UK Valuation Office: Land Valuation Contractor's Basis Framework

• The UK Valuation Office Agency's Property Services team assesses land values for contractor's basis valuations, with detailed data in Appendix 1.
• Valuations are based on a one-hectare plot of average density and location, with regional breakdowns including six distinct London regions and specific treatment for airports.
• Affordable housing requirements significantly impact land values, potentially creating anomalies due to varying mandates and planning policies at the antecedent valuation date.
• A 20% discount for prevailing residential land use is applied, stemming from the *Dawkins (VO) v Royal Leamington Spa BC* case and referenced in HMRC Rating Manual Part 3.
• Valuations differentiate between suburban housing assumptions outside London and higher-density residual valuations within London, also considering secondary versus prime locations and amenity values.

The specific percentage of affordable housing mandated, alongside its tenure mix, directly impacts the concluded land value.

The UK Valuation Office Agency (VOA) employs a specific methodology for assessing land values pertinent to contractor's basis valuations, with these assessments primarily conducted by its Property Services team. The foundational data underpinning these valuations is comprehensively detailed in Appendix 1, which categorizes land into five principal types. Each valuation is predicated on a standard one-hectare plot, assuming an average density and location within the relevant Billing Authority (BA) or region, and crucially, without accounting for any abnormal development costs.

These land categories are meticulously broken down, not only regionally but also, in certain instances like industrial land, to the individual Billing Authority level. This granular approach ensures that valuations reflect localized conditions as accurately as possible, forming a critical component of the UK property rating valuation guidance.

The VOA's framework acknowledges significant regional variations, particularly within London, which is delineated into six distinct regions, with the River Thames serving as a geographical separator between North and South. A dedicated 'region index' within Appendix 1 facilitates the mapping of specific Billing Authorities to their corresponding regions. For residential properties, indicative values are established for each region, drawing insights from "beacon" towns and cities, with further details available in the 'Resi BA and Town Index'. Similarly, industrial land values are presented as indicative regional figures.

Beyond standard land categories, the guidance addresses specialized properties. Following a shift in the valuation approach for Civil Airports, individual "non-civil" airports, General Aviation facilities, and smaller club airfields are specifically identified and valued. Their detailed assessments are accessible via the 'airports index' tab at the conclusion of Appendix 1, highlighting the comprehensive nature of the Valuation Office Agency contractor's basis.

A significant factor influencing land values, particularly outside London, is the assumption of planning consent for semi-detached suburban housing that fully complies with affordable housing requirements. The specific percentage of affordable housing mandated, alongside its tenure mix, directly impacts the concluded land value. This can lead to scenarios where towns with comparable base values exhibit markedly different land valuations due to varying affordable housing obligations. Such policies can also create apparent anomalies, where locations perceived as more valuable might yield lower land values because of more stringent or onerous planning policies in effect at the antecedent valuation date.

The VOA's approach underscores that property rating is fundamentally concerned with market value, and affordable housing planning policies are recognized as a direct influence on this. To account for prevailing residential land use, a 20% discount is applied to regional indicative values, a practice firmly rooted in the leading case of Dawkins (VO) v Royal Leamington Spa BC and Warwickshire CC [1961] RVR 291. This crucial legal precedent is further elaborated in the HMRC Rating Manual Part 3: The Contractor’s basis of valuation, providing essential context for understanding the UK Valuation Office land valuation contractor's basis.

Within London, the valuation methodology shifts to residual valuations, which are tailored to reflect the higher density of development characteristic of each specific location. In both central and fringe areas, the competition between residential and commercial land uses is a key consideration. For beacon towns and cities across each region, residual residential valuations are completed to reflect the higher density of dwelling units typical of more central areas, incorporating factors such as affordable housing provision. These beacon values serve as a guide, necessitating professional valuer judgment for interpolation to specific sites.

It is important to note that the figures provided generally pertain to secondary locations and do not encompass prime sites, such as those benefiting from direct motorway links. For industrial properties, while Appendix 1 provides standard levels, a discounted industrial land value from the same appendix is applied when a Practice Note for that specific class advises such a reduction. Furthermore, certain property classes may have "amenity values" adopted as their developed land value, primarily due to their unique location, with detailed guidance on these instances available in relevant Practice Notes. This comprehensive approach ensures that the affordable housing land value impact and other specific factors are appropriately integrated into the valuation process.

Lawyers advising on property development, rating appeals, or property transactions in the UK must understand the Valuation Office's methodology for land valuations under the contractor's basis. This guidance highlights how factors like regional indices, affordable housing requirements, and specific case law (e.g., *Dawkins*) can significantly impact assessed land values, affecting client liabilities and development viability.

Source: Original guidance from the Valuation Office Agency.