60%
Yorkshire and Humberside	1.45%	1.95%	1.80%	2.40%
East Midlands	1.50%	2.00%	1.85%	2.50%
West Midlands	1.90%	2.45%	2.30%	3.10%
East of England	2.40%	3.20%	2.95%	3.95%
South East	3.25%	4.35%	4.00%	5.35%
South West	1.50%	2.00%	1.85%	2.50%
North Wales	0.93%	1.25%	1.15%	1.55%
South Wales	1.40%	1.90%	1.75%	2.35%
Cardiff	1.90%	2.50%	2.35%	3.15%

Guidance note

The definition of the geographic areas referred to above can be found in the 2017 practice note: land values for Contractors Basis Valuations within the Rating Manual.

Undeveloped Land Value

Where present apply amenity land values as given in the 2017 practice note relating to land values.</p>

Practice note 1: 2017 - NHS hospitals 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 for example, 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 for example, 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 for example paediatric wards with operating theatres
the presence of a number of dispersed small, low value ancillary buildings (for example 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.

Practice note 2: 2017 - private hospitals

1. Market appraisal

There has been little change to the main stream private healthcare market which continues to be dominated by the main providers, HCA, BMI, Spire (formed in 2007 out the sale of BUPA hospitals), Ramsey & Nuffield. So much so that the Competition and Markets Authority has reported that some hospitals within London face being sold off by HCA and BMI. Private healthcare market investigation Competition and Markets Authority case - GOV.UK.

80% of private hospital patients have medical insurance, usually through AXA, BUPA, PRU Health or Aviva.
In addition to insurance backed patients there is a significant income stream from NHS patients which has shown steady growth over the past decade and accounts for in excess of a quarter of revenues. Possible reasons - In 2007 independent hospitals were included in the “Choose and Book” scheme open to NHS patients. The Health and Social Care Act 2012 brought about significant changes.
In 2013 the Health & Social Care Act (2012) came into force and resulted in a huge change of the NHS structure. Primary Care Trusts were abolished and Clinical Commissioning Groups established to deliver the National Health Service. See BMA - Understanding the NHS reforms. The Act removed the limit on private profits being earned by NHS Trusts. Thus we are likely to see an increase in private wings on NHS sites and an increase in services provided by the private sector.

Specialist Care Private Hospitals

These range from purpose built hospital 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 cares.

2. Changes from the 2017 List practice note

2.1 The Stage 2 Obsolescence allowances and Guidance Notes for main hospital buildings has been revised.

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

3. Ratepayer discussions

Full discussions have taken place with representatives of the private hospital sector namely Altus Group, Avison Young, BGL Partners and Gerald Eve as part of the Group Pre Challenge Review (GRCR) 33446266. This Memorandum of Agreement reflects in-depth cost analysis and consideration of all aspect of the contractors basis as it relates to the valuation of Private hospitals in England & Wales for the 2017 rating list.

4. Method of Valuation

4.1 Rentals Method

In the years preceding the AVD 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 Contractors basis should be applied in accordance with the following guidance.

4.2 The Contractors 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 2017 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 2017 VOA Cost Guide.

(iv) 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 has been agreed to represent 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 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.
£60m2 ARC of the footprint of the flat roof for buildings constructed after 2004. 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. Valuation Spreadsheet

Contractors based valuations of private 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	98H101	£2600	See guidance notes below.
Acute Hospitals built and completed prior to 1/4/2010	N/A	£1925
Non-Acute and Psychiatric Hospitals completed post 1/4/2010	98H102	£2200
Non-Acute and Psychiatric Hospitals completed prior to 1/4/2010	N/A	£1650
Temporary buildings-	98H104	£684
Stores and other inferior buildings. (separate or distinct stores, plant rooms, workshops, offices of inferior construction and garages)	98H105	£505	Plant rooms are to be cost 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.
Multi-storey car parks	98H107	£458/m2 or £10300/space
Basement car parks	98H108	£786/m2 or £17669/space

Guidance notes

1) Definition of 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.

The distinguishing features of these hospitals usually include:

Major operating theatres, ICU & HDU facilities
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 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

3) 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.

4) 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.

5) 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.

6) 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.

7) 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.

8) Separate costs for permanent modular construction have been dispensed with for the purposes of this Memorandum of Agreement and the appropriate cost from the table within Appendix 1 should be applied, dependent upon the hospital classification.

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

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.</li>
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		0.98	Cheshire	0.91
Northumberland		1.02	Greater Manchester	0.91
Tees Valley		1.01	Lancashire	0.91
Tyne and Wear		0.98	Merseyside	0.91
			Cumbria	0.91


Yorkshire and Humberside Region			South Western Region
East Riding and North Lincolnshire		0.91	Cornwall	1.03
North Yorkshire		0.97	Devon	1.01
South Yorkshire		0.93	Dorset	1.03
West Yorkshire		0.91	Gloucestershire	1.02
			North Somerset	1.01
			Somerset	1.00
			Wiltshire	1.02


East Midlands Region			West Midlands Region
Derbyshire	1.06		Herefordshire	0.91
Leicestershire and Rutland	1.04		Shropshire	0.93
Lincolnshire	1.05		Staffordshire	0.92
Northamptonshire	1.10		Warwickshire	0.96
Nottinghamshire	1.04		West Midlands	0.94
			Worcestershire	0.96


East of England Region			South East Region (Excl. London)
Bedfordshire	1.03		Berkshire	1.12
Cambridgeshire	0.99		Buckinghamshire	1.11
Essex	1.04		East Sussex	1.14
Hertfordshire	1.07		Hampshire	1.09
Norfolk	0.96		Isle of Wight	1.08
Suffolk	0.98		Kent	1.13
			Oxfordshire	1.08
			Surrey	1.17
			West Sussex	1.12

Wales		Central London South
North Wales		Lambeth		1.17
Flintshire	0.90	Southwark		1.17
Conwy	0.94	Wandsworth		1.19
Denbighshire	0.91
Gwynedd	0.98	Greater London North East
Isle of Anglesey	0.96	Hackney		1.15
Wrexham	0.93	Haringey		1.18
Mid Wales		Newham		1.08
Carmarthenshire	0.98	Tower Hamlets		1.15
Ceredigion	1.01	Barking and Dagenham		1.06
Powys	0.99	Enfield		1.08
Pembrokeshire	0.93	Havering		0.98
South Wales		Redbridge		1.05
Blaenau Gwent	0.97	Waltham Forest		1.07
Bridgend	0.95
Caerphilly	0.95	Greater London North West
Cardiff	0.96	Barnet		1.09
Monmouthshire	1.01	Brent		1.11
Neath Port Talbot	0.90	Ealing		1.16
Newport	0.96	Harrow		1.06
Rhondda, Cynon, Taff	0.94	Hillingdon		1.07
Merthyr Tydfil	0.95	Hounslow		1.06
Swansea	0.94
Torfaen	0.94	Greater London South East
Vale of Glamorgan	0.98	Bexley	1.12
		Bromley		1.09
		Croydon		1.12
Central London North		Greenwich		1.13
Camden	1.19	Lewisham		1.10
City of London	1.11
Hammersmith and Fulham	1.18	Greater London South West
Islington	1.16	Kingston Upon Thames		1.14
Kensington and Chelsea	1.23	Merton		1.13
Westminster	1.19	Richmond Upon Thames		1.12
		Sutton		1.10

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	+2%
2.0 million	+1%
3.0 million	ZERO
4.0 million	-1%
5.0 million	-2%
7.0 million	-3%
10.0 million	-4%
15.0 million	-5%
18.0 million	-6%
20.0 million	-7%
25.0 million	-8%
35.0 million	-9%
Over 40.0 million	- 10.0% MAX
NB. Intermediate figures may be interpolated.

Appendix 5

Professional Fees and charges

Size of contract	% Adjustment
Sums up to £750,000	15%
£750,000 to £1,499,000	14%
£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
2017	0.00%	1985	40.00%
2016	0.75%	1984	40.75%
2015	1.50%	1983	44.00%
2014	2.50%	1982	47.25%
2013	3.50%	1981	50.50%
2012	4.75%	1980	53.75%
2011	6.00%	1979	54.50%
2010	7.25%	1978	55.00%
2009	8.50%	1977	55.50%
2008	10.00%	1976	56.00%
2007	11.25%	1975	56.50%
2006	12.75%	1974	56.75%
2005	14.25%	1973	57.25%
2004	15.75%	1972	57.50%
2003	17.25%	1971	58.00%
2002	18.75%	1970	58.25%
2001	20.25%	1969	58.50%
2000	21.75%	1968	58.50%
1999	23.25%	1967	58.75%
1998	24.50%	1966	59.00%
1997	26.00%	1965	59.00%
1996	27.50%	1964	59.25%
1995	28.75%	1963	59.25%
1994	30.00%	1962	60.00%
1993	31.25%	1961	60.00%
1992	32.50%	1960	60.00%
1991	33.75%	1959	57.50%
1990	35.00%	1958	55.00%
1989	36.00%	1957	55.00%
1988	37.00%	1956	55.00%
1987	38.00%	1955 and earlier	55.00%
1986	39.00%

Table 2: Workshops and Stores Obsolescence Allowances

Age	% Obsolescence	Age	% Obsolescence
2017	0.00%	1985	27.00%
2016	0.50%	1984	28.00%
2015	1.00%	1983	29.00%
2014	1.50%	1982	30.00%
2013	2.00%	1981	31.00%
2012	2.50%	1980	32.00%
2011	3.00%	1979	33.00%
2010	3.50%	1978	34.00%
2009	4.00%	1977	35.00%
2008	4.50%	1976	36.00%
2007	5.00%	1975	37.00%
2006	6.00%	1974	38.00%
2005	7.00%	1973	39.00%
2004	8.00%	1972	40.00%
2003	9.00%	1971	41.00%
2002	10.00%	1970	42.00%
2001	11.00%	1969	43.00%
2000	12.00%	1968	44.00%
1999	13.00%	1967	45.00%
1998	14.00%	1966	46.00%
1997	15.00%	1965	47.00%
1996	16.00%	1964	48.00%
1995	17.00%	1963	49.00%
1994	18.00%	1962	50.00%
1993	19.00%	1961	50.00%
1992	20.00%	1960	50.00%
1991	21.00%	1959	50.00%
1990	22.00%	1958	50.00%
1989	23.00%	1957	50.00%
1988	24.00%	1956	50.00%
1987	25.00%	1955 and earlier	50.00%
1986	26.00%

Table 3: Temporary Buildings and Huts Obsolescence Allowances

Age	% Obsolescence	Age	% Obsolescence
2017	0.00%	1996	31.50%
2016	1.50%	1995	33.00%
2015	3.00%	1994	34.50%
2014	4.50%	1993	36.00%
2013	6.00%	1992	37.50%
2012	7.50%	1991	39.00%
2011	9.00%	1990	40.50%
2010	10.50%	1989	42.00%
2009	12.00%	1988	43.50%
2008	13.50%	1987	45.00%
2007	15.00%	1986	46.50%
2006	16.50%	1985	48.00%
2005	18.00%	1984	49.50%
2004	19.50%	1983	51.00%
2003	21.00%	1982	52.50%
2002	22.50%	1981	54.00%
2001	24.00%	1980	55.50%
2000	25.50%	1979	57.00%
1999	27.00%	1978	58.50%
1998	28.50%	1977	60.00%
1997	30.00%	Pre 1976	By Agreement

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:

Where £/ha is shown for the London Regions then apply residential land values less 20% as stated in the 2017 Land Value Practice Note.

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	£/ha	£/ha	£/ha	£/ha
Central London S	£/ha	£/ha	£/ha	£/ha
GLNW	£/ha	£/ha	£/ha	£/ha
GLSW	£/ha	£/ha	£/ha	£/ha
GLNE	£/ha	£/ha	£/ha	£/ha
GLSE	£/ha	£/ha	£/ha	£/ha
North East	3.40%	4.45%	4.00%	5.20%
North West	7.35%	9.50%	8.60%	11.20%
Yorkshire and Humberside	6.25%	8.10%	7.35%	9.50%
East Midlands	3.45%	4.45%	4.05%	5.25%
West Midlands	6.10%	7.85%	7.10%	9.25%
East of England	11.50%	14.90%	13.55%	17.60%
South East	10.95%	14.15%	12.85%	16.70%
South West	7.80%	10.10%	9.15%	11.90%
North Wales	5.05%	6.55%	5.95%	7.70%
South Wales	6.60%	8.50%	7.75%	10.05%
Cardiff	16.50%	21.30%	19.35%	25.15%

Guidance note

The definition of the geographic areas referred to above can be found in the 2017 Practice Note: Land Values for Contractors Basis Valuations within the Rating Manual.

