The Valuation Office AgencyAgency’s (VOA)(VOA) calculates a rateable value for each business property in England and Wales.

A rateable value is an estimate of what it would cost to rent a property for a year, on a set datevaluation knowndate. asThe theproperty Antecedent Valuation Date (AVD). It is assumed thatto the:be:

• property is vacant
• property is in reasonable repair
• property is available to let on the open market

It is also assumed that the tenant pays for the business rates, repairs and insurance

rentinsurance.

The hasvaluation beendate agreedis betweenset aby reasonablelaw landlord and ahelps reasonablemake tenant

rentvaluations began on the AVD

consistent.

YouRateable canvalue viewis yournot property’swhat ratableyou valuepay in yourrent business rates valuation account or using the find a business ratesrates. valuation tool. You can also see how your rateable value has been calculated and compare it to similar properties. Your local council uses the rateable value to work out your business rates bill. Your rateable value is not what you pay in rent or business rates.

Ways of calculatingworking out rateable valuesvalue

There are 3 main ways of working out rateable values.value. The method the VOA uses depends on the type of property and the information available about the property.

TheRental rental method

The VOArental usesmethod theis rentalused comparisonto methodvalue properties like shops, factories and offices. It’s used where there’s a lot of information available about lease terms and rents paid.

Profits Wemethod

The useprofits itmethod is used to value properties like hotels, leisure centres and theme parks. It’s used when there is not much information about rents paid. The rateable value is based on the rent a tenant would be willing to pay to achieve a certain amount of trade.

Contractor’s basis

The contractor’s basis is used to value properties like schools, airports and chemical plants. It’s used for properties that are oftennever rented out so there is no information about rents paid. The rateable value is based on the opencost market,of suchconstructing as: a like for like building.

Find and compare your rateable value

View your property’s rateable value and how it has been calculated with the find a business rates valuation service. You can also see the rateable values and calculations of comparable properties.

Shops and high street businesses

The VOA uses a ‘rental’ method to value businesses on the high street like shops, hairdressers and banks.

The VOA gathers information about rents paid for shops and high street businesses. It analyses the information and works out a price per square metre for the property. It also considers local conditions and property characteristics like:

• shopsan unusual shop shape
• officesadditional window display frontages
• cafessplit levels
• factoriessales andareas warehouseshidden by pillars

Zoning

WeZoning lookis atused howto muchapply the propertyprice wasper rentedsquare formetre aroundto the AVD,property alsoand considering:

• whetherget the rentrateable paidvalue. isThe belowfront marketof value
• thea termsshop ofincluding any window display area is considered the leasemost orvaluable licence
• space.

  Each zone covers the relationshipwidth betweenof the landlordshop and tenant

• anyhas incentivesa todepth rentof 6.1 metres. Zone A starts at the property
• ifshop window. As you move further into the tenantsshop, haveeach madezone improvementsis tohalf the property
• whethervalue of the rentone includesbefore servicesit. andSpaces utilities
• whenlike thestore rentrooms wasor agreed,upstairs offices are valued as valuesa changepercentage overof time
• whatthe similar,zone nearbyA propertiesrate.

  VOA: arehow beingwe renteduse retail zoning for business rates

  Plant and machinery

  Plant and machinery may be shown separately in the rateable value calculation and can include:

  • heating
  • sprinklers
  • air conditioning
  • cold stores

  Valuation schemes

  WeShops useand thishigh informationstreet toproperties calculatethat whatare anlike appropriateeach annualother rentwill would be forpart theof property.a Thisvaluation isscheme. theThis property’shelps make rateable value.

  Thevalues receiptsfair and expenditureconsistent.

  Method methodof measurement

  TheShops receiptsare andmeasured expenditureusing methodthe isnet alsointernal knownarea as(NIA) themethod.

  Factories, profitsworkshops method.and warehouses

  The VOA often uses itthe ‘rental’ method to value industrial properties like cinemasfactories, warehouses and themeworkshops.

  The parks.VOA Wegathers usuallyinformation useabout itrents whenpaid for industrial properties. It analyses the property’sinformation mainand purposeworks isout toan makeaverage aprice profitper square metre.

  To get the price per square metre of an individual property, the VOA considers things like:

  • size
  • property age
  • location
  • features, such as eaves height and thereheating

  The price per square metre is notmultiplied muchby informationthe aboutproperty rentsfloor paid.area Toto calculateget the rateable valuesvalue.

  Plant usingand themachinery

  Plant receiptsand machinery, car parking and expenditureland method,may webe generally:shown separately in the rateable value calculation. Plant and machinery can include:

  • Takesprinklers
  • air aconditioning
  • CCTV
  • heating

  Valuation representativeschemes

  Properties samplethat ofare like each typeother ofand property.

