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• Cover Page
• Title Page
• Copyright Page
• Contents and Authors
• Preface to the Sixth Edition
• Preface to the Fifth Edition
• Preface to the First Edition
• A Note of General Application Regarding the RICS Red Book
• Biography— William Hurst Rees
• Table of Cases
• Table of Statutes
• Table of Statutory Instruments
• Table of Circulars
• 1 Agricultural Property
• The fundamentals
• The valuer
• The purpose of the valuation
• The physical inspection
• Desk research
• Sources of comparable and other market information
• The impact of diversification
• The valuation of agricultural tenancies
• Study 4
• Study 5
• Agricultural value
• Study 6
• Concluding comments
• Further Reading
• Useful case references
• Valuation of agricultural tenants’ interests
• Agricultural Property Relief from Inheritance Tax
• 2 Residential Properties
• 1 Regulated
• 2 Secure
• 3 Assured shorthold (AST)
• 4 Assured
• Valuation on the basis of vacant possession
• Freehold properties let on regulated tenancies
• Study 1
• Freehold properties let on unfurnished tenancies with fair rent and with multiple tenancies
• Study 2
• Freehold tenancies let on assured shorthold tenancies
• Freehold properties let on assured tenancies
• Freehold ‘break up’ valuations
• Study 3
• Study 4
• Leasehold properties
• Study 5
• American style ‘lofts’
• Non-owner–occupier-type properties
• i Freehold properties in very poor repair or scheduled for redevelopment
• ii Houses in multiple occupation
• iii Artisan dwellings
• Furnished property
• 3 Leasehold Enfranchisement
• Study 1 Enfranchisement of a long term of lease
• Study Facts
• Qualification
• Analysis of comparables
• Study 2 A lease extension of 50 years
• Study Facts
• Qualification
• Study 3 Enfranchisement price with a short lease unexpired — Section 9(1) Assumptions
• Study 4 Enfranchisement against two superior interests and alternative approaches to section 15 rent
• Study 5 Enfranchisement price, comparables and the adverse differential issue — section 9(1) Assumptions
• Study 6
• Rateable value adjustment for qualification to discount tenant’s improvements
• Qualification for enfranchisement
• Study 7 Enfranchisement price where the rateable value is over £500 (£1,000 in London) — the “Norfolk” approach — section 9(1A) assumptions
• Study 8 Further rateable value adjustments as a means of reducing enfranchisement price
• Qualification for enfranchisement
• Study 9 Houses in the higher rateable value bands: extending a lease as an alternative to, or prior to, buying a freehold
• Lease extension
• Study 10 Higher Rateable Value Band Enfranchisement price if notice to have the freehold is served after the lease has been extended
• Study 11 Enfranchisement price for a house qualifying beyond the applicable financial limits in section 1–section 9 (1C) approach
• Facts
• Study 12 Premises with redevelopment potential and the repossession rights under section 17
• Facts
• Valuation of the lessee’s interest for sale (1) taking account of the landlord’s redevelopment rights under section 17(2)
• Study 13 Flats: Individual right to acquire a new lease under the Leasehold Reform, Housing and Urban Development Act 1993 — 90 years lease extension
• Facts
• Study 14 Flats: Collective Enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993
• Legal background
• Facts
• Study 15 Flats: Collective Enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993: Shorter Lease Terms Unexpired
• Study 16 Rights of occupiers of buildings in two or more flats to acquire their landlord’s interest under the provisions of Part 1 of the Landlord and Tenant Act 1987 as amended by the Housing Act 1996
• Facts: Shop with three flats above built 80 years ago
• Possible effects of the 1987 Act
• Procedure and tactics
• Possible approach to the valuation of the landlord’s interest under the 1987 Act
• Study 17 Collective enfranchisement of a Victorian house in five flats under section 24 of the 1993 Act as amended by the Commonhold and Leasehold Reform Act 2002
• The Facts
• Calculation of Freehold Acquisition Price to the Nominee Purchaser
• Further reading