Undeveloped Land Value Where present apply amenity land values as given in the 2017 Practice Note relating to land values.

Appendix 8

Stage 5 End Allowances

Where a hospital is particularly poorly located, either by way of access or the general environment in which it is sited it may be appropriate to incorporate a stage 5 allowance within the valuation. Examples would be hospitals with access through an industrial estate or poor housing development or those located on the sites of NHS Hospitals where the NHS facility is itself located in an area where a private facility would not normally be sited. Similarly an allowance maybe appropriate where it can be demonstrated that a hospital is so remote from the main road network or areas of population that it has a bearing on the ability of the hospital to attract patients.

Likewise 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 10%. Allowances conceded during negotiations on the 2010 List should normally be maintained into the 2017 List where the circumstances justifying the concession can clearly still be seen to apply, subject to the comments below.

Over the past two decades there has been a considerable rise in the use of day care surgery and the average length of stay in hospital following many other procedures has fallen. These factors impact in two ways on the valuation of private hospitals.

Firstly previous measures used for measuring the performance of private hospitals occupancy of bed spaces at midnight may no longer be an accurate yardstick of performance, since a bed may be used by more than one patient during the day, yet generating no overnight stays.

Secondly these two factors have impacted on the likely design of new hospitals, in that it is likely that a lower proportion of ward space required in new hospitals, than in existing hospitals built during the rapid expansion of the sector in the 1980s or earlier. This point is accepted and is therefore reflected in the higher age and obsolescence rates for buildings constructed prior to 1995. It follows that hospitals constructed in 1995 or later are likely to be of a design reflecting modern requirements.

Both these points should be taken into account when considering end allowances.

Overall the performance of a particular hospital will need to be judged over at least a 12-month period so as to eliminate the disproportionate effect of holiday periods where the private sector is normally quiet.

Practice note 3 : 2017 - Primary care centres (health centres) and doctors surgeries - Memorandum of Agreement

1. Market appraisal

Successive Governments since the 1960’s have provided financial assistance to GP’s to encourage the development of better quality, better equipped premises to enable more front line services to be delivered away from hospital. Although there are still some smaller single General Practice (GP) surgeries in converted dwelling houses, the trend has been towards the construction of large purpose-built GP surgeries or health centres that provide a wide range of services. These may include one or more GP practice, dentistry, midwifery, psychiatric services, treatment areas for minor surgical procedures, administration offices and a pharmacy.

The delivery of planned changes in health provision is a central element of the Health and Social Care Act 2012 which introduced significant changes to the structure of the NHS in England. As of 1 April 2013, primary care trusts and strategic health authorities ceased to exist, and have been replaced with a new infrastructure of commissioners and support units. Clinical commissioning groups (CCGs) and NHS England have taken on commissioning responsibilities, with public health commissioning being transferred to local government. Across England there were 207 CCGs responsible for the NHS commissioning budget (2017 figures). The aim was to transfer responsibility for commissioning decisions to GPs at a local level to improve healthcare services for their patients. CCG boards are predominantly made up of GP members, along with at least one member from secondary care, nursing and the general public.

All GP practices must be members of the CCG in their geographical area. Services commissioned by the CCGs include planned hospital care, rehabilitative care, emergency care, community health and mental health. The former PCT real estate functions now come under the umbrella of NHS Property Services Ltd which is a limited company wholly owned by the Secretary of State for Health. The company was created to take that part of primary care trust and strategic health authority estate not transferring to National Health Service providers on 1 April 2013. NHS Property Services Ltd has one of the biggest property portfolios in Europe and their role is to manage, maintain and improve NHS properties and facilities, working in partnership with the NHS. NHS England’s remit includes a responsibility for business rate issues in respect of GP surgeries and Health Centres.

In Wales, seven Local Health Boards are responsible for planning and delivery of healthcare services together with three NHS Trusts.

2. Changes from the 2010 practice note

For contractor based valuations the Stage 2 obsolescence allowances and guidance notes have been revised following extensive discussions and agreement on other specialist classes. Full details can be found at 4.2 below. The allowances for inferior construction have been dispensed with as these are reflected in the revised age related scale. True exceptions that fall outside the scale are to be considered on merit.

3. Ratepayer discussions

Discussions have taken place with GL Hearn (who represent NHS Property Services, NHS England and Community Health Partnerships, who operate the majority of primary care premises in England) and Avison Young (who represent all 7 Welsh Health Boards who operate all of the primary care estate in Wales). The Memorandum below reflects the in-depth cost analysis of 28 primary care projects throughout England and Wales.

4. Valuation scheme

4.1 The method of valuation employed will be determined by the reliability of the rental evidence available in respect of the type of Primary Care Centre or Drs Surgery under consideration.

4.2 Rentals basis

4.2.1 GP surgeries and primary care centres converted from buildings previously used for other purposes(e.g. residential/office) should generally be assessed on a rentals basis subject to their being sufficient rental evidence by way of lettings to other D1 users in the locality (e.g. dentists, chiropractors ,vets ,private medical practitioners etc. ) to formulate an opinion of value. Where in a particular locality there is a dearth of evidence relating to D1 use but evidence from other nearby localities suggests a relationship with office levels of value then that same relationship can be applied in the locality in question to derive a basis of valuation.

4.2.2 Following the Upper Tribunal decision in Gallagher (VO) v Dr M Read & Partners & Dr J Poyser and Partners (RA/31/2012), rents derived from the Doctors’ Rent and Rates Scheme ‘Current Market Rent’, whether on converted or purpose built GP Surgeries, are unreliable for rating valuation purposes as they do not accord with the rating hypothesis. This includes lease rents on GP Surgeries, lease rents on Primary Care Health Centres and lease rents on other healthcare uses in shared premises where it is evident that they too are affected by the DRRS.

4.2.3 Rents relating to LIFT building are of no assistance.

4.2.4 There is evidence of an increasing involvement within the primary care sector of the NHS of private sector providers. Such providers may occupy premises akin to purpose built NHS surgeries and clinics and where leased the providers may pay a market rent. Full details of the rent and lease are to be obtained by way of FOR and notified to the appropriate valuer in NVU. In these circumstances consideration should be given to applying the rental method of valuation.

4.3 The Contractors Basis

The costs shown in this section are for ease of reference. In all cases where a cost guide code is shown it is this that which must be input into the NBS template, not the costs shown here. Where the cost guide code shows options, the costs shown in this practice note should be used to aid selection. Should the cost guide show different costs to those shown in a current version of this practice note, please refer to the CCT.

4.3.1 Stage 1 -Estimated Replacement Cost

(i) Building costs

With the exception of areas that are not used at the AVD and have no prospect of being used, the actual GIA of the surgery/health centre should be used to calculate the Estimated Replacement Cost (Stage 1) of the hereditament in accordance with Appendix A.

(ii) External works

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

(iii) Location factors

Location factors should be applied in accordance with Appendix C, replicated from the 2017 VOA Cost Guide.

(iv) Contract size Adjustment

An adjustment for contract size is to be made to the building cost in accordance with Appendix D, replicated from the 2017 VOA Cost Guide.

(v) Professional Fees and Charges

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

4.2 Stage 2 - Age and Obsolescence

Adjustments for age and obsolescence should be made in accordance with the scales contained in Appendix F, which have been agreed for other specialist classes of property following extensive research and discussion between Agents and the VO. Allowances in Appendix F take into account the following salient points;

a) The revised age and obsolescence scale has been agreed to represent 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 and 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.

4.3 Stage 3-Land Value

The value of the developed land should be added in accordance with Appendix G.

4.4 Stage 4-Decapitalisation rate

Generally the lower statutory decapitalisation rate should be applied when valuing GP surgeries and health centres. Any concerns regarding the qualification as a ‘healthcare hereditament’ as defined in The Non-Domestic Rating (Miscellaneous Provisions) (No. 2) (Amendment) Regulations 1994 should be referred to NVU.

4.5 Stage 5- End Adjustments

Any advantage or disadvantage which might affect the value of the occupation of the hereditament as a whole should be reflected at this last stage. An adjustment under this head should not duplicate adjustments made elsewhere. Most buildings will not warrant further allowances at this stage and where allowances are appropriate, it is expected that they should not normally exceed 15%.

4.5.1 Flat roof allowance

Permanent buildings with a flat roof are to receive an end 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
£60m2 ARC of the footprint of the flat roof for buildings constructed after 2004

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.

4.5.2 Heating allowance

Oil, LP Gas or Electric Central Heating

Where the property has oil, LPG fired central heating or electrical heating, an end allowance of 5% shall be applied to the valuation.

Appendix A

Building costs

	Size	Cost
Health centre / group practice surgery	GIA up to 2650m2	£1,525
Health centre / group practice surgery	GIA > 2650m2	£2175
Temporary building	All	£ 684
Separate stores, garages and workshops	All	£505

Appendix B

Additions for 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%/75% building ratio, some landscaping around buildings, secure boundary fencing, adequate staff parking, external lighting and landscaping with limited general parking within the hereditament</a> 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</a> which falls short of full requirements
12.5%	Site typically with about 25% building ratio, landscaping around buildings, secure boundary fencing, external lighting and adequate parking within the hereditament</a> for all staff and other users.

Appendix C

Location factors

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

North East Region
Durham County		0.98
Northumberland		1.02
Tees Valley		1.01
Tyne and Wear		0.98

Yorkshire and Humberside Region
East Riding and North Lincolnshire		0.91
North Yorkshire		0.97
South Yorkshire		0.93
West Yorkshire		0.91

East Midlands Region
Derbyshire	1.06
Leicestershire and Rutland	1.04
Lincolnshire	1.05
Northamptonshire	1.10
Nottinghamshire	1.04

East of England Region
Bedfordshire	1.03
Cambridgeshire	0.99
Essex	1.04
Hertfordshire	1.07
Norfolk	0.96
Suffolk	0.98

North West Region
Cheshire	0.91
Greater Manchester	0.91
Lancashire	0.91
Merseyside	0.91
Cumbria	0.91

South Western Region
Cornwall	1.03
Devon	1.01
Dorset	1.03
Gloucestershire	1.02
North Somerset	1.01
Somerset	1.00
Wiltshire	1.02

West Midlands Region
Herefordshire	0.91
Shropshire	0.93
Staffordshire	0.92
Warwickshire	0.96
West Midlands	0.94
Worcestershire	0.96

South East Region (Excluding London)
Berkshire	1.12
Buckinghamshire	1.11
East Sussex	1.14
Hampshire	1.09
Isle of Wight	1.08
Kent	1.13
Oxfordshire	1.08
Surrey	1.17
West Sussex	1.12

Wales
North Wales
Flintshire	0.90
Conwy	0.94
Denbighshire	0.91
Gwynedd	0.98
Isle of Anglesey	0.96
Wrexham	0.93
Mid Wales
Carmarthenshire	0.98
Ceredigion	1.01
Powys	0.99
Pembrokeshire	0.93
South Wales
Blaenau Gwent	0.97
Bridgend	0.95
Caerphilly	0.95
Cardiff	0.96
Monmouthshire	1.01
Neath Port Talbot	0.90
Newport	0.96
Rhondda, Cynon, Taff	0.94
Merthyr Tydfil	0.95
Swansea	0.94
Torfaen	0.94
Vale of Glamorgan	0.98

Central London North
Camden	1.19
City of London	1.11
Hammersmith and Fulham	1.18
Islington	1.16
Kensington and Chelsea	1.23
Westminster	1.19

Central London South
Lambeth		1.17
Southwark		1.17
Wandsworth		1.19

Greater London North East
Hackney		1.15
Haringey		1.18
Newham		1.08
Tower Hamlets		1.15
Barking and Dagenham		1.06
Enfield		1.08
Havering		0.98
Redbridge		1.05
Waltham Forest		1.07

Greater London North West
Barnet		1.09
Brent		1.11
Ealing		1.16
Harrow		1.06
Hillingdon		1.07
Hounslow		1.06

Greater London South East
Bexley	1.12
Bromley		1.09
Croydon		1.12
Greenwich		1.13
Lewisham		1.10

Greater London South West
Kingston Upon Thames		1.14
Merton		1.13
Richmond Upon Thames		1.12
Sutton		1.10

Appendix D

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	+2%
2.0 million	+1%
3.0 million	ZERO
4.0 million	-1%
5.0 million	-2%
7.0 million	-3%
10.0 million	-4%
15.0 million	-5%
18.0 million	-6%
20.0 million	-7%
25.0 million	-8%
35.0 million	-9%
Over 40.0 million	- 10.0% MAX
NB. Intermediate figures may be interpolated.

