Valuation Office Agency
The Valuation Office Agencys (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 valuation date. The property is assumed to be:
- vacant
- in reasonable repair
- available to let on the open market
It is also assumed that the tenant pays for the business rates, repairs and insurance.
The valuation date is set by law and helps make valuations consistent.
Rateable value is not what you pay in rent or business rates. Your local council uses the rateable value to work out your business rates bill.
Ways of working out rateable value
There are 3 main ways of working out rateable value. The method the VOA uses depends on the type of property and the information available about the property.
Rental method
The rental method is used to value properties like shops, factories and offices. Its used where theres a lot of information available about lease terms and rents paid.
Profits method
The profits method is used to value properties like hotels, leisure centres and theme parks. Its 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.
Contractors basis
The contractors basis is used to value properties like schools, airports and chemical plants. Its used for properties that are never rented out so there is no information about rents paid. The rateable value is based on the cost of constructing a like for like building.
Find and compare your rateable value
View your propertys 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:
- an unusual shop shape
- additional window display frontages
- split levels
- sales areas hidden by pillars
Zoning
Zoning is used to apply the price per square metre to the property and get the rateable value. The front of a shop including any window display area is considered the most valuable space.
Each zone covers the width of the shop and has a depth of 6.1 metres. Zone A starts at the shop window. As you move further into the shop, each zone is half the value of the one before it. Spaces like store rooms or upstairs offices are valued as a percentage of the zone A rate.
VOA: how we use 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
Shops and high street properties that are like each other will be part of a valuation scheme. This helps make rateable values fair and consistent.
Method of measurement
Shops are measured using the net internal area (NIA) method.
Factories, workshops and warehouses
The VOA uses the rental method to value industrial properties like factories, warehouses and workshops.
The VOA gathers information about rents paid for industrial properties. It analyses the information and works out an average price per 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 heating
The price per square metre is multiplied by the property floor area to get the rateable value.
Plant and machinery
Plant and machinery, car parking and land may be shown separately in the rateable value calculation. Plant and machinery can include:
- sprinklers
- air conditioning
- CCTV
- heating
Valuation schemes
Properties that are like each other and valued using the same method are grouped into a valuation scheme. This helps make rateable values fair and consistent.
Method of measurement
Industrial properties are measured using the gross internal area (GIA) method.
Offices
The VOA uses the rental method to value offices.
The VOA gathers information about rents paid for offices. It analyses the information and works out a price per square metre for each floor area. It also considers things like:
- rent-free periods
- improvements made by the tenant
- unusual lease terms
A price per square metre is multiplied by the property floor area to get the rateable value.
Car parking may be shown separately in the valuation or reflected in the overall price per square metre.
Plant and machinery
Plant and machinery may be shown separately in the rateable value calculation and can include:
- air conditioning
- heating
- CCTV
- sprinklers
Valuation schemes
Properties that are like each other and valued using the same method are grouped into a valuation scheme. This helps make rateable values fair and consistent.
Measurement method
Offices are measured using the net internal area (NIA) method.
Pubs
The VOA uses fair maintainable turnover (a type of profits method) to value public houses.
This is the annual income a reasonably efficient landlord could expect to achieve on a certain date.
A rental percentage is applied to the turnover estimate to get the rateable value. The percentage takes into account things like the type of pub, its location and if it sells food.
The percentages are agreed with the industry groups and theyre in the valuation of public houses approved guide.
VOA: how we assess pubs for business rates
Hotels
The VOA uses fair maintainable trade (a type of profits method) to value hotels.
This is the annual trade a reasonably efficient operator could expect to achieve on a certain date . The VOA analyses trade from previous years and considers the trade of comparable properties.
The VOA applies a percentage to the fair maintainable trade to get the rateable value.
The percentage applied depends on:
- the type of hotel
- expected profit
- expected trading performance
Restaurants
The VOA uses the rental method to value restaurants.
The VOA gathers information about rents paid for shops and 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
- unusual layouts
- air conditioning
Zoning or an overall method is used to apply the price per square metre to the property and get the rateable value.
Overall method
The price per square metre is applied to the floor area of each part of the building. The most important space, such as the main dining area on the ground floor, is valued at 100% price per square metre.
Kitchens, stores and customer toilets are valued at a lower percentage of the price per square metre.
Kitchens that customers can see and are part of the dining experience are valued at 100% price per square metre.
Zoning
The restaurant is divided into zones. Each zone covers the width of the restaurant and has a depth of 6.1 metres.
Zone A starts at the window and is valued at 100% price per square metre. As you move deeper into the restaurant, each zone is half the value of the one before it.
Spaces like store rooms or upstairs offices are valued at a price per square metre.
Plant and machinery
Plant and machinery may be shown separately in the valuation and can include air conditioning and lifts.
Valuation schemes
Properties that are like each other and valued using