Barrel-Dregs, a talk with the Rating Valuation Officer (97)

By | August 12, 2010

For what it is worth I was talking to the Rating Valuation  Officer a few days ago.

The conversation started very guardedly, since I was seeking to reduce the rates on a factory site, not a pub.

Normal Commercial Property Rateable values supposedly equate to the rent that would be reasonably achieved within that area, which the Valuation Officer agreed.

I mentioned that I had been invited to discuss certain issues on valuation at the RICS, this lead or I steered the conversation round to Pub Rents.

Pub Rents and rates should do the same, but they do not, since they are based on FMT.

Originally in the RICS Guidelines for Pub Rents the existing turnover had to be considered in any FMT calculation, which gave a reasonably accurate valuation of the viability of FMT.

The TRVG (RICS Trade Related Valuation Group) supposedly under the former Chairmanship of so called expert in running pubs and his merry band, allegedly removed the need to consider existing business in the FMT calculation, allowing unrestricted guesstimations of possible business and FMT, raising rents to unsustainable levels and in turn rates, in pursuit of enhanced property valuations with no consideration of viability.

Sadly because so many people take pubs with no knowledge of these things they accept the rent and in turn the rates, establishing a false norm, which in most cases is not viable.

Closing pubs removes them from being used for Comparables for either rent or rates, so the Comparables for rent and rating figures are normally cherry picked from the surviving pubs, maintaining high rents and rates.

If existing figures are reintroduced into the calculations it will reduce the FMT level or if more people refused to accept the rental levels demanded, this would in turn justify bringing the rates down, in addition Skys’ charges are based on rateable values, the saving to the industry and licensees would be enormous.

Unfortunately the Pub Co’s put people in on a TAW (Tenant at Will) at a low rent and then hike the rent when they sign the lease, they have to establish in writing the rental level for the lease before they even consider taking a TAW.

Strangely the TAW rent is never given to the Valuation Office, only the lease rent.

If Comparables, which I consider to be totally flawed, without a rigid direction as to use, took into consideration vacant pubs at nil rent, and TAW rents, rather than cherry picking the high rents, we might just get some real basis back into these flawed calculations and viable, realistic rental, rating and Sky charges.

If the Landlords had to pay all these charges, they would screw them all down very rapidly.

Barfly

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One thought on “Barrel-Dregs, a talk with the Rating Valuation Officer (97)

  1. David

    I think the valuations officers in other markets can see exactly what has been gong on but won’t lift a finger as it would reduce revenue.

    Reply

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