Appendix E

Professional Fees and charges

Size of Contract	% Adjustment
Sums up to £750,000	14%
£750,000 to £1,499,000	13%
£1,500,000 to £3,999,999	11.5%
£4,000,000 to £7,499,999	10.5%
£7,500,000 to £14,999,999	9.5%
Over £15,000,000	9%

Appendix F

Obsolescence Allowances - main buildings

Age	% Obsolescence	Age	% Obsolescence
2017	0%	1985	40%
2016	0.75%	1984	40.75%
2015	1.50%	1983	44.00%
2014	2.50%	1982	47.25%
2013	3.50%	1981	50.50%
2012	4.75%	1980	53.75%
2011	6.00%	1979	54.50%
2010	7.25%	1978	55.00%
2009	8.50%	1977	55.50%
2008	10.00%	1976	56.00%
2007	11.25%	1975	56.50%
2006	12.75%	1974	56.75%
2005	14.25%	1973	57.25%
2004	15.75%	1972	57.50%
2003	17.25%	1971	58.00%
2002	18.75%	1970	58.25%
2001	20.25%	1969	58.50%
2000	21.75%	1968	58.50%
1999	23.25%	1967	58.75%
1998	24.50%	1966	59.00%
1997	26.00%	1965	59.00%
1996	27.50%	1964	59.25%
1995	28.75%	1963	59.25%
1994	30.00%	1962	60.00%
1993	31.25%	1961	60.00%
1992	32.50%	1960	60.00%
1991	33.75%	1959	57.50%
1990	35.00%	1958	55.00%
1989	36.00%	1957	55.00%
1988	37.00%	1956	55.00%
1987	38.00%	1955 and earlier	55.00%
1986	39.00%

Appendix G

Land Value Additions – Developed Land

The locations referred to below are defined within R2017 Land Values for Contractors Basis Valuations in the Rating Manual section 6 part 3: Valuation of all property classes: Section 1200

Location	Percentage addition (GIA up to £2650m2)	Percentage addition (GIA > 2650m2)
Central London N	50.25%	36.25%
Central London S	19.00%	13.75%
GLNW	15.50%	11.25%
GLSW	37.25%	26.75%
GLNE	23.00%	16.50%
GLSE	28.75%	20.50%
North East	4.50%	3.25%
North West	9.75%	7.00%
Yorkshire and Humberside	8.25%	6.00%
East Midlands	4.50%	3.25%
West Midlands	8.00%	5.75%
East of England	15.25%	11.00%
South East	14.50%	10.50%
South West	10.50%	7.50%
North Wales	6.75%	4.75%
South Wales	8.75%	6.25%
Cardiff	22.00%	15.75%

Practice note 2: 2010 - the valuation of primary care centres

The contents of this practice note (with the exception of land value additions in London, Hampshire and parts of Dorset) have been discussed and agreed with representatives of NHS England. It is expected that all parties to an appeal relating to property occupied by NHS England (or NHS Property services) will apply the practice note as drafted. Any queries relating to the interpretation and implementation of the practice note should be referred to the appropriate valuer in NVU.

Occupiers/ratepayers other than NHS England are not bound by this agreement. However the content of the practice note is to be applied to hereditaments in the occupation of all ratepayers within this class. Where difficulties arise the NVU valuer is to be advised.

1. Co-ordination Arrangement

Primary Care Centres are a generalist class.

The Special Category Code should be according to the method of valuation:

Contractors’ basis – Scat 436

Rentals basis – Scat 437

As a generalist Class the appropriate suffix letter should be G in both cases.

All Contractors’ basis valuations must be completed on the Non Bulk Server.

2. Method of Valuation

These hereditaments span a range of types and sizes and include what have commonly been known as “health centres”, but which are now termed “primary care centres”, as well as individual GP practice premises.

This Practice Note should be followed for the purposes of compiling and maintaining the 2010 Rating Lists.

A. The Rentals Basis

GP surgeries and primary care centres converted from buildings previously used for other purposes(e.g. residential/office) should generally be assessed on a rentals basis subject to their being sufficient rental evidence by way of lettings to other D1 users in the locality (e.g. dentists, chiropractors ,vets and private medical practitioners etc. ) to formulate an opinion of value.

Following the Upper Tribunal decision in Gallagher (VO) v Dr M Read & Partners & Dr J Poyser & Partners (RA/31/2012), rents derived from the Doctors’ Rent and Rates Scheme ‘Current Market Rent’, whether on converted or purpose built GP Surgeries, are unreliable for rating valuation purposes as they do not accord with the rating hypothesis. This includes lease rents on GP Surgeries, lease rents on Primary Care Health Centres and lease rents on other healthcare uses in shared premises where it is evident that they too are affected by the DRRS Rents relating to LIFT building are of no assistance.

Some highly specialised hereditaments such as kidney dialysis centres can be leasehold and subject to significant rents. Such rents should be investigated further to assess their reliability and the weight to be placed upon them In these instances, care should be taken to ensure that any rental information is investigated to remove non-rateable elements. These elements may form a substantial part of the rent.

B. Contractors Basis

This section is intended to apply to purpose built NHS primary health care centres and GP surgeries. Exceptionally where it is considered that rental evidence on purpose built surgeries which is not derived or affected by the DRRS is available within the locality the relevant NVU advisor should be consulted before proceeding. It will also apply to substantially redeveloped premises including Health Centres converted from other specialist buildings.

Specialist facilities such as diagnostic centres may require special consideration if the standard of construction or provision of rateable services differs substantially from a typical Primary Care Centre.

STAGE 1

1.1. Building Costs - permanent buildings

	Pre 2007	2007 onwards,
GIA m2	£ /m2 GIA	£ /m2 GIA

450	973	1083
600	928	1030
1000	909	1011
2000	896	997

No contract size adjustment is to be made.

£/m2 figures are to be interpolated for intermediate GIAs.

1.2 For Pre 2008 blocks of temporary construction a cost of £500per m2GIA (before external works, contract size allowance and fees) should be adopted. Whilst for those constructed from 2008 onwards a cost of £650 per m2 GIA (on the same basis) should be adopted. No further allowance for flat roof construction should be made. Where the building is unheated the cost of £500 or £650 should be reduced by 12.5%.

1.3 For all separate stores, workshops, and garages (but not other buildings) a cost of £480 per m2GIA (before external works, contract size allowance and fees) should be adopted regardless of age.

1.4 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, which would not have arisen if the primary care centre 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.

1.5 Location Allowances

The location factors contained in Appendix 1 should be applied to the above costs.

1.6 External Works

The following additions should be made to the ERC of all buildings (after adjustment for location):

Suggested % addition	Description
Min 1%-2.5%	For Primary Care Centres with 2 or more main floors on Town centre or island sites with minimal visible external works.
4%-5%	Town centre or island site, 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.
5%-8.5%	As above, but typically with very limited staff parking and landscaping, and with some boundary fencing.
8.5%-14%	Site typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and very limited general parking within the hereditament.
14%-17.5%	As above, but typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which falls short of full requirements.
17.5%-20%	Site typically with extensive landscaping around buildings, secure boundary fencing and adequate parking within the hereditament for staff and all other users.

Where hereditaments do not fit exactly into one of the above categories it will be necessary for case workers to exercise further judgment.

1.7 Professional Fees and Charges

Sums up to £500,000 13%

£500,000 to £2,000,000 11% (min fee £65,000)

Sums over £2,000,000 9% (min fee £220,000)

In each case the percentage addition will be made after location adjustment and the addition of the cost of associated external works.

1.8 Allowances for Inferior Construction

A percentage allowance will be made where buildings of a given age exhibit the stated type of construction. This allowance will be deducted from the aggregate ERC derived from the table at 1.1, following the addition of externals and fees.

These allowances should not be made in the case of temporary buildings and stores etc. priced according to para.1.2 and 1.3.

Appropriate allowances are as follows (allowances may not be aggregated between tables):

Either:

Table 1.8.1(a)

Construction type	Allowance
Buildings with a significant wall area made up of Continuous, storey height, non-structural infill cladding panels (usually incorporating windows). (These panels are typically found in conjunction with gable walls of brick/block construction).	10%
As above but where such infill cladding panels are not continuous	Up to 10% depending on the extent of such panels
Flat roof
What is flat as opposed to a pitched roof will generally be self-evident. Flat roofing allowances should be applied to all types of flat roof. In instances where an allowance is sought for pitched roofing caseworkers should seek advice from the National Valuation Unit before proceeding. Where a building has varying roof types a reasonable apportionment should be made to arrive at the allowance.	a) £80m2 ARC of the footprint of the flat roof for buildings constructed up to and including 2004. b) £60m2 ARC of the footprint of the flat roof for buildings constructed after 2004. The allowance is subject to a cap at 15%.
Buildings of a "pre second world war school" type* exhibiting excessive height and circulation space or poor circulation arrangements. *pre second world war school” type is typified by a higher central general purpose/circulatory space often with clerestory windows, surrounded by lower consulting and ancillary rooms around the perimeterand may be constructed post 1945.	5%
Inferior Facing Brickwork	5%

In the case of buildings constructed between 1945 and1959 suffering from inferior facing brickwork, any allowance that may be warranted should be dealt with at Stage 2.

OR:

Table 1.8.1 (b)

Construction type	Allowance
Light structural steel or timber frame buildings with flat roof and very little or no brickwork to walls, typically substantially pre-fabricated and assembled on site (to include system built buildings)	27.5%

OR:

Table 1.8.1(c)

Minimum allowances

Year	Construction Type	Minimum percentage allowance
1960-64	Any	5% minimum
1965-74	Any	10% minimum
1975-80	Any	5% minimum

The specific allowances mentioned at Para 1.8.1 (a) and (b) above, if appropriate, are to count against the minima in table 1.8.1 (c).

For example:

i.A building built between 1965 and 1974, with areas as in the example above in para 1.8.1a has a flat roof allowance of 9.2%, but the minimum allowance is 10%. 10% would apply.

ii.A building built between 1975 and 1980, with areas as in the example above in para 1.8.1a has a flat roof allowance of 9.2%, but the minimum allowance is 5%. 9.2% would apply.

iii.A building built between 1960 and 1964, which has none of the features mentioned in para 1.8.1, will attract only the minimum allowance of 5%.

1.9 Other Allowances

Oil, Gas or Electric Central Heating

Where the property has oil, LPG fired central heating or electrical heating, an end allowance of 5% shall be applied to the valuation

STAGE 2

2.1.1 Obsolescence allowances

Obsolescence allowances shall be made after additions for external works, fees and any allowance under para 1.8 (allowances for inferior construction), in accordance with the following age-related scale/footnotes. The age to be adopted is one year prior to the date of building completion:

Year	% Allowance	Year	% Allowance
2010	0	1984	21
2009	0.5	1983	22
2008	1	1982	23
2007	1.5	1981	24
2006	2	1980	25
2005	2.5	1979	26
2004	3	1978	27
2003	3.5	1977	28
2002	4	1976	29
2001	4.5	1975	30
2000	5	1974	31
1999	6	1973	32
1998	7	1972	33
1997	8	1971	34
1996	9	1970	35
1995	10	1969	36
1994	11	1968	37
1993	12	1967	38
1992	13	1966	39
1991	14	1965	40
1990	15	1964	41
1989	16	1963	42
1988	17	1962	43
1987	18	1961	44
1986	19	1960	45
1985	20	Pre 1960	45-50

2.1.2 The scale is not intended to be rigidly age-based and allows for some flexibility in selection of allowance having regard to variations in the functional utility and physical condition of buildings of particular ages. This flexibility is limited to the use of a notional age (for this purpose only) of up to 5 years either side of the year of completion. The internal communication problems of tall buildings are however dealt with at para 2.2 below.

2.1.3 In the case of refurbished buildings a notional age between the date of refurbishment and the date of original construction may be used in order to derive an appropriate age and obsolescence allowance.

2.1.4 For buildings where there is specific evidence of functional redundancy and/or physical repair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where for example modern health and safety, fir or building regulations preclude or limit the original purpose of the building. Care should then be taken to not then duplicate this at stage 5.

There may be exceptional cases e.g exceptionally un-modernised pre-1955 buildings or redundant buildings where an allowance is in excess of 50% may be justified.

Where a purpose built surgery/primary care centre has been subject to modernisation and refurbishment then a lower age and obsolescence allowance should be applied than that indicated by the age related scale above. The allowance adopted in these circumstances is a matter for judgement based on the degree to which the premises are upgraded.

Special treatment may also be necessary where a primary care centre was designed many years before completion (possibly warranting treatment in an earlier age group).

2.1.5 Where an allowance has been given under table 1.8.1 (b) above (for light framework buildings) or the building is temporary (and priced according to 1.2 and1.3) the maximum allowance given in para 2.1.1 above may be increased; by a further 10% where the block was built before 1980 and by a further 7.5% where the block was built 1980-1995.