• 4 The Landlord and Tenant Act 1954
• Conditions for security of tenure to apply
• Excluded tenancies
• Automatic continuance under section 24
• Termination of business tenancy
• a Section 25 notice
• b Section 26 request
• Application to the court
• Landlord’s grounds of opposition
• Terms of a new tenancy granted by the court
• Property to be comprised in new tenancy (section 32)
• Duration of a new tenancy (section 33)
• Rent under new tenancy (section 34)
• Other terms of the new tenancy (section 35)
• Contracting out of the 1954 Act
• Rent reviews and business tenancies
• Service of notices
• Interval of rent review
• Formula and machinery
• Disagreement
• Compensation
• Compensation for improvements
• 5 Industrial and Distribution Properties
• Introduction
• Types of industries
• Influences on location
• Government grants
• Regulatory regime
• Building specification
• Large sheds
• Bespoke buildings
• Plant and machinery
• Valuations for financial statements
• Industrial building allowances and capital allowances
• Capital allowances
• Industrial building allowances
• 6 Offices
• The leases
• The headlease
• The underleases
• Cost of services
• Schedule II
• Reversionary rental values
• Inspection of the building
• Enquiries of public authorities
• Assessment of the rental data (Schedule IV)
• Valuation of rents in excess of open market rents
• Valuation
• 7 Retail Properties
• Rental value
• Situation
• Size and type
• Study 1
• Restaurants
• Food stores
• Departmental and variety stores
• Retail warehouses
• Lease terms
• Study 3
• Capital value
• 8 Taxation
• Open market value
• Evidence of value — valuation methodology
• Apportionments
• UK Guidance Note 3
• Capital Gains Tax
• Study 1
• Taper relief
• Roll-over relief for assets used in a trade
• Roll-over relief and compulsory purchase
• CGT and dwellings
• Inheritance Tax
• Agricultural Property Relief for IHT
• Woodlands regime for IHT
• Business property relief for IHT
• Heritage property exemption, and maintenance funds
• Value Added Tax and property
• An overview of VAT liability
• Qualifying buildings: dwellings, relevant residential buildings and charitable buildings
• Construction (goods and services)
• Sale
• Letting
• Protected buildings
• Change of use
• Holiday accommodation
• Commercial buildings and civil engineering works
• Bare land
• Option to tax
• Study 9
• Study 10
• Study 11
• Whether or not to opt to tax
• Stamp Duty Land Tax
• Leases
• Study 12
• Study 13
• Study 14
• Study 15
• Study 16
• Study 17
• Agreements for leases
• Indefinite term
• Variations
• Study 18
• Study 19
• Study 20
• Resolution of rent review
• Resolution of contingent event
• Turnover rents
• Variable rents
• Acquisition of lease from SDLT exempt assignor
• Land transaction returns
• Basic provisions
• Notifiable transactions
• Private finance initiative lease and leasebacks
• Assignments
• Leases for indefinite terms
• Holding and holding over prior to the grant of new lease
• Variable or uncertain leases
• Surrenders and reduction of rent or lease term
• Uncertain or unascertained rents
• Abnormal increases in rent
• Linked transactions
• Transactions between spouses and civil partners
• Chargeable consideration
• Single payment
• Payment other than cash
• Phased payments
• Contingent payments
• Debt as consideration
• Exchanges
• Payments for chattels
• 9 Compulsory Purchase
• Part I Procedural Matters
• Historical summary
• Commencing the process
• Date of valuation on compulsory acquisition
• Time barring of claims
• Part II The Valuation Rules
• Compensation for land taken — the statutory valuation rules
• The other principle valuation requirements when assessing market value
• Assumptions as to planning permission
• Compensation when permission for additional development is granted after acquisition
• Part III Compensation Where Part only of the Land is Taken
• Material detriment
• Severance and injurious affection
• Acquisition of part of a property subject to a lease — apportionment of the rent payable
• Part IV Compensation under Rule 6
• Claims unrelated to the value of the land: rule 6 items, Disturbance and other matters
