Business Rates Property Valuation
All commercial property in Northern Ireland is valued for non-domestic rates purposes to the same standard. That is the definition of Net Annual Value as laid down in the Rates (Northern Ireland) Order 1977.
The statutory definition requires the hypothetical tenant to pay a rent stripped of all amounts paid to the landlord by way of rates, repairs, insurance, etc., by any particular tenant. This is a rent that is left over after all outgoings have been paid. The hereditament must be assumed to be in its actual state and must not be assumed to be in a better state than in which the valuer finds it. It cannot be overemphasised how important it is to exercise professional skill and judgement in accurately identifying the Net Annual Value by applying the correct method of valuation.
Tone of the List
The principle Order requires the district valuer to value a property in tone with comparable hereditaments shown in the valuation list.
Where rental evidence is available, on the same basis as the statutory hypothesis, it is accepted that the valuer does not need to look beyond that evidence. It may, however, be necessary to analyse and adjust the rent to fall into line with the rating hypothesis.
Receipts and Expenditure Method
In the absence of rental evidence, it may be preferable to employ an accounts based valuation. This is generally employed where there is a monopoly benefit to occupying the property. This method is most commonly employed in the valuation of, among others, hotels, public houses, historic buildings and ports.
Contractor's Principle Method
The Contractor's principle has often been said to be the method of last resort, however, if employed correctly it stands beside the other methods as a reliable basis for estimating the Net Annual Value. It is a costs based valuation that looks at the replacement cost of the asset before depreciating it for age and obsolescence. The land is then valued before the application of the statutory decapitalisation rate. This method is commonly employed in the valuation of stadia, airports and public sector property.
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