2.1.6 The deduction of the appropriate allowances from aggregate costs will give the ARC.

2.2 Multi-floor Allowances

The following deductions should be made from Adjusted Replacement Costs for Primary Care Centres with 2 main floors or more on the assumption that lift provision is adequate. These deductions should be made after the age-based obsolescence allowance has been applied.

Buildings with 2 main floors or less	0%
Buildings up to 7th floor	10% overall
Buildings with 8th floor and above	15% (10% overall below 8th floor)

Where, a two storey building has no lifts an allowance of 10% on the first floor may be warranted.

For buildings of three storeys and above, where lifts are inadequate to serve the actual use that is being made, a further allowance may be warranted.

This must be justified on the facts of particular cases, and is recognised as not normally necessary.

Further advice to relating to this topic will be issued separately as an appendix.

STAGE 3

3.1 Developed Land Value

The following percentages are recommended to be applied to the results of Stages 1 and 2 to arrive at the appropriate land value:

Location	Land Value Addition
Central London	29%
Inner London	19%
Outer London	14.5%
M 25 belt (see (d) below)	12%
Rest of South East (see (e) below)	6.5%
Rest of England and Wales	4.75%

For the purposes of the above table: a. The m25 Belt should be taken to be the whole county of Surrey, plus Windsor & Maidenhead, Slough, Wokingham, Bracknell Forest, South Bucks, Chiltern, Wycombe, Reading, Oxford (City), Cambridge (City), Dacorum, Three Rivers, Watford, St Alban’s, Hertsmere, Welwyn/Hatfield, E Herts, Broxbourne, Epping Forest, Brentwood, and Sevenoaks b. The Rest of South East consists of those parts of the counties of Kent, East Sussex, West Sussex, Hants (exc Isle of Wight), Berks, Bucks, Oxon, Herts, Beds, and Essex,( to the extent that they exclude the BAs listed as in the m25 belt), plus Bournemouth, Poole and Christchurch

NB.

a.The percentages additions in relation to land values in London have not been agreed. In the event of difficulties in agreeing the additions as above caseworkers should contact NVu for advice.

b.It is not intended that there should be abrupt changes in the approach to site values between the above locational groupings, and shading of these percentages may need to be applied close to their boundaries.

c.The inclusion of Hampshire, Bournemouth, Poole and Christchurch within the definition of SE England is not agreed. Cases of difficulty should be referred to the appropriate valuer in NVU.

STAGE 4

4. De-capitalisation Rate

The Adjusted Replacement Cost (ARC) of the hereditament shall be de-capitalised to an annual equivalent by taking the prescribed rate. Guidance as to whether the upper or lower rate is appropriate can be found in Appendix 2 of this practice note.

STAGE 5

5. End Adjustments

At this stage the valuer should consider whether any adjustment should be made to the stage 4 figure to reflect considerations which would affect the hereditament as a whole, such as piecemeal development, lack of integrated design, or a location which is isolated from the primary care centres catchment population, but which have not been accounted for at other stages. The maximum allowance under this heading would not normally exceed 10%.

Appendix 1

Location adjustments

YORKSHIRE AND HUMBERSIDE REGION

Humberside	Including East Yorkshire, Holderness, Kingston on Hull, North Lincs, N E Lincs, Boothferry and Beverley	0.94
North Yorkshire		0.98
South Yorkshire		0.96
West Yorkshire		0.94

EAST MIDLANDS REGION

Derbyshire		0.93
Leicestershire	Includes Rutland	0.93
Lincolnshire		0.92
Northamptonshire		0.98
Nottinghamshire		0.92

EAST ANGLIA REGION

Cambridgeshire		0.99
Norfolk		0.93
Suffolk		0.95

SOUTH EAST REGION (EXCLUDING LONDON)

Bedfordshire	Includes Luton	1.04
Essex		1.05
Hertfordshire		1.09
Kent		1.07
Surrey		1.12
East Sussex		1.08
West Sussex		1.07
Berkshire		1.07
Buckinghamshire		1.05
Hampshire		1.03
Isle of Wight		1.04
Oxfordshire		1.01

GREATER LONDON

Barking & Dagenham		1.07
Barnet		1.12
Bexley		1.14
Brent		1.14
Bromley		1.11
Camden		1.26
City of London		1.20
City of Westminster		1.26
Croydon		1.15
Ealing		1.15
Enfield		1.09
Greenwich		1.15
Hackney		1.19
Hammersmith & Fulham		1.22
Haringey		1.20
Harrow		1.10
Havering		1.02
Hillingdon		1.10
Hounslow		1.09
Islington		1.20
Kensington & Chelsea		1.27
Kingston Upon Thames		1.17
Lambeth		1.20
Lewisham		1.11
Merton		1.16
Newham		1.08
Redbridge		1.07
Richmond Upon Thames		1.14
Southwark		1.20
Sutton		1.12
Tower Hamlets		1.18
Waltham Forest		1.10
Wandsworth		1.20

SOUTH WESTERN REGION

Avon	Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire.	1.03
Cornwall		1.01
Devon		1.00
Dorset		1.03
Gloucestershire		1.03
Somerset		1.00
Wiltshire		1.02

WEST MIDLANDS REGION

Hereford &Worcester		0.93
Shropshire		0.92
Staffordshire		0.90
Warwickshire		0.95
West Midlands		0.93

NORTH WEST REGION

Cheshire		0.90
Greater Manchester		0.91
Lancashire		0.90

Islington		1.20
Kensington & Chelsea		1.27
Kingston Upon Thames		1.17
Lambeth		1.20
Lewisham		1.11
Merton		1.16
Newham		1.08
Redbridge		1.07
Richmond Upon Thames		1.14
Southwark		1.20
Sutton		1.12
Tower Hamlets		1.18
Waltham Forest		1.10
Wandsworth		1.20

SOUTH WESTERN REGION

Avon	Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire.	1.03
Cornwall		1.01
Devon		1.00
Dorset		1.03
Gloucestershire		1.03
Somerset		1.00
Wiltshire		1.02

WEST MIDLANDS REGION

Hereford &Worcester		0.93
Shropshire		0.92
Staffordshire		0.90
Warwickshire		0.95
West Midlands		0.93

NORTH WEST REGION

Cheshire		0.90
Greater Manchester		0.91
Lancashire		0.90
Merseyside		0.91

WALES

Clywd		0.93
Dyfed		0.99
Gwent		0.97
Gwynedd		0.95
Mid Glamorgan		0.97
Powys		0.96
South Glamorgan		0.98
West Glamorgan		0.95

ISLANDS

Isle of Man, Isles of Scilly and Channel Islands

1.22

Practice note 2: 2010 - appendix 1 method of valuation flowchart to be considered for new primary care assessments

Click here to see the Method of Valuation Flowchart.

This property is valued using the non-bulk server. The manual can be accessed here.

Practice note 2: 2010 - appendix 2 primary care centres decapitalisation rate

This property is valued using the non-bulk server. The manual can be accessed here.

1. Practice for 2005 & later Rating Lists

It is considered that following the widening of the definition of primary care hereditament for 1995 Rating Lists it is not correct to consider any areas as “partial treatment” areas, as generally they are used overwhelmingly for the reception or treatment of “persons suffering from any illness, injury or infirmity”.

A revised and simplified scheme has thus been drawn up for the classification of primary care centre activities for use in cases where it appears that a significant amount of floor area within a primary care centre is used for activities not involving the “reception or treatment of persons suffering from any illness, injury or infirmity” (i.e. uses not listed below as being Category A uses).

2. Classification of Primary Care Centre activities

Activities within a primary care centre can be divided into three categories (as defined below);

a. Those that are overwhelmingly used for reception or treatment of persons suffering from any illness, injury or infirmity; b. Those which are not so used and; c. Ancillary uses shared between categories.

Where the floor area used for category (a) exceeds the floor area used for category (b) the primary care centre should be treated as a “primary care hereditament” and the lower decapitalisation rate used.

Below are listed the types of accommodation which are considered to fall into these categories A, B and C:

Category A

Areas that are overwhelmingly used for reception or treatment of persons suffering from any illness, injury or infirmity;

This category will include:

General Practitioner (GP) or Health Authority (HA) consulting and examination rooms;
GP patient records/computer rooms;
Practice Managers Offices;
Common rooms for use of Doctor’s surgery only;
HA Therapy rooms;
GP Treatment and/or minor operations rooms;
Dental Surgeries;
Dental Lab;
Chiropody/Podiatry rooms;
Reception/waiting areas that only serve full treatment use areas;
Other rooms wholly used for, reception/treatment, or therapy;
Areas wholly ancillary to areas falling within this classification.

For the avoidance of doubt, main reception/waiting areas would not fall within this category, but would come within the ancillary group.

Category B

Those areas that are not used for reception or treatment of persons suffering from any illness, injury or infirmity.

This category will include;

HA Offices;
HA Health Education Rooms;
District/School Nurse, Midwives and Health visitor’s Office*;
Speech Therapist’s Office*;
Family Planning Clinic;
Well Baby and Woman Clinic;
Reception/waiting areas that only serve category B areas.

*Where these offices are used as a base for external work rather than work within the primary care centre or for “Reception or Treatment” within the relevant definition.

Category C

Ancillary uses shared between categories.

This category will include;

Reception and waiting areas common to a number of occupiers and which do not fall under category A;
Corridors;
Toilets;
Common rooms for use of whole centre;
Stores;
Boiler rooms;
Caretaker’s office/store.

NB It is of course accepted that the above lists are by no means exhaustive.

3. Shared ancillary areas in multi building hereditaments

Where a category C shared ancillary use (such as reception area) only serves some of the buildings in this type of hereditament, its floor area should be apportioned pro rata between the category A and B uses within the buildings served.

Where a category C use serves all buildings within a multi building hereditament, its floor area can be treated similarly to a single building hereditament.

4. Areas with a known pattern of uses

Some areas may be earmarked to be used on specific days for a use falling within one category, and for the remainder of the time for a use falling within another category. For example a room might be used on half a day per week for treatment of ulcers (category A use), and for the rest of the time as a well woman clinic (category B use). In these instances the floor space should be apportioned between the two categories of use according to the proportion of usage time allocated to each of them (in the above example, and on the basis of a 5 day working week for the primary care centre, 1/10th to category A and the remaining 9/10ths to category B).

5. Important Note

Having decided on the appropriate Decap rate it is important if using the Generic Contractors Spreadsheet, to ensure the correct Decap rate is actually applied. The spreadsheet defaults to the lower rate, but this can be over-written to the higher rate where appropriate

Practice note 4: 2010 - the valuation for rating of NHS hospitals

Introduction

This practice note has been revised following Counsel’s advice that “treatment” as described below should be regarded as a non-domestic use of property: “‘Treatment’” means treatment in its normal sense and therefore includes, but is not limited to, any medical intervention, diagnostic care or observation undertaken by professional staff in hospitals, including doctors, nurses, midwives, therapists and psychologists, designed to improve or modify patients’ physical and/or mental abilities and social functions. This includes, but is not limited to nursing (which includes aiding convalescence), psychological interventions, physiotherapy and other sorts of therapy including habilitation and rehabilitation”

A period of 60 days remains a fair determinant of short-stay accommodation. Therefore for hospital ward space to qualify as domestic property within s66 of the Local Government Finance Act 1988 it will be necessary to establish that patient stays are in excess of 60 days while not receiving “treatment”. This is thought to be extremely unlikely.

Consequently it is likely that ward space and ancillary accommodation which was previously apportioned between domestic and non-domestic use should now be treated as solely non- domestic use and assessed accordingly. Further detail is provided in the Rating Manual (RM) Section 840 to which reference should be made.

This policy recognises the significant changes that have taken place in healthcare provision since the policy was first formulated some 25 years ago. The incidence of hospitals providing “care” as opposed to “treatment”, for example the old style geriatric wards, is now thought to be very much a feature of the past.

Permanent staff accommodation (but not temporary accommodation provided for “on-call” staff or patients’ relatives) should continue to be treated as domestic accommodation and where this is present the hereditament is to be regarded as a composite property.

The interpretation and application of exemption under paragraph 16 of Schedule 5 of LGFA remains unaltered and should continue to be applied in appropriate circumstances (see Rating Manual Section 840)

It remains the case that there may well be some NHS hospitals which will remain as composite hereditaments. The approach to valuation in circumstances where a domestic element is present is now contained in Appendix 1 to the main section of the rating manual and no longer features in this practice note.

The remaining elements of this practice note which had for the most part, been agreed with a consortium of agents acting on behalf of the occupiers of the majority of NHS Hospitals throughout England and Wales remains unaltered. However two issues remain unresolved, one relating to the treatment of age and obsolescence in regard to “systems buildings” and the other to land values in Hampshire and parts of Dorset. Both are referred to in the appropriate section of this practice note

This property is valued using the non-bulk server. The manual can be accessed here.

