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Valuation for Non-Domestic Rating of Higher Education Institutions in England & Wales

This Memorandum for guidance on the method of valuation is derived from challenge settlements agreed under GPCR reference number: 30929882. This Memorandum has been drawn up with reference to current statute law and relevant case law.

1. Higher Education Institutions (HEIs)

1.1Higher Education is normally understood to refer to courses of study which lead to degrees, diplomas, or similar advanced qualification of a higher standard than is available through Further Education. The term HEI includes Universities and Colleges of Higher Education whose Principals are represented by GuildHE.

1.2It is confirmed that the acceptance of this Memorandum applies to all Universities and University Colleges, and to relevant Guild HE Colleges. It is, however, recognized that for application to Oxford and Cambridge Universities this Memorandum requires specific adaptation which is the subject of a separate rider, in accordance with Appendix 6. Valuation guidance for the Colleges of the Universities of Oxford and Cambridge is similarly provided by way of a Supplementary Memorandum of Agreement.

1.3In the case of buildings which were designed and built as all or part of a College of Further Education and have not been significantly modified, regard should be had to the appropriate guidance for the valuation of such colleges.

2. Identification of Hereditaments

2.1 The normal approach should be applied to the identification of hereditaments and no attempt should be made to aggregate property which on normal rating principles constitutes more than one hereditament.

2.2 Identified hereditaments will be either wholly non-domestic, wholly domestic or composite in accordance with statutory provisions. Where a hereditament is composite, no value should be ascribed to the domestic use of property (including use for accommodating students and resident staff). It should not be assumed that such accommodation is absent, but rather that it forms the subject of a separate and contemporaneous lease held by the same occupier of the non-domestic part. Account should be taken of the presence or absence, and of the disposition of such domestic accommodation to the extent that the value of the non-domestic part is affected.

2.3 In the case of composite hereditaments, some facilities may be appurtenant to both the domestic and non-domestic accommodation. These facilities may include workshops, garden maintenance buildings, boiler houses, certain recreational and catering facilities and the like. They will contribute to the valuation by reference to the proportion of non-domestic to domestic accommodation.

2.4 Identified hereditaments should be placed in the following categories:

• a) Category A Contractors Basis Hereditaments - All those hereditaments consisting of purpose-built and other adapted buildings occupied by an HEI and for which as a hereditament an HEI is the only possible hypothetical tenant because of rebus sic stantibus or planning restrictions. HEI centres, complexes and campuses will fall into this Category.

• b) Category B HEI Living Accommodation - All Halls of Residence, hostels and other living accommodation. This will be regarded as domestic property, and will not be entered in Rating Lists, except to the extent that it should be considered to be non- domestic in accordance with Appendix 5.

• c) Category C Miscellaneous Hereditaments - All other non-domestic or composite hereditaments occupied by HEIs where an alternative method of valuation is appropriate.

2.5 This categorisation should not affect the identification of hereditaments, and property should not be grouped into hereditaments comprising property of only one category unless this forms a natural unit of assessment in accordance with normal rating principles.

It follows that a hereditament in Category A or C may contain some property for which a different category will be appropriate; in such cases an overall judgement should be made as to the correct category for the hereditament as a whole. Where a hereditament is composite and therefore contains Category B property with either Category A or C, see paragraphs 4.1 and 6.0 below.

3. Basis of measurement

3.1 Cost information is derived from a Gross Internal Area (GIA) basis and referencing details should be compatible. The definition of GIA should be as provided in the RICS Guidance Note Code of Measuring Practice (6th Edition effective from September 2007) and measurements should be taken in accordance therewith.

3.2 Link Walkways - Link blocks and subways which contain no areas which 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 hereditament 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.

4. Valuation of category A hereditaments

4.1 Estimated Replacement Cost (ERC) - The ERC of all the buildings comprising the hereditament should be determined by reference to the unit costs for the relevant building use classifications set out in Appendix 1 Table 1 according to the use to which they are or would usually be put. Appendix 1 also contains, in Table 2, a detailed but not exhaustive list of uses falling within each of the particular classifications. Where a particular use is not specifically shown, or where a building is put to a variety of uses, valuers should use their judgement in deciding which classification to adopt. In coming to a conclusion on classification, predominant use will generally be a prime consideration but building construction style may also be relevant.

4.2 External Works - The cost of the site works/externals should be added in accordance with Table 3 set out in Appendix 1.

4.3 Unit building costs vary from place to place and the unit prices incorporated in Appendix 1 Table1 relate to a location factor of 1.00. These rates should be adjusted according to where the hereditament is located and the location factors in Appendix 2 Table 1 should be used.

4.4 Contract Size Adjustment - The aggregate of locationally adjusted building costs and external costs should be subject to contract size adjustment as set out in Appendix 1 Table 4. The allowance will be determined by the cost of the whole hereditament including that of domestic and exempt areas. The allowance is determined by the ERC adjusted by location factor and inclusive of external works addition but net of professional fees.

4.5 Professional Fees An addition for professional fees should be made in accordance with Table 5 of Appendix 1.

4.6 Adjusted Replacement Cost (ARC) - Adjustments to the ERC of each building may be required to reflect disabilities relating to physical depreciation; functional obsolescence (including flat roof allowances and/or the adequacy of services such as lifts in multi-storey buildings); and/or technological obsolescence. The appropriate allowances to be made are a matter for the valuer to determine, but in general the scales and adjustments in Appendix 2 should be used.

4.7 Adjusted ARC - Any building which includes domestic or exempt property as defined in the Local Government Finance Act 1988 should have its ARC reduced in proportion to the relevant floor areas.

4.8 Site Value - The site of the hereditament will be separated into two elements:-

• a) Developed parts - That part of the site comprising the HEI buildings together with their immediately adjacent grounds (for example circulation space, courtyards, attached gardens, etc.) shall be considered to be within its operational curtilage. It should be possible in nearly all cases for this operational curtilage to be ascertained without difficulty. Valuers should apply common sense in drawing this boundary. The precise area of this curtilage need not be determined, although it may be necessary for the ascertainment of the undeveloped areas (see next sub paragraph). The value of the operational curtilage land will be determined by taking a percentage of the total Adjusted ARC of the buildings. The relevant percentage will vary according to region and the various rates are shown in Appendix 4. The percentage represents the value of a site for HEI use. Using a percentage of Adjusted ARC enables relativities of site density to be properly reflected and will automatically apply any allowance which has been given to the buildings. It is not intended that there should be abrupt changes in the approach to site value between the regional groupings shown in Appendix 4, and shading of these percentages may be required close to their boundaries. It is not generally intended that

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