• Basis of compensation under rule 6
• Total extinguishment claims
• Compensation for the loss of goodwill
• Other heads of claim in relocation cases
• Part V Minor Interests and other Special Cases
• Short tenancies — section 20 CPA 1965
• Land subject to agricultural tenancies
• Persons without compensatable interests
• Unfit housing
• Listed buildings in poor repair
• Leasehold Reform Act 1967
• Tax on compulsory purchase compensation
• Part VI Loss and other Payments
• Introduction to loss payments
• Home loss payments
• Loss payments
• Advance payment of compensation
• Interest on compensation
• Part VII Compensation where no land is Taken
• Compensation under section 10 CPA 1965
• Compensation under part 1 of the LCA 1973
• Further reading
• 10 Compensation for Planning and other Restrictions on the Use of Land
• Introduction
• General principles governing statutory compensation
• Valuation principles
• General principles affecting claims
• Depreciation in the value of the interest
• Other direct losses
• Depreciation and disturbance in the same claim
• Loss of developer’s profit
• Interest on the claim
• Losses arising on other land
• Professional fees
• Tax on compensation
• Schedule 3
• Abandonment or loss of Schedule 3 rights
• Schedule 3 development and the concept of existing use value
• Existing use value replaced by Schedule 3 value
• Effect of Schedule 10 on Schedule 3 value
• Schedule 3 value and permitted development value
• Refusal of consent for development lying within Schedule 3 Part I
• Study 1
• Refusal of development not coming within Schedule 3
• Study 4
• Compensation for the revocation or modification of a planning consent
• Study 5
• Compensation for the refusal of permitted development
• Compensation for discontinuance orders, including those requiring some reduction in the intensity of a use
• Study 8
• Compensation for stop notices
• Study 11
• Compensation for listed buildings
• Compensation for the revocation or modification of listed building consent
• Compensation for the imposition of a building preservation notice
• Purchase notices and listed buildings
• Conservation area consents
• Conservation area purchase notices
• Compensation for the preservation of ancient monuments
• Compensation derived from tree preservation orders
• Refusal of consent to fell, or the grant of conditional consent: section 203
• Refusals under the new regulations (1999)
• Replanting directions: section 204
• Trees and purchase notices under section 198
• Compensation for losses under the Wildlife and Countryside Act 1981
• Areas of Special Scientific Interest (SSSI)
• Nationally important SSSIs: nature conservation orders
• Management schemes and management notices
• Compensation for the closure of a highway to vehicles, and similar events
• Compensation for restrictions on advertising
• Compensation for restrictions on mineral workings
• Compensation in connection with hazardous substances
• Revocation or modification of hazardous substances consent by order under section 14(1)
• The revocation or modification of hazardous substances consent following an application for its continuance under section 17
• Compensation for statutory undertakers
• Compensation for planning blight
• Purchase notices and “reasonably beneficial use”
• Compensation where an alternative consent is given
• Studies which involve purchase notices
• Further Reading
• 11 Minerals
• Introduction
• Study 1
• Rating
• Study 2
• Study 3
• Compulsory Purchase and Compensation under the Mining Code
• Study 4
• Study 5
• Study 6
• Compensation for mineral planning decisions
• Compensation
• Study 7
• 12 Rating
• Chargeable dwellings
• Size, layout, character and locality
• Non-domestic hereditaments
• Composite hereditaments
• Valuation
• The hypothetical tenancy
• Valuation methods
• Rental comparison
• Profits or accounts (receipts and expenditure) method
• Contractor’s method
• Phasing or transitional arrangements
• Reconciling evidence
• Shops*
• Study 6
• Study 7
• Study 8
• Study 9
• Study 10
• Study 11
• Study 12
• Offices*
• Study 13
• Factories and warehouses*
• Study 14
• Hotels*
• Study 15
• Study 16