1. Co-ordination Arrangements

NHS Hospitals are a specialist class and are the responsibility of specialist teams within the business units. Co-ordination and the preparation of practice notes are the responsibility of the Class Co-ordination Team(CCT)(Hospitals). Guidance on the practical implementation and interpretation of the practice note should be sought from the appropriate technical specialist within NVU. The R2010 Special Category Code 134 should be used. The appropriate suffix letter is S.

2. Exemption under LGFA 1988 Sch 5

Areas treated as exempt will be omitted from the GIA. See paragraph B1 below.

3. Composite Hospitals

A hospital will constitute a composite hereditament if it contains

a. Permanent living accommodation for staff, and/or

b. Accommodation generally used as bed spaces for patients staying more than 60 days.

Where a hospital is composite, value will be attributed only to the non-domestic use of property in the manner indicated in section B.

Temporary accommodation provided for “on-call” staff or patients’ relatives is to be treated as non-domestic.

4. Application of the Contractor’s Basis

The contractor’s basis is to be applied in the manner indicated in section C.

5. The Boundary between Domestic and Non-Domestic use of Property in NHS Hospitals

1) Although the cost of all areas within the hereditament must be taken into account for the calculation of contract size allowance, the valuation must then attribute value only to the non-domestic use of property, which is not exempt. This may effectively be done by eliminating from GIA the areas, which are exempt under LGFA 1988 Sch 5 paras 11 and 16, and by excluding certain areas from GIA as follows:

a. All wards and patient bedrooms normally used at 1 April 2008

i) by patients who have no residence elsewhere, or

ii) for periods exceeding 60 days by patients with homes elsewhere,

iii) the number of days to be calculated for the purposes of this paragraph should be the sum of the days stay in any wards in the hereditament. Where it appears that long stay figures provided by a Trust do not fully reflect the above, an appropriate adjustment should be made to these figures, having regard to the best opinion of the trust

b. Ward sisters’ stations associated with wards falling within (a) above.

c. Toilets, showers, washrooms, lobbies, entrance ways and corridors solely used for access to long stay wards together with stores whether for drugs, dressings or cleaning materials which are ancillary to a ward or wards falling within (a) above, but not central stores, unless the hospital falls within (d) below.

d. Where all patients treated in the hospital fall within category (a) above, all stores and all ancillary offices, except those offices used exclusively for or in connection with treatment of patients, personnel administration, clinical research, or staff training.

e. Permanent living accommodation for staff, (but not “on-call” accommodation).

f. Day rooms, libraries, hobby rooms, wholly used by patients accommodated in wards/rooms falling within (a) (to the extent to which they are not exempt under Sch5 para 16).

g. Kitchens and canteens, boiler houses, on-site laundries wholly serving patients accommodated in wards/rooms falling within (a) above and/or staff housed in accommodation within (e) above.

2) Wards used partly for domestic purposes should be partly excluded from GIA. The wards falling within this category will be those normally used at AVD by certain patients who have no residence elsewhere, or for periods exceeding 60 days by patients with homes elsewhere. The remainder of such wards will normally accommodate patients staying for periods of 60 days or less and will constitute non-domestic property. The area to be excluded from GIA will be found by applying to the total floor area of the ward the following fraction:

1) Accommodation described in (b), (c) (f) or (g) above, but serving a ward or wards falling within para 2 rather than 1(a), shall be excluded from GIA to the extent of the floor area of the accommodation multiplied by the fraction in para 2 above, having regard to all wards served.

2) Accommodation described in (d), (f) and/or (g) above but used by, or for, both long and short stay patients shall be excluded from GIA to the extent of the total area of the accommodation multiplied by the following fraction:

1) Where all EFA within a block is to be excluded from GIA in accordance with 1(a)-(g) above, the whole block is to be excluded from valuation. Where only part of the EFA within the block is to be excluded in accordance with 1 to 4 above, the area excluded within the block should be the GIA of the block multiplied by the following fraction:

If it is impractical to calculate the total EFA of the block or floor, the area excluded should be increased by 20% to give a notional GIA reflecting shared access. Where it is more convenient to ascertain the non-domestic area within a “composite” building directly rather than by deducting the domestic area, the appropriate GIA may be found by adding 20% to the non-domestic EFA.

For the purpose of these provisions, GIA will be as defined in the RICS Code of Measuring Practice, and EFA will equate to NIA as defined in that code but including all bathrooms, sluices and WCs situated within wards, or used exclusively for the purposes of particular wards, and excluding all corridors providing access to any areas defined in paras 1 - 4 above, or to other parts of the hospital.

6. Application Of The Contractor’s Basis

Stage 1

6.1 Building Costs

The following overall costs psm shall be taken to represent the ERC of individual blocks of permanent construction

Cost £psm overall GIA – before external works, contract size allowance and fees
		Non Acute Hospitals E.g. Maternity, Geriatric, Mental Health, Community
Year of building Completion	Acute Hospitals	Excl Operating theatres **But see note Below	Operating theatre	Education and Nurse Training Buildings NOT Post Grad Medical centres	Medium/high secure mental health units **But see note Below
Pre 1945	1108	901	1291	830	901
1945-1959	1293	1050	1503	970	1050
1960-1964	1066	870	1245	799	870
1965-1969	1000	812	1163	750	812
1970-1974	942	762	1090	706	762
1975-1980	1000	812	1163	750	812
1981-1994	1327	1088	1621	995	1088
1995-2002	1542	1198	1663	1156	1198
2003-2005	1601	1244	1715	1201	1244
2006 – 31.3.2010	1676	1350	1768	1238	To be individually considered
1.4.2010 onwards	To be individually considered	To be individually considered	To be individually considered	To be individually considered
For further guidance on post 1/4/2010 developments see Appendix 1. The contents of the appendix have not been agreed

The costs relating to acute hospitals in all age bands should be increased by up to £24 per sq m if a combined heat and power plant (CHP) is installed without the necessary certification granting partial exemption, and to a proportionately lower figure where the capacity of the plant does not serve the whole hospital. Where CHP plant is installed which is exempt the costs for all age bands should be reduced by £6.

The following overall costs psm shall be taken to represent the ERC of individual blocks of permanent construction:

*For Non-acute hospitals, minor operation rooms/suites, which do not vary significantly as regards quality/specification from the remainder of the hospital, should be costed 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 theatre (not to the remainder of the suite).

** Where the proportion of domestic long stay beds nights(i.e. relating to patients who have occupied bed nights for in excess of 60 days and during that period have received no treatment(as indicated above)) in non-acute hospitals is more than 30the above costs in terms of £psm should for all age bands be reduced by the following percentages –

If located in

Central London 13.7%

Rest of London 14.5%

M25 Belt 14.7%

Remainder of SE England 14.9 %

Remainder of England & Cardiff 15.3 %

Wales (excluding Cardiff) & Other low value areas 15.6 %

Definitions of the areas referred to above are included within this practice note under the section headed Developed Land Value to which reference should be made

This reduction shall only be applied to ward areas and associated ancillary accommodation as defined in section B of this practice note.

For further guidance on this topic see Appendix 1. The contents of the appendix have not been agreed

Following the revision in policy in respect of the interpretation of domestic accommodation within health care hereditaments this adjustment will now be rarely applied

*** Education and Nurse training buildings shall be valued at 75% of the cost of an acute building of the same age as is detailed in the table above.

6.1.2 Post 2005 Buildings

£1676 is a maximum and to be applied to all new whole acute hospitals (or such hospitals wholly built in phases from 2006 onwards) unless adjusted overall costs of new hospitals show that they should be at less in which case those lower adjusted costs will be adopted.

Extensions will be valued at £1676 unless they are of lower than Queen Elizabeth Romford specification, in which case they will be taken at pre 2006 cost. £1676 should be adopted only for buildings or extensions exhibiting a higher quality of construction than is average for pre 2006 hospitals.

6.1.3 Buildings designed many years before completion

Special treatment may be warranted where a hospital was designed many years before completion.

6.1.4 Minor Buildings

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

6.1.5 Older Community Hospitals of Cellular Layout

In the pre-1959 community etc bands, prices should be reduced by up to 20% for single storey and 25% for multi-storey where the hereditament is sub-divided internally by solid walls into relatively small rooms.

6.1.6 Low spec 1981-2008 buildings on acute sites

Permanent buildings which are 1981-2008 additions to existing acute buildings and of lower specification than normal for that period are to be costed within range between:

The Acute price and
The equivalent Community price (this could be the Community operating theatre price if new block is an operating theatre).

It is envisaged that only a minority of 1981- 2008buildings will qualify for such treatment.

6.1.7 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 to their Technical Advisers for further guidance.

6.1.8 Exceptions

Exceptions from the above costs are set out in paras 1.1.9 to 1.1.16 below.

6.1.9 System buildings

System or modular buildings should be valued at the appropriate rate for the hospital, see para 1.1, other than blocks which are constructed using the “Oxford” or “Best Buy” systems when reductions should be made from the above costs as follows:

Pre 1960	-16.5%
1960-1964	-16.5%
1965-1969	-16.5%
1970-1974	-16.5%
1975-1980	-10%
1981 onwards	-27.5%

Consideration may be given to extending this reduction to certain other “systems”, where appropriate. Flat roof allowance should not be given to system buildings.

6.1.10 Temporary Buildings (including timber buildings)

For all blocks of temporary, or timber, construction (even where those buildings have in fact been on site for many years) a cost of £553 per sm GIA (before external works, contract size allowance, fees and age and obsolescence) should be adopted for all buildings first occupied prior to 2008, and for newer buildings £650 per sq m. Where the temporary or timber building is unheated the cost of £500/£650/m2 should be reduced by 12.5%.

6.1.11 Stores and other inferior buildings

For all separate or distinct stores, plant rooms, workshops, offices of inferior construction and garages (but not other buildings) a cost of £480 psm GIA (before external works, contract size allowance, fees, and age and obsolescence) should be adopted regardless of age.

6.1.12 EMS (Second World War Emergency Medical Services) Buildings

EMS buildings will be valued at £400 psm to reflect age & obsolescence provided that those buildings are currently used as fully functional wards. An addition of up to 10% is appropriate where the building has been refurbished. Further allowances may be made where EMS buildings are not currently used as fully functioning wards. There should be no adjustments for flat roofs to EMS buildings.

6.1.13 Day Surgery and Minor Operations Units

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

6.1.14 Multi-storey, Basement and Roof-top Car Parks

For hospitals outside Greater London, no cost should be included for multi-storey, rooftop or basement car parks.

6.1.15 Link Blocks/Subways

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.

6.1.16 Flat Roofs

A reduction of £281 psm of roof ‘foot print’ should be made to the value of pre 1960 and post 1980 buildings with traditional flat, timber & truss decked, felt covered roofs (£140 psm foot print for flat roofs with other coverings).

No allowance should be made on roofs of post 2004 buildings unless constructed as above.

6.1.17 Plant Rooms

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.

6.2 Location adjustment

The following location factors should be applied to the above costs. Where a particular hospital falls on or close to the county or London borough boundary and the location factor given in the table below is higher or lower in the adjacent county or borough consideration should be given to adjusting the location factor upward or downward as appropriate.

