Scope
The scope of this Practice Note is solely to ensure a consistent valuation approach for this property Class/Sub Class/Type for Non-Domestic Revaluation 2023 and subsequent entry in the new Valuation List which becomes effective on 1 April 2023.
The basis of valuation for new entries in the Valuation List, or Rating Revision cases after 1 April 2023, remains Schedule 12 (2)(1) of the Rates (NI) Order 1977.
Description
This Practice Note refers to property classified as:
Class: Warehouses, Stores, Workshops (Non-IND), Garages
Sub Class: Car Showroom
Type: T1, T2, T3
This Sub Class is for premises constructed or adapted for use as car showrooms. It includes stand-alone vehicle showrooms and those, which along with ancillary buildings such as workshops and offices, form part of a larger hereditament.
Car showrooms typically will include a car sales showroom, ancillary offices and workshops, and associated car display and storage yards.
Showrooms range from modern purpose-built properties located on prominent arterial road sites occupied by main dealers, to buildings converted or adapted for the display and sale of vehicles occupied by local second hand car dealers.
A showroom (purpose-built, converted or refurbished) may have a double height display area often with a mezzanine used as administration offices. The frontage is usually sheet glass, providing a prominent display. Showroom construction will be typically of steel frame and concrete base. Internally the floor is tiled with plastered wall finishes. The standard of heating and lighting is usually very high. The showroom area will include reception, offices and customer toilets with a similar standard of finish.
Older purpose-built showrooms are typically single storey, with prominent glass frontage and, where occupied by a main dealership, generally finished to a similar standard as a modern unit. The refurbished showroom, in terms of finish, may be indistinguishable from a recently constructed showroom. In contrast, unmodernised showrooms do remain and need to be considered on their own merits.
Converted showrooms of modest proportion and refurbishment, predominantly found in tertiary locations and typically occupied by traders operating in the local area, are often developed from workshop space, generally with poor retail display and finishes similar in quality to non-industrial offices.
This Practice Note will consider Car Showroom properties which are predominantly used for the purposes of car sales and which include significant showroom facilities, which for comparative purposes will fall into one of the three following types:
Type 1
Modern purpose-built car showrooms generally situated on prominent stand- alone sites, on retail parks and similar locations or clustered together.
Type 2
These may be purpose built or converted “branded” dealerships or older, of an “unbranded” specification which exist in standalone secondary positions, usually along busy arterial routes and on the edge of large towns, or within established industrial warehouse estates.
Type 3
These may be purpose built or converted car showrooms within, or close to, smaller towns and large villages. They may be “branded” dealerships but are more likely to be independent dealerships and often will be older purpose built or converted premises, which have in many instances originated from workshop beginnings, with only basic showrooms.
Car lots, repair garages and mechanics workshops or petrol filling stations with only a small ancillary sales element are excluded from this Practice Note and should be valued by reference to their primary class.
This Practice Note does not apply to car sales yards (i.e. properties with no buildings or with structures such as portacabins). These should be valued in line with the Reval2023 Practice Note for Yards.
Legislative background
Rating Legislation
Schedule 12 Part 1 Paragraph 1 of the Rates (NI) Order 1977 applies.
“Subject to the provisions of this Order, the Net Annual Value of a hereditament shall be the rent for which, one year with another, the hereditament might, in its actual state, be reasonably expected to let from year to year, the probable average annual costs of repairs, insurance and other expenses (if any) necessary to maintain the hereditament in its actual state, and all rates, taxes or public charges (if any), being paid by the tenant”.
Planning Designation
Car Showrooms are not included in any Class in the Schedule to The Planning (Use Classes) Order (NI) 2004 and are therefore sui generis, meaning of a type of their own.
Valuation approach for 2023
The Comparative method of valuation is to be retained as the approach for this type of hereditament.
Research shows that car showrooms are predominately owner-occupied and, historically, there has been limited rental evidence available.
Comparison should be with other properties of similar type and character, in a similar location to the subject.
The variety of car showroom types and locations increases the complexity of a single valuation approach. Three valuation approaches will be adopted.
Car Showroom Type T1
Car showroom pricing will be based on the prevailing Retail Warehouse ground floor pricing. Associated workshops will be based on prevailing workshop pricings in the locality which are valued under a separate Practice Note. Car Showroom yards will be based on yard pricings which are also valued under a separate Practice Note.
Car Showrooms Type 2 and 3
Types 2 and 3 valuations are based on the prevailing warehouse valuations for the location, with an appropriate uplift for the showroom.
Yards
The external site can be used for a variety of purposes, including display, delivery storage, landscaping and for staff and customer parking. Yards can also vary in terms of surface finish, fencing, lighting etc.
All modern car showrooms have a requirement for land to display cars for sale, customer and service parking and car storage. The yard value is a significant item within any car showroom valuation. The least valuable yard is typically to the rear and usually utilized for car storage or parking areas for staff. These areas are not normally accessed by the public.
Yards used for parking and storage, and not situated where a sales and display area would normally be located, should be referenced and valued in line with the Reval2023 Practice Note for Yards.
Display/ Sales Areas
Display areas are typically situated in front of the building line however the site layout of modern showrooms may mean that premium sales space can also be located on other parts of the site away from the road frontage.
Marked car spaces used for display, customer parking and service parking should be expressed in terms of an area of square metres.
Where car spaces are not marked the measured gross area of the yard, less essential access (internal site road) to the workshop only and any landscaped areas, should be used. Areas used for vehicle access into the showroom should not be deducted from the area.
All areas of landscaping (flower beds, embankments etc.) or areas used for essential access into the site or to the workshop areas or petrol filling station or to other separately assessed buildings should be excluded.
One-offs
Where a Car Showroom is regarded as being a one-off and of a type or in a location that does not fit any of the Types described above it will remain the responsibility of the individual Valuer to determine which of the above approaches represents the best ‘fit’ subject to consultation with and guidance from the Practice Note author.
Rent and Lease Questionnaires
For this class of property Rent and Lease Questionnaires (RALQ’s) were issued centrally and analysed by the Practice Note author.
Contacts
For advice on any aspect of this Practice Note contact LPS on 0300 200 7801.
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