• Schools and nurseries
• Public buildings
• Study 17
• Study 18
• Study 19
• Cinemas
• Study 20
• Petrol filling stations and garages*
• Study 21
• Plant and machinery
• 13 Development Properties
• Planning policy and legislation
• Tenants’ requirements
• The institutions
• Macro economic conditions
• Infrastructure improvements
• Valuation purposes
• The valuation of land with development potential
• Professional guidance
• Preliminary investigations
• Site investigations
• Time scale
• Study 1
• Notes
• Development appraisal
• Study 2 Conventional Development Appraisal
• Study 3 Discounted Cash Flow Appraisal
• Ground rent and partnership schemes
• Study 4 Ground Rent Calculation
• Study 5 Ground Rent with Premium
• Study 6 Partnership Scheme
• Rental slices
• Sensitivity analysis
• Study 7 Sensitivity Analysis
• Study 8 Contractor’s budget calculation
• 14 Garages, Petrol Filling Stations and Motorway Service Areas
• Part 1 Petrol filling stations
• The industry
• History of the petrol business
• Present market
• Petrol tie and the law
• Direct management, licensees, leases and dealers — the modern retailing operation
• Modern filling stations
• Basis of valuation
• Forecourt values
• From capital value to rental value
• The Harewood case
• Fast food caterers
• Shops and car washes
• Cost of construction and site values
• Part 2 Motorway service areas
• Part 3 Garages
• Valuation
• Showroom
• Offices
• Workshops
• Used car stances
• Capitalising the rent
• Location
• Fast Fit premises
• Recommended reading
• 15 Lease Renewals and Rent Reviews of Commercial Property
• Best practice
• Lease renewals
• Pact
• Rent reviews
• Methods of valuation
• Open market rental value
• Profit’s test
• Capital values
• Methods of resolving disputes
• The Arbitration Act 1996
• Arbitration procedure
• Independent expert determinations
• Evidence
• Proof of evidence
• Arbitrator’s award
• Appeals and challenges
• Appendix I An arbitration award
• Appendix II An Independent Expert Determination
• Unit 99 Airport Industrial Estate Coventry
• 16 Valuations for Financial Statements
• Introduction
• International Financial Reporting Standards (IFRS)
• UK generally accepted accounting principles
• Special applications
• Share listings and company circulars
• Takeovers and mergers
• Pension funds
• Collective investment schemes
• Unregulated property unit trusts
• Bases of value
• Fair value
• Market value
• Existing use value
• Which bases to use?
• Depreciated replacement cost
• Depreciation accounting
• Working studies
• Study 1 Reporting value of owner occupied property
• Study 2 Calculation of residual amount
• Study 3 Depreciated replacement cost
• 17 Public Houses
• Property
• Planning
• Licensing
• Ownership
• Landlord and Tenant Reform
• Market
• Trade
• Methods of valuation
• Capital valuations
• Profits method
• Comparative method
• Investment method
• Overbids
• Price per barrel
• Kennedy method
• Building costs
• Rental valuations
• Profits method
• Comparative method
• Floor area
• Rating valuations
• Study 9
• Study 10
• Study 11
• Study 12
• Study 13
• Study 14
• Study 15
• Further reading
• 18 Hotels
• Introduction
• RICS Valuation Standards
• GN 1
• GN 1.4: The valuation approach
• Valuation Information Paper no 6
• Inspections
• Definitions
• Investigation of market sector, demand and competition
• Trading potential/fair maintainable trade
• Goodwill
• Accounts
• Study 1
• Study 2
• Valuations
• Capitalisation of maintainable profit (earnings multiple approach)
• Study 3
• Discounted Cash Flow approach
• Comparison of the two approaches
• Comparable approach and evidence of open market transactions
• Rental valuations
• Study 4
• Tenant’s improvements
• Investment valuations
• Property company/operating company valuations
• Valuations for loan security purposes
• Conclusion
• 19 Leisure Properties
• Introduction
• Types of leisure property
• Planning
• Licensing
• Other legislative matters
• Tenure restrictions
• RICS regulatory framework
• Collating the evidence and referencing
• Physical factors
• Unit size
• Location
• Trading potential
• Comparable evidence
• Measurement
• Appropriate method of valuation
