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This guide provides an overview of the Valuation Office Agencys (VOA) approach to measuring and valuing non-domestic properties (properties or land that are not solely used residentially). It looks at the most common property types and how they are valued as well as explaining the most common valuation methods.

There are a number of different valuation methods but the most common one is a rentals-based approach.

This guide doesnt cover all methods and every property type. This is because valuation is a complex process that looks at every individual property and applies unique criteria depending on type, geographic location and the attributes of the property or land.

You can view a summary of your propertys valuation using the find a business rates valuation service. You can also see a more detailed valuation using a business rates valuation account.

Non-domestic rates

Non-domestic rates, also known as business rates, cover all property consisting of land or buildings not classed as domestic property or exempt from rating.

Business rates apply to a wide range of property regardless of whether they are used for actual business purposes. They apply to, for example, beach huts and village halls as well as the shops, offices, and factories more commonly associated with business use.

If a property has a mix of domestic and non-domestic uses, it will have both a non-domestic assessment (meaning it could be liable to business rates) and a Council Tax band.

New rating lists (which contain the rateable values for non-domestic properties) are usually prepared every five years. The current list was published on 1 April 2017. The next list will come into effect on 1 April 2023.

Rateable value

The VOA gives a rateable value to each non-domestic property and this is used by local councils to calculate a propertys business rates.

A propertys rateable value represents the rent the property could have been let for on a certain date set in law. It may not be the actual rent paid on this date as the law makes a number of assumptions (such as the property being vacant, to let and in reasonable repair, and that the rent excludes any other charges, taxes or insurance).The rateable value is not the amount you pay, but it is used by local councils to calculate your business rates bill. Estimate your business rates bill.

You can check a propertys rateable value using the find a business rates valuation service.

Setting a rateable value

For most properties that are rented, there are three stages to a valuation:

1. The VOA collects rent evidence (rent and lease agreement details) for most non-domestic properties. This evidence is analysed and adjusted by VOA surveyors to ensure that all evidence is considered fairly. The approach will be different, depending on the type of property (for example, bed and breakfast properties are valued using different information from shops).
2. For most properties, they set common basic values per square metre for similar properties in the same area. Larger properties may have a lower value per square metre, in the same way that buying items in bulk will usually mean a lower individual price per item.
3. The VOA then adjusts the basic value per square metre to reflect the propertys individual features and applies this to the floor areas.

Some properties are not valued by using the floor area so the valuation approach uses another means of comparison, for example for a bed and breakfast property a basic value is applied to the number of bedspaces.

Valuation schemes

The VOA groups similar properties in the same area together to make sure that they value them fairly and consistently. This is called a valuation scheme.

All properties in the same scheme will be given a value from the same value range. The VOA makes assumptions about these similar properties and if a property is different from these assumptions the VOA adjusts the propertys value.

For example, in a valuation scheme the VOA may assume that the properties have no fire protection. If one of the properties in that scheme does have it, they may apply a higher value to that property because of this feature. The final value will depend on an adjustment of all of the individual attributes and factors together.

Most types of property are valued by a method known as rental basis, following accepted valuation practice. Shops are generally valued on a zoning basis whereas offices or industrial property will be valued on a main space basis.

Some properties that are not normally rented, such as hospitals and schools, are valued using the contractors test basis. This looks at the cost of replacing the building and, after adjustment, takes a prescribed percentage of that cost as the rateable value.

Property where the rental value is usually linked to turnover, such as pubs and large hotels, may be valued using their trading potential as an indicator of value (also known as fair maintainable trade). This is known as the receipts and expenditure basis.

Assets included in valuation

The VOA will include certain business assets in their valuation. For example, plant and machinery may add value to a property and therefore certain types of plant and machinery are likely to be shown separately in a valuation.

What counts as plant and machinery?

Examples (and how they are relevant to the valuation) may include:

Shops

• Air conditioning / air handling (floor area served by system (sq m))
• CCTV security system (only if 4 or more cameras)
• Fire protection / detection / alarm / suppression (area covered by sprinkler system (sq m))
• Lifts (floors served and capacity, whether goods or passenger)
• Renewable energy items (presence of solar panels / wind turbine, and their generating capacity in kilo Watts (kW))
• Cold stores (whether built in or free standing as well as gross floor area)
• Uninterruptible power supply / standby generator (size of generator in kilo Volt Amps (kVA))

Offices

• Air conditioning / air handling (floor area served by system (sq m))
• CCTV security system (only if 4 or more cameras)
• Fire protection / detection / alarm / suppression (area covered by sprinkler system (sq m))
• Lifts (floors served and capacity, whether goods or personnel)
• Renewable energy items (presence of solar panels / wind turbine, and their generating capacity in kilo Watts (kW))
• Uninterruptible power supply / standby generator (size of generator in Kilo Volt Amps (kVA))

Industrial

• Air conditioning / air handling (floor area served by system (sq m))
• CCTV security system (only if 4 or more cameras)
• Fire protection / detection / alarm / suppression (area covered by sprinkler system (sq m))
• Lifts (floors served and capacity, whether goods or personnel)
• Air compressors (whether screw or piston). Free air flow capacity in cubic metres per hour, or cubic feet per minute. (CMH / CFM)
• Renewable energy items (presence of solar panels / wind turbine, and their generating capacity in kilo Watts (kW))
• Cold stores (whether built in or free standing and gross floor area)
• Uninterruptible power supply / standby generator (size of generator in Kilo Volt Amps (kVA))

Measuring methods

Zoning

Zoning is a standard method of valuing and comparing retail premises. Shop or retail premises are divided into zones, starting from the window. Typically, each zone has a depth of 6.1 metres although this can vary depending on the location of the property.

Zones become less valuable the further they are from the window/entrance. Zone A, which is the closest, is the most valuable as it has the highest potential to generate business for the shop. Zone B is next, then Zone C. Anything after Zone C is usually defined as the remainder.

VOA: how we use retail zoning for business rates

Survey method

The VOA uses standard measuring methods based on the Royal Institution of Chartered Surveyors (RICS) former code of measuring practices.

There are two common methods -

The net internal area (NIA) method of measurement is generally applied to:

• offices
• shops
• other retail premises, such as banks, hairdressers, restaurants

The gross internal area (GIA) method of measurement is generally applied to industrial property such as warehouses or manufacturing units.

Net internal area

The net i

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