SCOTLAND

Scotland

1.02

NORTHERN REGION

Cleveland	Including Hartlepool, Stockton on Tees, Middlesbrough, Redcar and Cleveland	0.99
Cumbria		1.02
Durham		0.98
Northumberland		1.02
Tyne & Wear		0.98

YORKSHIRE AND HUMBERSIDE REGION

Humberside	Including East Yorkshire, Holderness, Kingston on Hull, North Lincs, N E Lincs, Boothferry and Beverley	0.98
North Yorkshire		0.98
South Yorkshire		0.96
West Yorkshire		0.94

EAST MIDLANDS REGION

Derbyshire		0.93
Leicestershire	Includes Rutland	0.93
Lincolnshire		0.92
Northamptonshire		0.98
Nottinghamshire		0.92

EAST ANGLIA REGION

Cambridgeshire		0.99
Norfolk		0.93
Suffolk		0.95

SOUTH EAST REGION (EXCLUDING LONDON)

Bedfordshire	Includes Luton	1.04
Essex		1.05
Hertfordshire		1.09
Kent		1.07
Surrey		1.12
East Sussex		1.08
West Sussex		1.07
Berkshire		1.07
Buckinghamshire		1.05
Hampshire		1.03
Isle of Wight		1.04
Oxfordshire		1.01

GREATER LONDON

Barking & Dagenham		1.07
Barnet		1.12
Bexley		1.14
Brent		1.14
Bromley		1.11
Camden		1.26
City of London		1.20
City of Westminster		1.26
Croydon		1.15
Ealing		1.15
Enfield		1.09
Greenwich		1.15
Hackney		1.19
Hammersmith & Fulham		1.22
Haringey		1.20
Harrow		1.10
Havering		1.02
Hillingdon		1.10
Hounslow		1.09
Islington		1.20
Kensington & Chelsea		1.27
Kingston Upon Thames		1.17
Lambeth		1.20
Lewisham		1.11
Merton		1.16
Newham		1.08
Redbridge		1.07
Richmond Upon Thames		1.14
Southwark		1.20
Sutton		1.12
Tower Hamlets		1.18
Waltham Forest		1.10
Wandsworth		1.20

SOUTH WESTERN REGION

Avon	Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire.	1.03
Cornwall		1.01
Devon		1.00
Dorset		1.03
Gloucestershire		1.03
Somerset		1.00
Wiltshire		1.02

WEST MIDLANDS REGION

Hereford & Worcester		0.93
Shropshire		0.92
Staffordshire		0.90
Warwickshire		0.95
West Midlands		0.93

NORTH WEST REGION

Cheshire		0.90
Greater Manchester		0.91
Lancashire		0.90
Merseyside		0.91

WALES

Clywd		0.93
Dyfed		0.99
Gwent		0.97
Gwynedd		0.95
Mid Glamorgan		0.97
Powys		0.96
South Glamorgan		0.98
West Glamorgan		0.95

Islands

Isle of Man, Isles of Scilly and Channel Islands

1.22

6.3 External Works

6.3.1 The following additions should be made to the locationally adjusted ERC:-

2.5% to 1%	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.
7.5%-5%	Site with 50%/75% building ratio, typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and limited general parking within the hereditament.
5% to 2.5%	As above, but with 80% to 90% building ratio, typically with limited staff parking and landscaping, and with some boundary fencing.
10%-7.5%	As above, but with less than 50% building ratio typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which in some cases may fall short of full requirements. At the top end of the range, landscaping around buildings will be extensive and car parking within the site will be adequate for staff and all other users.

6.3.2

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.

6.3.3

Where car-parking provision is inferior to the standard mentioned above as typical for the building plot ratio band the above percentages may be abated to no less than the minimum in the next lowest band. Where parking provision is improved, without altering the building plot ratio band, the percentages may be increased to no more than the maximum in the next highest band.

6.4 Contract Size Adjustment

The aggregate of locationally adjusted building costs and external costs should be subject to contract size adjustment as set out below. The VO Cost Guide for the 2010 Revaluation provides a detailed explanation for this adjustment. The allowance will be determined by the cost of the whole hereditament including that of domestic and exempt areas.

Contract Size Adjustment Table

ERC £	% Adjustment
Up to 0.5 million	+ 10% max
0.75 million	+ 7.5%
1.0 million	+6%
1.5 million	+4%
2.0 million	+2%
3.0 million	ZERO
4.0 million	-1%
5.0 million	-2%
6.0 million	- 3%
8.0 million	-5%
11.0 million	-7%
14.0 million	-8%
17.0 million	-9%
Over 20.0 million	- 10.0% MAX
NB. Intermediate figures may be interpolated.

6.5 Professional Fees and Charges

An addition of 9.5% shall be made to the total cost of permanent buildings in Acute & Maternity Hospitals.

An addition of 10% shall be made to the total cost of all other permanent buildings in Geriatric, Psychiatric, Community & Cottage Hospitals & free standing Day Surgery units.

An addition of 5% shall be made to the total cost of temporary buildings assembled on site.

An addition of 2.5% shall be made to the total cost of temporary buildings that are brought onto the site complete rather than for assembly in modular form.

In each case the percentage addition will be made after locational adjustment, the addition of the cost of associated external works, and contract size adjustment.

Stage 2

7. Obsolescence Allowances

7.1 (a) Permanent Buildings

Obsolescence allowances shall be made for individual blocks of permanent buildings within a hospital, after additions for external works and fees, in accordance with the following age-related scale: For the purposes of Age and Obsolescence only, the age of the building should be taken as one year before opening, for buildings constructed before 2010

Year of building completion	% Allowance	Year of building completion	% Allowance
2010	0	1984	21
2009	0.5	1983	22
2008	1	1982	23
2007	1.5	1981	24
2006	2	1980	25
2005	2.5	1979	26
2004	3	1978	27
2003	3.5	1977	28
2002	4	1976	29
2001	4.5	1975	30
2000	5	1974	31
1999	6	1973	32
1998	7	1972	33
1997	8	1971	34
1996	9	1970	35
1995	10	1969	36
1994	11	1968	37
1993	12	1967	38
1992	13	1966	39
1991	14	1965	40
1990	15	1964	41
1989	16	1963	42
1988	17	1962	43
1987	18	1961	44
1986	19	1960	45
1985	20	Pre 1960	45-50

7.1.2

There may be exceptional cases e.g. substantially unmodernised pre-1960 buildings, or buildings pending redevelopment, where an allowance in excess of 50% would be justified.

When considering if a building falls into the category of “substantially un-modernised” regard should be had to the following-

The hypothetical tenant is deemed to have maintained the hereditament in good order not only to command the original rent but to enable it to provide modern healthcare; to do this pre-1960 buildings will be expected to have had an upgraded electrical supply, replaced floor coverings and sanitary fittings during their life. As these are the minimum expectations, the presence of any of these works carried out more than 15/20 years earlier will not offend substantial un-modernisation; nor will compliance with all Fire and Health & Safety regulations.

To qualify for an age/obsolescence allowance in excess of 50% it is expected that the building will predominantly have the following:

original roof covering
original windows
original internal layout
original ceiling height, with no suspended ceilings
no air conditioning

7.1.3

Where a block dating from before 1981 has been the subject of above average modernisation or refurbishment after 1 April 1995, the ARC may be increased. A more significant addition may be warranted where a very major scheme has been undertaken such as the external recladding of a 1960s building.

7.1.4

Special treatment may be warranted where a hospital was designed during an age range prior to that in which it is completed.

7.1.5

Care should be taken to avoid double counting between this Stage and Stages 1 and 5, particularly in respect of fragmentation/dispersal/poor layout. Where these problems are found within blocks, and are caused by bad internal design, they should normally be regarded as reflected in the age-related costs set out in para 1.1.1 although particular problems evidenced by difficult communications between departments within the block may justify an increase in the percentage allowance of up to 5%. The internal communication problems of tall buildings are however dealt with at para 2.2 below. Where problems arise from bad external arrangement between blocks, the additional allowance falls to be considered at Stage 5 (see para 5 below).

7.1.6

(a) For buildings where there is specific evidence of functional redundancy and/or physical disrepair beyond the range of problems typically encountered in buildings of that era, it may be appropriate to make a further allowance of up to 10% in addition to the appropriate age based allowance. Such an allowance may be appropriate where, for example, modern health and safety, fire or building regulations preclude or limit the original purpose of the building.

7.1.7

For “Oxford” or “Best Buy” system-built structures and other accepted systems, the allowances given above may be increased; by a further 10% where the block was built before 1985, and by up to a further 7.5% where the block was built 1985-1995. (VO caseworkers are instructed to refer to NSU before any allowance under this heading is conceded)

For further guidance on this topic see Appendix 1. The contents of the appendix have not been agreed.

7.1.7(b) Temporary Buildings

Obsolescence allowances shall be made for individual blocks of temporary buildings within a hospital, (including those of inferior construction which were erected for temporary purposes and have outlasted their intended lives) after additions for external works and fees, in accordance with the following age-related scale:

2009	1.5%	1994	24.0%	1979
2008	3.0%	1993	25.5%	1978
2007	4.5%	1992	27.0%	1977
2006	6.0%	1991	28.5%	1976
2005	7.5%	1990	30.0%	1979	46.5%
2004	9.0%	1989	31.5%	1978	48.0%
2003	10.5%	1988	33.0%	1977	49.5%
2002	12.0%	1987	34.5%	1976	51.0%
2001	13.5%	1986	36.0%	1975	52.5%
2000	15.0%	1985	37.5%	1974	54.0%
1999	16.5%	1984	39.0%	1973	55.5%
1998	18.0%	1983	40.5%	1972	57.0%
1997	19.5%	1982	42.0%	1971	58.5%
1996	21.0%	1981	43.5%	Pre 1971	60.0%
1995	22.5%	1980	45.0%

7.1.8

The deduction of the appropriate allowance from aggregate costs will give the ARC of each block.

8. Multi-floor allowances

8.1.1

The following deductions should be made from the ARCs of individual blocks on the assumption that lift provision is adequate. These deductions should be made after the age-based allowance has been made; the percentage deductions are not cumulative.

Buildings with two main floors or less	0%
Buildings with three main floors or more	10% overall*

For further guidance on this topic see Appendix 1. The contents of the appendix have not been agreed

8.1.2

These deductions are intended to reflect the operational difficulties of running a hospital in a multi-storey building. In particular, they reflect the problems of patients, staff and visitors moving between different storeys. The deductions should only apply therefore to floors which are directly devoted to patient care and will not become applicable if the floors above 2 stories are used for ancillary purposes such as administrative offices, stores, changing rooms or plant areas.

Where the lower floors of a building are larger than the upper floors, the caseworker will need to make a judgement as to the extent to which the extended parts of the lower floors should also benefit from the multi-storey allowance. This will depend on the use of the extension in the context of the use of the building. If the uses are distinct such as a tower block above a two storey podium where the podium houses outpatient and clinical departments and the tower block contains the in-patient areas it is expected that the multi floor allowance will not apply to the podium; whereas if the use in the extension is directly related to the use in the building then it will be appropriate to apply the allowance to the whole. The test to be applied before a decision is taken to apply the allowance to any floor space within a building is as follows: “Is the use of the space hampered by the number of stories in the building?” If the answer is in the negative, no allowance should be made.

8.1.3

Where, exceptionally, lifts are inadequate to serve the actual use that is being made, further allowance may be warranted. This must be justified on the facts of particular cases, and is recognised as not normally necessary.

Stage 3

9. Developed Land Value

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

For further definition of areas, *see below	Acute Hospitals	Non-acute Hospitals & mental Health Units
*Central London	12.5%	17.0%
*Rest of London	9%	11.25%
*M25 belt	7.5%	9.375%
**Remainder of South East England	6%	7.5%
Wales (excluding Cardiff), Merseyside and North East England***, Cornwall, Devon, Somerset including North Somerset but not Bath and North East Somerset, , Lincolnshire, Copeland, Allerdale, Barrow In Furness	2%	2.5%
Remainder of England (excluding areas indicated below) + Cardiff	4%	5%

Central London is W1, W2, W8, W11, SW1, SW3, SW5, SW7, SW10, WC1, WC2, EC1, EC2, EC3, EC4

Rest of London - West is the London boroughs of Enfield, Barnet, Harrow, Brent, Hillingdon, Ealing, Hounslow, Richmond, Kingston, Wandsworth, Merton, Bromley, and those parts of Camden, Westminster, Kensington & Chelsea, and Hammersmith & Fulham outside the defined postal districts for the London Central zones.

Rest of London - East is the remainder of London falling outside the Central and Rest of London West zones

The “M 25 Belt” is for this purpose defined as the following Billing Authority areas:

Hertfordshire	Hertsmere, St Albans, Three Rivers, Watford, Dacorum, Broxbourne, St Alban’s, Welwyn/Hatfield
Buckinghamshire	Chiltern, South Bucks, Wycombe
"Berkshire"	Slough, Windsor and Maidenhead, Bracknell, Wokingham, Reading
Surrey (the whole county)	Surrey Heath, Runnymede, Spelthorne, Elmbridge, Woking, Guildford, Waverley, Tandridge, Reigate & Banstead, Mole Valley, Epsom & Ewell
Essex	Epping Forest, Thurrock, Brentwood, Basildon
Kent	Sevenoaks, Dartford
West Sussex	Crawley

The remainder of South East England is defined as the following counties excluding the Billing Authority areas forming part of the “M 25 Belt” as defined above:

Bedfordshire, Buckinghamshire, Berkshire, Oxfordshire, Hertfordshire, Essex, Kent, East and West Sussex, for the avoidance of doubt the Isle of Wight should be treated as outside “South East England” for the purpose of this Practice Note.

The treatment of land value at Stage 3 for hospitals in Hampshire, Poole, Bournemouth and Christchurch has not been agreed.

For further guidance on this topic see Appendix 1. The contents of the appendix have not been agreed.

North East England is defined as including Northumberland, Tyne & Wear, County Durham, and Cleveland (Hartlepool, Stockton on Tees, Middlesbrough, Redcar and Cleveland).

Where a particular hospital falls on or close to a boundary and the developed land value percentage is higher or in the adjacent area consideration should be given to adjusting the percentage upward or downward as appropriate.

Stage 4

10. Decapitalisation Rate

The ARC of the hereditament shall be decapitalised to an annual equivalent by taking

3.33% (2.97% in Wales).