  1. Considervalued using the fairsame maintainablemethod tradeare ofgrouped into a reasonablyvaluation efficientscheme. operator,This ideallyhelps bymake reviewingrateable 3values yearsfair and consistent.

     Method of accountsmeasurement

     Industrial toproperties arriveare atmeasured using the gross income.

  2. Deductinternal area (GIA) method.

     Offices

     The VOA uses the cost‘rental’ ofmethod salesto andvalue workingoffices.

     The expense.

  3. DeductVOA whatgathers wouldinformation beabout rents paid for offices. It analyses the information and works out a fairprice incomeper square metre for each floor area. It also considers things like:
     • rent-free periods
     • improvements made by the operator.tenant
     • unusual lease terms

TheA remainingprice amountper square metre is whatmultiplied couldby reasonablythe beproperty paidfloor area to rentget the property,rateable Thisvalue.

Car isparking may be shown separately in the figurevaluation weor usereflected forin the property’soverall rateableprice value.per square metre.

Plant and machinery

ToPlant applyand machinery may be shown separately in the rateable valuesvalue ofcalculation theand representativecan samplesinclude:

• air toconditioning
• heating
• CCTV
• sprinklers

Valuation similarschemes

Properties properties,that weare calculatelike whateach percentageother ofand valued using the properties’same totalmethod incomeare wouldgrouped beinto spenta onvaluation rent.scheme. This allowshelps usmake to calculate rateable values offair otherand propertiesconsistent.

Measurement withoutmethod

Offices needingare measured using the fullnet financialinternal information.area We(NIA) usemethod.

Pubs

The aVOA wideuses range‘fair maintainable turnover’ (a type of sampleprofits propertiesmethod) to makevalue surepublic wehouses.

This haveis anthe accurateannual representationincome ofa allreasonably propertyefficient typeslandlord incould allexpect locations.

Theto contractor’sachieve basis

on a certain date.

TheA VOArental oftenpercentage usesis applied to the contractor’sturnover basisestimate to valueget propertiesthe rateable value. The percentage takes into account things like schools,the hospitalstype andof airports.pub, Weits uselocation and if it forsells propertiesfood.

The thatpercentages are notagreed normallywith rentedthe outindustry groups and oftenthey’re arein notthe runvaluation of public houses approved guide.

VOA: how we assess pubs for profit.business rates

Hotels

The rateableVOA uses ‘fair maintainable trade’ (a type of profits method) to value hotels.

This is basedthe howannual muchtrade ita wouldreasonably costefficient operator could expect to buildachieve theon property.a Tocertain calculatedate rateable. valuesThe usingVOA analyses trade from previous years and considers the contractor’strade basis,of we:comparable properties.

1. Estimate

   The howVOA muchapplies ita wouldpercentage cost to buildthe afair modernmaintainable equivalenttrade ofto get the propertyrateable todayvalue.

   The onpercentage aapplied cleareddepends site.on:

   • the type of hotel
   • Adjustexpected thisprofit
   • expected figuretrading basedperformance

   Restaurants

   The onVOA uses the property’s‘rental’ actualmethod ageto value restaurants.

   The VOA gathers information about rents paid for shops and condition.restaurants. It analyses the information and works out a price per square metre. It also considers local conditions and property characteristics such as:

   • outside seating
   • Addunusual thelayouts
   • air valueconditioning

   Zoning ofor anyan land‘overall’ attachedmethod is used to apply the price per square metre to the property and get anythe siterateable improvements.

2. Multiplyvalue.

   Overall method

   The price per square metre is applied to the totalfloor costarea byof aeach percentagepart knownof the building. The most important space, such as the ‘decapitalisationmain rate’dining —area decapitalisationon ratesthe ground floor, is valued at 100% price per square metre.

   Kitchens, stores and customer toilets are setvalued inat legislationa lower percentage of the price per square metre.

   Kitchens that customers can see and are part of the dining experience are valued at each100% revaluation.

price per square metre.

Example

Zoning

Measurement method

Restaurants are measured using the net internal area (NIA) method.

Valuation schemes

The VOA putsgroups allcomparable non-domestic properties into a valuation schemes,scheme. soThis wehelps canthem value similar properties infairly groups.and Weconsistently.

Local groupvaluation schemes

Local valuation schemes are used for properties valued using the rental methodmethod, intosuch localas shops, offices and industrial properties.

Each scheme has a range of prices for floor areas (such as an area of a shop) and additional items (such as parking spaces). Properties in the scheme are given a price from within that range. This is the property’s ‘base rate’. To set the base rate, the VOA looks at the individual characteristics of a property.

