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BCIS data and business rates revaluation 2023

Published: 30/01/2023

The revaluation

From 1 April 2023, the rateable values of all non-domestic properties in England will be updated by the Valuation Office Agency (VOA) to reflect the property market as at 1 April 2021.

Since November 2022 organisations have been able to view the proposed valuation. They can challenge a property’s rateable value if they think it’s wrong.

For most properties the valuation is based on an estimate by the VOA of the property’s open market rental value on 1st April 2021.

Contractor’s basis of valuation

However, there are specialised buildings that do not have an open market rent, for example, larger industrial buildings and public buildings, universities, etc. For these the ‘contractor’s basis of valuation’ can be used. And it is here that BCIS data will prove useful:

Average Building Prices
Cost Analyses
Schedule of Rates
Tender Price indices
Location factors
Plant and Equipment Indices
Component life

The first stage of the Contractor’s Basis is to estimate what it would cost to construct the property, including all the buildings, site works, and all rateable structures and rateable plant and machinery within the property, on an undeveloped site.

The estimated cost of replacement should include all of the elements that would go to make up an actual cost. Design costs, site works, provision of services and supervision costs (including fees) should all be included in the estimated replacement cost. In most cases costs will relate to the actual property, but there may be cases where it would be appropriate to cost a modern, simpler or smaller substitute.

The estimate of the replacement cost can be achieved either by:

reference to historical records of the actual cost of constructing the building or structure and acquiring plant and equipment.
reference to other appropriate and reliable sources of cost estimates. Unit costs based on competitive rates prevailing at the valuation date.

If the original cost of the building, structure or plant and equipment are available the cost information will need to be adjusted to correspond with the valuation date. BCIS has different indices for buildings, civils and plant and equipment, etc. that could be used, although care needs to be exercised to ensure that an appropriate index is applied.

If unit costs are used the valuer will also need to adjust for any difference in cost levels between the location of the property being valued and the source of the cost information.

Adjusting for current condition

The costs estimated relate to the provision of new buildings, structures, plant and equipment, etc. As it is the actual property that has to be valued, in its existing physical state, adjustments should be considered at this stage. This is to reflect certain deficiencies in comparing the actual property with the ‘new’ property that forms the basis of the estimate.

These include:

‘Physical obsolescence’ – this relates to the deterioration of the buildings, or other parts of the property, through the wear and tear of the components.
‘Functional obsolescence’ – this relates to the problems that may be present in the design of the property, which could be deficient by comparison with current requirements,
‘Technological obsolescence’ – this arises where current technology has evolved to such an extent, that the actual buildings or plant to be valued have become significantly redundant, or economically outmoded.