Stage 5

11. End Adjustments

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 Valuers 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, Valuers 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.
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 eg. 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 eg. 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.
Shared sites with substantial trust and university presence.
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 eg. paediatric wards with operating theatres.
presence of a number of dispersed small, low value ancillary buildings (eg. nissen huts) should have little impact on the overall percentage end allowance.

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.

Practice note 4: 2010 - appendix 1 guidance note NHS hospitals

This guidance note is to be read in conjunction with the revised 2010 practice note relating to NHS Hospitals. It gives guidance on those aspects of the practice note which were not agreed with the syndicate of agents acting on behalf of a number of Primary Care Trusts or where reference to further guidance is made within the practice note.

The subject matters covered relate to

Building Costs to be applied at stage 1 of the contractors basis of valuation where the date of completion occurs after 1/4/2010
The application of a reduction in building costs to non –acute hospitals where long stay bed nights exceed 30% of total bed nights.
The treatment of age and obsolescence relating to “Oxford” or “Best Buy” Systems built structures
Multi-floor allowances
Land values in Hampshire and parts of Dorset

1. Building Costs post 1/4/2010(PN reference 1.1.)

The revised 2010 practice note advises VO’s that the cost applicable to buildings erected post 1/4/2010 in respect of all hospitals should have regard to actual cost.(In respect of medium and high secure mental health units this applies to buildings completed after 31st December 2006) “Have regard to” should not be taken to mean “adopt” . The first step in the consideration of known building costs is the analysis and adjustment of the costs such that they are compatible with both the level of building costs at the AVD and with the principles of the contractors basis of valuation. The exercise should preferably be undertaken by a building cost expert in NABS. Only in circumstances where full analysed and adjusted costs are available and the costs of all non –rateable elements have been allowed for should the actual adjusted cost be adopted .

In other circumstances the following practice should be followed

a. Where only headline costs are known or cost information is incomplete, so as not to permit identification of non-rateable and/or abnormal costs, a 30% deduction should be made from the cost after adjustment for date, location and contract size (subject to an underpinning minimum of £1676 in respect of acute hospitals and £1350 in respect of non-acute hospitals)

b. Where no cost information is available the cost to be applied may be up to a maximum of 30% above the 2010 costs dependant upon the perceived quality of the buildings under consideration.

Vo’s should be aware that the increased costs are largely attributable to enhanced specification partly attributable to the “green agenda” and partly due to the availability of funds prior to the current period of austerity. Although the former will continue to be a feature in building works completed post 2012, the latter will not.

In the event of an appeal leading to litigation it may be necessary to reconsider the costs adopted which in respect of submissions to the Tribunals would be expected to align with the actual adjusted costs.

The above is subject to the general proviso relating to extensions of existing hereditaments contained with paragraph 1.1.2 of the practice note

2. Reduction in Building Costs were long stay bed nights exceed 30% of total bed nights (PN reference 1.1.)

This provision is concerned with the entire hospital and should not be applied on a ward by ward basis i.e. Only where long stay bed nights exceed 30% of total bed nights across all wards should the lower costs be adopted and then only applied to ward areas and associated ancillary accommodation. A new code MW is available for use within the revised valuation spreadsheet and should be applied to the those line entries to which the lower cost is to apply.

3. The treatment of age and obsolescence relating to “Oxford” or “Best Buy” Systems built structures (PN reference 2.1.6)

In general buildings as referred to above or other accepted systems should only be given the additional allowances where it can be established that due to their method of construction the buildings performance has deteriorated at a faster rate than that normally associated with traditional buildings. This may manifest itself in higher than normal maintenance, repair and running costs. In respect of buildings constructed in the period 1985-1995 caseworkers should refer to NSU before any allowance is conceded. It is expected that clear evidence of accelerated depreciation will be advanced to justify an allowance.

4. Multi-floor allowances (MFA) (PN reference 2.1.6)

MFAs are intended to reflect the operational difficulties of running a hospital in a multi-storey building. In particular, they reflect the problems of patients, staff and visitors moving between different storeys. The deductions should only apply, therefore, to floors which are directly devoted to patient care and will not become applicable if the floors above 2 stories are used for ancillary purposes such as administrative offices, stores (other than for medical supplies), changing rooms or plant areas.

Where the lower floors of a building are larger than the upper floors, the VO’will need to make a judgement as to the extent to which the extended parts of the lower floors should also benefit from the multi-storey allowance. This will depend on the use of the extension in the context of the use of the building. If the uses are distinct such as a tower block above a two storey podium where the podium houses outpatient and clinical departments and the tower block contains the in-patient areas it is expected that the multi floor allowance will not apply to the podium; whereas if the use in the extension is directly related to the use in the building then it will be appropriate to apply the allowance to the whole.

5. Land values in Hampshire and parts of Dorset (PN reference 3.1)

Land values in Hampshire, Poole, Bournemouth and Christchurch have not been agreed. VO’s should continue to apply the land value addition appropriate to defined areas of SE England (6% and 7.5%) to hospitals situated in these locations. Appellants will be expected to justify the application of lower values by reference to actual land sales in those areas.

It is possible that this issue may require resolution via litigation in which case actual land values rather than a % of ARC will be required at stage 3 of the valuation. In preparation of this possibility referencers and caseworkers should record the actual developed land area within the survey record/ valuation sheet.

Queries relating to this guidance note should be directed to NSU(Civics)

Practice note 5: 2010 - the valuation for rating of private sector hospitals

This practice note has been revised following Counsel’s advice that “treatment” as described below should be regarded as a non-domestic use of property: “‘Treatment’” means treatment in its normal sense and therefore includes, but is not limited to, any medical intervention, diagnostic care or observation undertaken by professional staff in hospitals, including doctors, nurses, midwives, therapists and psychologists, designed to improve or modify patients’ physical and/or mental abilities and social functions. This includes, but is not limited to nursing (which includes aiding convalescence), psychological interventions, physiotherapy and other sorts of therapy including habilitation and rehabilitation”

A period of 60 days remains a fair determinant of short-stay accommodation. Therefore for hospital ward space to qualify as domestic property within s66 of the Local Government Finance Act 1988 it will be necessary to establish that patient stays are in excess of 60 days while not receiving “treatment”. This is thought to be extremely unlikely.

Consequently it is likely that ward space and ancillary accommodation which was previously apportioned between domestic and non-domestic use should now be treated as solely non- domestic use and assessed accordingly. Further detail is provided in the Rating Manual (RM) Section 840 to which reference should be made.

This policy recognises the significant changes that have taken place in healthcare provision since the policy was first formulated some 25 years ago. The incidence of hospitals providing “care” as opposed to “treatment”, for example the old style geriatric wards, is now thought to be very much a feature of the past.

Permanent staff accommodation (but not temporary accommodation provided for “on-call” staff or patients’ relatives) should continue to be treated as domestic accommodation and where this is present the hereditament is to be regarded as a composite property.

The interpretation and application of exemption under paragraph 16 of Schedule 5 of LGFA remains unaltered and should continue to be applied in appropriate circumstances (see Rating Manual Section 840)

It remains the case that there may well be some private hospitals which will remain as composite hereditaments. The approach to valuation in circumstances where a domestic element is present is now contained in Appendix 1 to the main section of the rating manual dealing with NHS hospitals and does not features in this practice note.

1. Co-ordination arrangements

Private Hospitals are a specialist class, responsibility for ensuring effective co-ordination lies with the appropriate CCT. Guidance on interpretation of the practice note and difficulties of implementation should be referred to the NSU specialist advisor For more information see Rating Manual – Section: Practice Note 1: 2010

The Special Category Code 135 should be used. As a specialist class the appropriate suffix letter is S.

2. Valuation Basis

The contractor’s basis provides the principal method of valuation, without prejudice to the application of a rental basis where evidence is available; such evidence is likely to be found in Central London and it is anticipated that valuation on this basis will be confined to this location.

This property is valued using the non-bulk server.

3. Basis of measurement and referencing

All referencing should be on the basis of Gross Internal Area (GIA) as defined in the RICS/ISVA Code of Measuring Practice (4th edition). One overall GIA should be found for the hospital with separate areas to GIA identified for:

Outbuildings, including temporary Portakabin offices
Separate stores, workshops and garages situated outside of the principal hospital accommodation

4. Exemption issues; composite hospitals

Exemptions under the provisions of LGFA 1988 Sch 5, issues of composite hereditaments and of the boundary between domestic and non-domestic use arise in the NHS Estate. The principles to be adopted, should the need arise, are set out in the companion practice note concerning NHS Hospitals and the associated Rating Manual section and are not reproduced here in the interests of brevity.

5. Application of the Contractors Basis

5.1 Building Costs

The following overall costs /m2 shall be taken to represent the ERC of individual blocks of permanent construction: these are costs per square metre GIA before external works, contract size allowance and fees.

	Up to1994	1995 to 2002	2003- 2005	2006 to 1/4/2010	Post 2010
Acute Care Hospitals	1362	1474	1555	1600	To be individually considered
For psychiatric care hospitals and those lacking operating theatres, HDU and X-Ray suites	1225	1325	1400	1440	To be individually considered

System and modular buildings should be cost on their own merits, this may be at the same level as the main hospital , higher or lower depending on specification. Where available regard should be had to actual costs.

For all blocks of temporary construction a cost of £500 per m2 GIA for buildings pre 2003, age and obsolesce £650/m2 for buildings built 2003 onwards (before external works, contract size allowance and fees) should be adopted regardless of age.

For all separate stores, workshops, plant rooms and garages (but not other buildings) a cost of £480 per m2 GIA (before external works, contract size allowance age, obsolesce and fees) should be adopted regardless of age.

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.

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.

5.2 Location Adjustment

The following location factors should be applied to the costs referred to at paragraph 5.1. Where a particular hospital falls on or close to the county or London borough boundary and the location factor given in the table below is higher or lower in the adjacent county or borough consideration should be given to adjusting the location factor upward or downward as appropriate.

NORTHERN REGION

Cleveland	Including Hartlepool, Stockton on Tees, Middlesbrough, Redcar and Cleveland	0.99
Cumbria		1.02
Durham		0.98
Northumberland		1.02
Tyne & Wear		0.98

YORKSHIRE AND HUMBERSIDE REGION

Humberside	Including East Yorkshire, Holderness, Kingston on Hull, North Lincs, N E Lincs, Boothferry and Beverley	0.94
North Yorkshire		0.98
South Yorkshire		0.96
West Yorkshire		0.94

EAST MIDLANDS REGION

Derbyshire		0.93
Leicestershire	Includes Rutland	0.93
Lincolnshire		0.92
Northamptonshire		0.98
Nottinghamshire		0.92

EAST ANGLIA REGION

Cambridgeshire		0.99
Norfolk		0.93
Suffolk		0.95

SOUTH EAST REGION (EXCLUDING LONDON)

Bedfordshire	Includes Luton	1.04
Essex		1.05
Hertfordshire		1.09
Kent		1.07
Surrey		1.12
East Sussex		1.08
West Sussex		1.07
Berkshire		1.07
Buckinghamshire		1.05
Hampshire		1.03
Isle of Wight		1.04
Oxfordshire		1.01

GREATER LONDON

Barking & Dagenham		1.07
Barnet		1.12
Bexley		1.14
Brent		1.14
Bromley		1.11
Camden		1.26
City of London		1.20
City of Westminster		1.26
Croydon		1.15
Ealing		1.15
Enfield		1.09
Greenwich		1.15
Hackney		1.19
Hammersmith & Fulham		1.22
Haringey		1.20
Harrow		1.10
Havering		1.02
Hillingdon		1.10
Hounslow		1.09
Islington		1.20
Kensington & Chelsea		1.27
Kingston Upon Thames		1.17
Lambeth		1.20
Lewisham		1.11
Merton		1.16
Newham		1.08
Redbridge		1.07
Richmond Upon Thames		1.14
Southwark		1.20
Sutton		1.12
Tower Hamlets		1.18
Waltham Forest		1.10
Wandsworth		1.20

SOUTH WESTERN REGION

Avon	Including North Somerset, Bristol, Bath and Northeast Somerset, South Gloucestershire.	1.03
Cornwall		1.01
Devon		1.00
Dorset		1.03
Gloucestershire		1.03
Somerset		1.00
Wiltshire		1.02

WEST MIDLANDS REGION

Hereford & Worcester		0.93
Shropshire		0.92
Staffordshire		0.90
Warwickshire		0.95
West Midlands		0.93

NORTH WEST REGION

Cheshire		0.90
Greater Manchester		0.91
Lancashire		0.90
Merseyside		0.91

WALES

Clywd		0.93
Dyfed		0.99
Gwent		0.97
Gwynedd		0.95
Mid Glamorgan		0.97
Powys		0.96
South Glamorgan		0.98
West Glamorgan		0.95

Islands

Isle of Man, Isles of Scilly and Channel Islands

1.22

5.3 External Works

The following additions should be made:

2.5% to 1%	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.
5% to 2.5%	As above, but with 80% to 90% building ratio, typically with limited staff parking and landscaping, and with some boundary fencing.
7.5%-5%	Site with 50%/75% building ratio, typically with some landscaping around buildings, secure boundary fencing, adequate staff parking, and limited general parking within the hereditament.
10%-7.5%	As above, but with less than 50% building ratio typically with landscaping around buildings, secure boundary fencing, adequate staff parking and general parking within the hereditament which in some cases may fall short of full requirements. At the top end of the range, landscaping around buildings will be extensive and car parking within the site will be adequate for staff and all other users. It is expected that most Private Hospitals will not reach the upper end of the range

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).