For example, the VOA may assume none of the properties in a valuation schemes.scheme Wehave usuallyfire groupprotection. If one of the properties valuedin usingthe scheme does have fire protection, the

VOA receiptsmay andgive expenditurethe methodproperty a higher base rate or contractor’smake basisan intoadjustment to reflect its value.

National valuation schemes

Properties in national valuation schemes.schemes Youare canusually findvalued using the detailsprofits ofmethod youror property’scontractor’s basis.

The VOA discusses some national valuation schemeschemes incentrally. yourWhere businesspossible, ratesthey’re valuationalso account.agreed with industry bodies or their representatives.

Measuring propertiesthe property

The two methods the VOA usuallyuses measuresmost often to find out the area of a building usingare either the net internal area method(NIA (NIA)and or gross internal area method (GIA).(GIA).

They’re based on the Royal Institution of Chartered Surveyors (RICS)(RICS) code of measuring practices. Read the latest RICS Code of measuring practice on the RICS website.

WatchVOA: a video on how the VOA measures properties.

How we measure properties for business rates

NIA

NIA is the usable area within a building measured to the inside face of theperimeter walls ofat each floor.floor Welevel. useIt’s itused for properties like shops, offices and restaurants.

Things that contribute to the usable area include:

• entrance

  *entrance halls

• * kitchens
• * built-in cupboards in occupy usable areas
• ramps * ramps, sloping areas and steps in usable areas
• * areas occupied by ventilation and heating grilles

Things that do not contribute to the usable area include:

• shared entrance halls, landings and balconies
• internal structural walls
• toilets
• cleaners’ and cleaner’s rooms
• columns and chimney breasts
• stairwells and lift shafts

Example

An office is 10m long by 12m wide. A cleaner’s cupboard in a corner of the office measures 2m by 1m. The usable area is 118 square metres (120 square metres minus 2 square metres).

GIA

GIA is the area withinof a building measured to the insideinternal face of the perimeter walls ofat each floor.floor Welevel. useIt’s itused for properties like factories, workshops and warehouses.

Things that contribute to the area of a building include:

• entrance halls
• internal walls and partitions
• internal balconies and walkways that are open sidedopen-sided
• columns and chimney breasts
• stairwells and lift shafts

Things that do not contribute to the area of a building include:

• the thickness of the perimeter wall
• external projections
• external balconies and walkways that are open sidedopen-sided
• canopies

How different property types are valued

FindSee out how the VOAlatest values:

• shopsRICS andCode otherof highmeasuring streetpractice businesses
• factories,on workshopsthe andRICS warehouseswebsite
• offices
• pubs
• hotels
• restaurants
• day nurseries
• petrol stations and service stations
• self-catering holiday lets

.

OccupyingShared multipleproperty partsand ofoccupying amore sharedthan one property

Properties in England

If you occupy more than one part of a property, the number of rateablevaluations values you get depends on whether:

• the parts you occupy touch each other or not
• you use the parts for the same purpose

The parts or floors you occupy touch when either:(either of these apply):

• one part shares all or some of a wall (or type of enclosure) with the other part
• all or some of one floor is directly over the ceiling of the other floor

The VOA will give one rateablevaluation value for all the parts that touch and are used for similar purposes. You will get one business rates bill for these parts.

The parts or floors you occupy do not touch when they are separated by either:(either of these):

• another occupier
• areas shared with other occupiers such as lifts, stairwells or hallways

The VOA will give a valuation for each part that does not touch. You will get more than one business rates bill.

If you have parking separated from the building by a shared area, the VOA will give separate valuations for the building and the parking.

Example 1

Assim’s business occupies the ground floor to the third floor of an 8 storey office building. Another company occupies the fourth to the seventh floors. Access to all floors is by communal lifts and stairs. Assim’s business will receive one valuation for all the floors it occupies. The other company will receive one valuation for all the floors they occupy.

Example 2

Jessica’s business occupies the ground floor and second floor of a 4 storey office building. Another company occupies the first and third floors. Access to all floors is by communal lifts and stairs. Jessica’s business will receive a valuation for each floor it occupies. The other company will receive a valuation for each floor they occupy.

Properties in Wales

Before 1 April 2023,2023 if you occupiedoccupy partsbuildings of a property in Wales that wereare side by side or one floor above another,another in a building, you receivedwill receive a valuation for each building or floor.

If there wasis a connection between the buildings or floors that you diddo not share with anyone else, you receivedwill receive one valuation for the parts that wereare connected.

Wales

Example adopted the same rules as England from 1

Cynthia Aprilhas 2023.