• Accounts approach to the valuation of leisure properties
• Full accounts approach to rental value
• Adding back
• Adjustment for sinking fund
• Alternative approaches to establishing rental value
• Establishing capital value
• The profits approach
• Single earnings multiplier
• The dual capitalisation approach
• Discounted cash flow
• Investment method
• Capital comparison
• Valuation for various purposes
• General
• Valuations for loan security
• Valuations for balance sheets
• Non-commercial leisure properties
• Study 1 Freehold Valuation of a Leisure Park Investment
• Study 2
• The use of valuation checks
• Summary
• 20 Easements and Wayleaves for Sewers, Pipelines and Cables
• General
• Introduction
• Legal background
• Role of the valuer
• Compensation for permanent damage
• General
• Advance payments
• Sewers and water pipes
• Gas and other pipelines
• Electricity pylons, poles and fibre optic cables
• Telecommunications
• Private easements and wayleaves
• Preparing for the scheme
• General
• Route
• Surface structures
• Promoter’s representative
• Trial investigations
• Timing of the work
• Single farm payments
• Land drainage
• Soil protection
• Depth
• Ditches
• Stacking and protecting turf and plants
• Working widths
• Fences
• Access points for promoter
• Access for claimant
• Continuity of supplies
• Record of condition
• Trees
• Working hours
• Reinstatement of roads and paths
• Control of dust
• Noise, vibration and explosives
• Support structure
• Infectious diseases
• Wet weather working
• Pollution of water supplies
• Soil-borne pests and diseases
• Fossils and artefacts
• Security and the prohibition of certain activities
• Diary
• Normal farming practice
• Surface damage compensation
• General
• Advance payments
• Monitoring
• Loss of arable crops
• Loss on grassland
• Reinstating arable land
• Reseeding grassland
• Additional costs of working severed areas
• Future losses
• Field boundaries
• Disturbance to animals
• Deficiency of top soil
• Claimant’s time
• Miscellaneous
• Full and final settlement
• Miscellaneous information
• Betterment
• Future planning consents
• Minerals
• Cathodic protection
• Abandonment
• Contractor’s liability
• Interest
• Professional fees
• Disputes
• Formulating the claim
• Permanent damage
• Surface damage compensation
• 21 Assessments for Insurance Purposes
• Reinstatement cost and indemnity value
• Reinstatement memorandum
• Reinstatement cost
• Study 1
• Indemnity value
• Study 2
• Calculation of rebuilding costs
• Method of measurement
• Property type
• Construction type
• Method of assessment
• Sources of cost information
• Additions to the basic assessment
• Public authorities and European Union clause
• Debris removal clause
• Architects’, surveyors’ and consulting engineers’ fees clause
• Fees for building regulation and planning applications
• Value Added Tax
• Average conditions
• Ordinary pro rata average
• Reinstatement average
• Combating inflation
• Day-one reinstatement scheme
• 85% Reinstatement memorandum
• Inflation indices for building cost assessments
• Insurable interest
• Utmost good faith
• References in connection with listed building insurance
• 22 The Valuation of Care Homes
• Background
• Approach to valuation
• Key drivers
• Standards of accommodation
• Standards of care
• Standards driven upwards by market forces
• Demand for care beds
• Supply of care beds
• Competitive pressures
• Occupancy rates
• Fee rates
• Staff costs
• Non-staff operating costs
• Ebitdam
• Study 1 Worked example
• Capital value
• Trends in capital values
• References
• 23 Negligence and Valuations
• Duty of care
• Liability in contract and tort
• Duty of borrower’s valuer to lender
• Duty of lender’s valuer to borrower
• Other cases
• Breach of duty
• Defining the valuer’s task
• The objective standard
• The professional knowledge required
• Specific valuation issues
• Margin of error
• The role of expert evidence
• Extent of liability
• Liability to purchaser
• Incidental losses
• Liability to vendor
• Liability to lender
• Defences
• Exemption clauses and disclaimers
• Statutory time-limits on liability
• Contributory negligence
• Index