The above does not include multi storey or basement car parking for which a separate addition should be made.

5.4(a) Contract Size Adjustment

The aggregate of building costs (adjusted for location) and external costs should be subject to contract size adjustment as set out below.

ERC £	% Adjustment
Up to 0.5 million	+ 10% max
0.75 million	+ 7.5%
1.0 million	+6%
1.5 million	+4%
2.0 million	+2%
3.0 million	ZERO
4.0 million	-1%
5.0 million	-2%
6.0 million	-3%
8.0 million	-5%
11.0 million	-7%
14.0 million	-8%
17.0 million	-9%
Over 20.0 million	- 10.0% MAX
NB. Intermediate figures may be interpolated.

5.5 Professional Fees and Charges

An addition of 9.5% shall be made to the building costs and external costs for all acute buildings including maternity buildings, adjusted for location and contract size.

An addition of 10% shall be made for Psychiatric buildings and outbuildings

Where Temporary Buildings form a significant part of the valuation:

Professional Fees of 5% shall be added to the total cost of temporary buildings assembled on site.
Professional Fees of 2.5% shall be added to the total cost of temporary buildings which are brought onto the site complete rather than for assembly in modular form.

5.6 Obsolescence Allowances

The age related allowances as shown below should be applied. For the purposes of Age and Obsolescence only, the age of the building should be taken as one year before opening.

Year of building completion	% Allowance	Year of building completion	% Allowance
2010	0	1984	21
2009	0.5	1983	22
2008	1	1982	23
2007	1.5	1981	24
2006	2	1980	25
2005	2.5	1979	26
2004	3	1978	27
2003	3.5	1977	28
2002	4	1976	29
2001	4.5	1975	30
2000	5	1974	31
1999	6	1973	32
1998	7	1972	33
1997	8	1971	34
1996	9	1970	35
1995	10	1969	36
1994	11	1968	37
1993	12	1967	38
1992	13	1966	39
1991	14	1965	40
1990	15	1964	41
1989	16	1963	42
1988	17	1962	43
1987	18	1961	44
1986	19	1960	45
1985	20	Pre 1960	45-50

Where a private hospital has undergone significant works of refurbishment consideration should be given to reducing the indicated allowance.

Where a purpose built hospital is extended within ten years of its construction and the extension is built to the same design, then the obsolescence allowances applied to the extension should be the same as that for the original building.

5.7 Multi-floor allowances

The following deductions should be made from the ARCs of individual blocks on the assumption that lift provision is adequate. These deductions should be made after the age-based allowance has been made; the percentage deductions are not cumulative.

Buildings with two main floors or less	0%
Buildings with three main floors or more	10% overall*
Buildings with eight or more floors	10% on overall*basis up to 7th floor, then 15% on 8th floor and above.

Where the allowance is made on an overall basis, the percentage deduction will be made in respect of all floors of the building. In the case of the lower two main floors it will not be applied to an area larger than the footprint of the floor above the higher of these.

Hospitals constructed on sloping sites with multiple levels do not qualify for the above allowances unless there is more than one main floor above the highest main floor with ground level access.

Where, exceptionally, lifts are inadequate to serve the actual use, which is being made, further allowance may be warranted. This must be justified on the facts of particular cases, and is recognised as not normally necessary.

In the case of buildings comprising three main floors, where the top floor is composed wholly or mainly of accommodation not directly devoted to patient care (e.g. offices, stores or plant areas) the overall allowance shown in the above table should be reduced to 5%. Where buildings comprise more than 3 three main floors and one or more floors above second floor level is composed wholly or mainly of accommodation not directly devoted to patient care (e.g. offices, stores or plant areas) the overall allowance shown in the table above should be restricted to 5 % in respect of these floors only.

5.8 Developed Land Value

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

London Central (W1, W2, W8, W11, SW1, SW3, SW5, SW7, SW10, WC1, WC2, EC1, EC2, EC3, EC4)	Appropriate Capital Value BUT not less than 12.5% of ARC.
London Inner (SW6, W9, W10, W12, W14, NW1, NW8, N1, E1, E2, SE1)	Appropriate Capital Value BUT not less than 12.5% of ARC.
Remainder of London boroughs	Appropriate Capital Value BUT not less than 12.5% of ARC.
M25 belt	12%
Remainder of South East England	10.15%
Remainder of England & Wales	7.5%

For the purposes of the above table:

The M25 Belt should be taken to be the whole county of Surrey, plus Windsor & Maidenhead, Slough, Wokingham, Bracknell Forest, South Bucks, Wycombe, Chiltern, Reading, Oxford (City), Cambridge (City), Dacorum, Three Rivers, Watford, St Alban’s, Hertsmere, Welwyn/Hatfield, E Herts, Broxbourne, Epping Forest, Brentwood, and Sevenoaks
The Rest of South East consists of those parts of the counties of Kent, East Sussex, West Sussex, Hants (exc. Isle of Wight), Berks, Bucks, Oxon, Herts, Beds, and Essex,( to the extent that they exclude the BAs listed as in the M25 belt), plus Bournemouth, Poole and Christchurch

Where the evidence indicates that the adoption of the percentage addition for land value produces a land value addition, which in terms of a value per hectare, is in excess of prevailing land values in the immediate locality in which the hospital is located, actual residential building land values current at AVD, less 20% are to be adopted in the alternative.

5.9 Undeveloped Land Value

Undeveloped land will consist of amenity land other than that for the immediate landscaping of buildings. Land which is in excess of that required for amenity use should be ignored. The areas of car parks and roadways are not to be treated as undeveloped land. The value of undeveloped land should be found by using a price per hectare derived from evidence of transactions in other amenity or sports field land. The value adopted should reflect fencing and drainage. The typical range of values recommended for undeveloped land is as below:

Greater London area zone 1 (postal districts EC, WC, W1, W2, W11, W8, SW1, SW3, SW5, SW7 and SW10)	£1,650,000 per hectare
Greater London area zone 2 (Greater London excluding zones 1 and 3)	£175,000 per hectare
Greater London area zone 3 (within 4 miles of GLA boundary)	£60,000 per hectare.
Within M25, but outside Greater London	£50,000 per hectare
North East*	£25,000 per hectare
Remainder of England and Wales	£45,000 per hectare

North East consists of Northumberland, Tyne & Wear, Durham and Cleveland

5.10 Decapitalisation Rate

The ARC of the hereditament shall be decapitalised to an annual equivalent by taking the lower statutory Decap. Rate of 3.33%,

5.11 End Adjustments

Where a hospital is particularly poorly located, either by way of access or the general environment in which it is sited it maybe appropriate to incorporate a stage 5 allowance within the valuation. Examples would be hospitals with access through an industrial estate or poor housing development or those located on the sites of NHS Hospitals where the NHS facility is itself located in an area where a private facility would not normally be sited. Similarly an allowance maybe appropriate where it can be demonstrated that a hospital is so remote from the main road network or areas of population that it has a bearing on the ability of the hospital to attract patients.

Likewise 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 10%. Allowances conceded during negotiations on the 2005 List should normally be maintained into the 2010 List where the circumstances justifying the concession can clearly still be seen to apply, subject to the comments below.

Construction of new private hospitals dropped off during the 1990s, and during this period, there has been a considerable rise in the use of day care surgery and the average length of stay in hospital following many other procedures has fallen. These factors impact in two ways on the valuation of private hospitals.

Firstly previous measures used for measuring the performance of private hospitals occupancy of bed spaces at midnight may no longer be an accurate yardstick of performance, since a bed may be used by more than one patient during the day, yet generating no overnight stays.

Secondly these two factors have impacted on the likely design of new hospitals, in that it is likely that a lower proportion of ward space required in new hospitals, than in existing hospitals built during the rapid expansion of the sector in the 1980s or earlier. This point is accepted and is therefore reflected in the agreed prices of main buildings for buildings constructed prior to 1995. It follows that hospitals constructed in 1995 or later are likely to be of a design reflecting modern requirements.

Both these points should be taken into account when considering end allowances.

Overall the performance of a particular hospital will need to be judged over at least a 12-month period so as to eliminate the disproportionate effect of holiday periods where the private sector is normally quiet.

Practice note 6: 2010 - the valuation for rating of private sector eye hospitals and clinics

Co-ordination Arrangements

Private sector Eye Hospitals and clinics are a generalist class (with specialist guidance as necessary). They should be allocated a primary description code of MH. The SCAT will depend upon the method of valuation adopted

Rentals Basis 437

Exceptionally

Contractors basis 436

As a generalists Class the appropriate suffix letter should be G in both cases.

Method of Valuation

Eye clinics and hospitals are located within a broad spectrum of buildings of different age and specification ranging from converted pre- Victorian residences to purpose built facilities located on edge of town business parks. Many of these buildings will be occupied under a lease and as a consequence it is considered there will be sufficient rental evidence available for the majority of hereditaments in this class to be valued by reference to the rentals method. When considering the pool of rental evidence, regard may be had to rental evidence drawn from other private clinics which are considered to be in the same mode or category of use.

The valuation scheme to be applied will in most instances embrace other private clinics and should utilise valuation scales VXOSUGLIFT1 & VXOSUGNLIFT1.

Exceptionally where there is no rent passing and the building is in such a location and of such a nature that comparison cannot be drawn to rented property in the same mode or category of use elsewhere then the contractors method maybe utilised. Guidance regarding the costs to be adopted and the decap rate to be applied should be sought from the appropriate valuer in NSU.

This property is valued using the non-bulk server. The manual can be accessed here.

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Hospitals and healthcare

1. Scope

2. List description and special category code

3. Responsible teams

4. Co-ordination

5. Legal framework

6. Survey requirements

7. Survey capture

8. Basis of valuation

9. Valuation considerations

10. Valuation support

Practice note 1: 2017 - NHS hospitals

1. Market appraisal

2. Changes from the 2017 list practice note

3. Ratepayer discussions

4. Method of valuation

5. Valuation Spreadsheet

Practice note 1: 2017 - NHS hospitals appendix 1

Guidance Notes

Practice note 1: 2017 - NHS hospitals appendix 2

Practice note 1: 2017 - NHS hospitals appendix 3

Practice note 1: 2017 - NHS hospitals appendix 4

Practice note 1: 2017 - NHS hospitals appendix 5

Practice note 1: 2017 - NHS hospitals appendix 6

Practice note 1: 2017 - NHS hospitals appendix 7

Practice note 1: 2017 - NHS hospitals appendix 8

Practice note 2: 2017 - private hospitals

1. Market appraisal

Specialist Care Private Hospitals

2. Changes from the 2017 List practice note

3. Ratepayer discussions

4. Method of Valuation

5. Valuation Spreadsheet

Appendix 1

Appendix 2

Guidance notes

Appendix 3

Appendix 4

Appendix 5

Appendix 6 - Age and Obsolescence Allowances

Appendix 7

Practice note 3 : 2017 - Primary care centres (health centres) and doctors surgeries - Memorandum of Agreement

1. Market appraisal

2. Changes from the 2010 practice note

3. Ratepayer discussions

4. Valuation scheme

Appendix A

Appendix B

Appendix C

Appendix D

Appendix E

Appendix F

Appendix G

Practice note 2: 2010 - the valuation of primary care centres

1. Co-ordination Arrangement

2. Method of Valuation

A. The Rentals Basis

B. Contractors Basis

STAGE 1

1.1. Building Costs - permanent buildings

No contract size adjustment is to be made.

1.5 Location Allowances

1.6 External Works

1.7 Professional Fees and Charges

1.8 Allowances for Inferior Construction

Either:

Table 1.8.1(a)

OR:

Table 1.8.1 (b)

OR:

Table 1.8.1(c)

1.9 Other Allowances

STAGE 2

2.1.1 Obsolescence allowances

2.2 Multi-floor Allowances

STAGE 3

3.1 Developed Land Value

STAGE 4

4. De-capitalisation Rate