Case concerning five linked appeals in the Land Valuation Appeal Court of the Court of Session. The appeals related to entries in the 2010 Valuation Roll for five large industrial buildings in Inchinnan (ranging from 5,311 sq. m to 52,393 sq. m).
The valuation of the subjects had been difficult due to a lack of comparable rental evidence.Instead of using a revaluation scheme by the Scottish Assessor’s Association (SAA), the assessor had used local rental evidence to devise his own scheme. The first step was to derive a basic rate from rental evidence of smaller units in the area then to make a quantum adjustment to reflect the fact that the unit rate deceases as size increases. The principle issue in this case was the size of the quantum adjustment applied.
The assessor’s approach was accepted by the Renfrewshire Valuation Appeal Committee. However, whilst the court refused the appeals in relation to the two smallest buildings (it considered that the assessor had reliable rental evidence for buildings of up to 6,000 sq. m), it allowed appeals in relation to the three larger buildings.
The assessor was entitled not to apply the SAA valuation scheme if in his judgement the scheme was not suited to the circumstances in the valuation area. The Committee had also been correct to reject Rolls Royce’s valuation which followed the methodology of the assessor’s scheme but applied the quantum adjustment from the SAA scheme. However, there were two main problems with the assessor’s calculation of the quantum discounts:
- the assessor had relied on agreed valuations under the 2005 Valuation Roll and evidence of rental growth from those valuations (whereas, on the correct approach, a revaluation should be based on a fresh appraisal of the subjects without regard to their earlier values); and
- the assessor had also relied on the current rent for the Rolls Royce premises which, on the evidence before the Committee, had not been an open market rent and had been based on pre-ordained contractual increases rather than contemporaneous review.
The cases in respect of the three larger buildings were returned to the Committee for a re-hearing and the assessor directed to reconsider his valuations in the light of the decision.
The full judgement is available from Scottish Courts here.
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