Rating Manual section 5a: valuation of all property classes - Advertising
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From: Valuation Office Agency Published 5 May 2017 Updated: 22
February 2023, see all updates Source:
https://www.gov.uk/guidance/rating-manual-section-6-part-3-valuation-of-all-property-classes/section-20-advertising-rights-advertising-stations-and-land-used-for-advertising
Advertising rights, advertising stations and land used for
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From: Published 5 May 2017 Updated: 22 February 2023, see all updates Source: https://www.gov.uk/guidance/rating-manual-section-6-part-3-valuation-of-all-property-classes/section-20-advertising-rights-advertising-stations-and-land-used-for-advertising Advertising rights, advertising stations and land used for advertising This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version. 1. Market appraisal According to figures available from the Outdoor Media Centre (sourced in August 2015 and based on figures compiled by the Advertising Association/WARC), total advertising spend in the UK was £18.533 Billion for the year ending December 2014 (compared to £17.756 Billion in the year ending December 2007). However, there was a pronounced dip in overall spend in the intervening period between January 2009 and December 2012. The annual spend on media in the UK between 2007 and 2014, together with the out of home (outdoor) contribution is as follows:
These figures indicate that out of home advertising in represented in the year ending December 2014 around 5.50% of the total advertising spend in the UK; this share is the same as it was in 2007 and, despite the total spend between 1 January 2009 to 31 December 2012 shrinking significantly, out of home has maintained its share, being between 4.80% and 5.68% of overall UK media spend throughout the period. Interestingly, whilst out of home has maintained its share of overall spend over the seven year period, the spend on internet advertising has increased significantly, seemingly at the expense of newspapers, other print media and direct mail. Although strictly speaking outside the scope of this small format practice note, the figures available suggest the following regarding the use of all types of outdoor displays over the period April 2008 to April 2015:
Looking beyond April 2015 is difficult, but based on current knowledge the following observations can be made:
2. Changes from the last practice note The following broad changes and observations should be considered when comparing the guidance contained in the previous (2010) practice note to this 2017 practice note:
3. Ratepayer discussions Discussions have taken place with representatives for Clear Channel UK Ltd., JC Decaux and Primesight in respect of the levels of value to be applied for the Revaluation 2017 for 6-sheet and 4-sheet panels on bus shelters and certain superstores. Available evidence of rents on small display advertising has also been examined. Similarly, bus shelter and small format advertising has been considered in the context of more general advertising industry indicators and trends. 4. Valuation scheme4.1 Overview of approach and schemes In general, the approach detailed in Rating Manual section 6 part 3 - section 20 should be adopted when making valuations in respect of advertising rights or stations, and land used for advertising. This Practice Note provides valuation guidance on the valuation of small format advertising displays for the 2017 Rating Lists. Included are small format 4-sheet and 6-sheeet displays, in particular bus shelter, petrol filling station, motorway service area and supermarket advertising displays. Also included is the approach to be taken in respect small format displays at sponsored roundabouts and those on lampposts. The figures in this note are expressed in terms of “single sides” or “single panels”; additionally, the figures must not be used for any display sizes larger than the modern 6-sheet, being 1.8m x 1.2m. Guidance on the categorisation of any particular town and city and the relative location classifications within that town and city is given below. The basis of classification remains as adopted for earlier Rating Lists; the general expectation is therefore that categorisation and classification adopted for R2010 will apply for R2017. 4.1.1 Categorisation of towns / cities The scheme of valuation identifies four urban categories:
In the majority of cases it should be straightforward to decide upon the most appropriate category and classification to adopt for any particular bus shelter location. However, regard may be had to additional factors such as population size, any local restrictions on advertising, whether “Heritage” Centres and whether the shelter is in a Historic City or Town. These factors may have a bearing on the categorisation/classification decision to be made Central London The relative categorisations within Central London are now well established and these remain unchanged for 2017 purposes. Within Central London, the “key higher value” locations are excluded from the scope of this practice note and values are not provided. This repeats the approach taken in previous revaluations. It is therefore envisaged that the Units responsible for “key higher value” locations in Central London will establish and apply appropriate levels of value depending on the relative merits of the locations concerned. Cities, outer London boroughs, major towns and other towns For 2017, determining the correct categorisation of any city or town is again most important. It is however envisaged that the work completed by Units during maintenance of the 2010 lists will have established the relative strengths and the therefore the appropriate categorisation of Cities, Boroughs and Towns from an advertising perspective. It is already established that some “Cities” could be more appropriately categorised as “Major Towns” and, conversely, some “Major Towns could be categorised as “Cities” 4.1.2 Classification within towns / cities Within each of the four “urban Categories” above, the scheme of valuation identifies three locations:
It is important to build on the valuable work already done in determining the relative strengths of advertising position and not revisit this area unnecessarily. Town centre This should be taken as meaning the main central shopping and commercial centre of the particular conurbation concerned. Main roads The majority of bus shelter sites falling into this classification are likely to be situated on main roads. Main road locations should include the principal commuter routes into the city/town centre, the main arterial routes, the main suburban high streets and certain high volume locations such as the approach road to a major superstore. Other locations These will include feeder roads, minor roads, residential suburbs and estates, This classification is also likely to encompass neighbourhood and small local “estate type” shopping centres. 4.2 Data capture and the Rating Support Application Advertising Displays are a class offered valuation support on the VOA Rating Support Application (RSA). All values shown in this practice note are expressed in terms of single-sheet panels. 4.3 Structure, planning and Illumination All figures provided in this practice note reflect costs for structure, planning and illumination as appropriate. Where valuation officers obtain rental information in respect of advertising rights, care must be taken to adjust such rents by an appropriate amount depending on the type of display; costs must be amortised and added to the rent as appropriate. This is how the 2017 valuation schemes in respect of the majority of larger format advertising displays would be expected to operate. However, when formulating 2017 valuation schemes for small format advertising displays and where the figures are taken from this note, it is recommended that separate matrices be created for bus shelter, supermarket, lamppost, petrol filling station, motorway service areas and sponsored roundabouts as appropriate that reflect these features. For such small format schemes, it is important that the matrix description state, “All prices in this valuation scheme include structure, planning fees and/or illumination” or something to that effect. 4.4 Bus shelter displays – 2017 list values to be adopted The vast majority of advertising panels at bus shelters are displayed as 6-sheets, the typical format being double-sided, 6-sheet displays. A small number of 4-sheet panels still remain, however as the figures provided in the “Market Appraisal” at paragraph 1 suggest, these are being gradually removed and/or, if considered viable, replaced with 6 sheet panels. 4.4.1 Bus shelter 6-sheet panels For bus shelter 6-sheet panels, the following values, expressed in terms of a single 6-sheet panel, should be adopted:
4.4.2 Bus shelter 4-sheet panels In the absence of any local evidence to the contrary, any remaining bus shelter 4-sheet panels should be valued on the following basis, expressed in terms of a single 4-sheet panel:
4.4.3 Bus shelter displays – other considerations Other features that may need consideration when dealing with the valuation of bus shelter advertising displays are considered in the following paragraphs. Advice is also given on aspects of data capture and rating list address creation. 4.4.3.1 Bus shelters with additional static panels In respect of those bus shelters that have more than the standard “double 4-sheet” or “double 6-sheet” static display panels, the following approach, which replicates that taken during 2005 and 2010 Rating List maintenance, should be adopted for 2017. For bus shelters containing more than one double panel or two single panels, it is accepted that in most cases the additional static panels do not have the same value as the first two static panels. In such cases the subsequent static panels should be valued at 50% of the appropriate single panel price. For example: Where the single 6-sheet panel is £425, the third and any subsequent static panel should be taken at £212.50 each, being 50% of £425. There may however be some exceptional cases where this reduced rate for third and further additional panels would not apply. For example, where a bus shelter is situated outside an underground or railway station, and where the additional static panels are specifically sited to attract the pedestrians going into and out of the station. Each case should be judged on its own merits but in these exceptional cases, any additional static panels are expected to be valued at the same single sheet rate as the first two single panels. In other words, additional panels in exceptionally good locations typically attract no discount. 4.4.3.2 Bus shelters with scrollers Some bus shelters display multi‑scrolling 6-sheet panels. Such scrollers tend to be located in the more prominent locations and normally display 2, 3 or 4 sheets per panel face. The scrolling panel usually has a static display panel on the rear side. It is rare to have two scrollers “back-to-back”. In respect of bus shelters that have scrollers, the appropriate single sheet rate should be applied to each scrolling face with no discount. 4.4.3.3 Bus shelters with electronic or digital displays Using what is a relatively new and improving format, some bus shelters incorporate electronic or digital media to display advertisements on 6-sheet panels. Such displays are steadily increasing in number. They tend to be located in the more prominent locations offer the equivalent of 6 sheets per panel face in terms of their ability to be placed in national advertising “packages”. The electronic panel may have a static display panel on the rear side. They are not as bulky as scrollers, so there may also be situations where there are two electronic or digital panels “back-to-back”. In respect of bus shelters that have electronic or digital displays, six times the appropriate single sheet rate should be applied to each electronic or digital display with no discount. 4.5 Supermarket 6-sheet panels – 2017 list values to be adopted For the purposes of this paragraph, superstores include large hypermarkets and supermarkets and modern standalone superstores with significant parking provision. The figures shown below should not be used in respect of 6-sheet advertising at traditional convenience stores located in a parade of local shops, or convenience stores at petrol filling stations. Refer to paragraph 4.7 below for lamppost advertising in retail car parks. The values to be adopted for 6-sheet panels displayed at superstores are dependent on the named operator of the store. Where details are known, the terms of licence agreements between the supermarkets and the advertising company remain unchanged following renewal. This is thought to be mainly due to the “profit-share” elements built into the arrangements on top of the base rent figures. It has been established that both Tesco and Sainsbury retain specific rights to use panels themselves for a percentage of the time. This percentage is specified in the licence agreements and is a “retained right”; therefore in these circumstances it is not correct to value these individual panels at a level reflecting the right to advertise for 100% of the time. In practice, those supermarkets having retained rights tend to use a particular number of panels, but not necessarily the same panels, at any one time. The combination of panels used by the supermarket appears to be agreed between the parties with due consideration for position, duration etc. The “adjusted figures” recommended below for the main supermarkets take account of the percentage of advertising time retained by Tesco and Sainsburys, and for 2017 this percentage remains unchanged from that recommended in previous rating lists. Two sets of figure are therefore provided. The first set of figures represents the full value of a standard 6-sheet panel at any particular supermarket. However, it is the second set of figures that must be adopted in the valuation of each single 6-sheet panels at the particular supermarkets mentioned. The figures only differ where the host is known to reserve advertising time. In respect of applying figures more widely, attention is also drawn to the guidance provided in paragraph 4.10 below. The figures provided below are expressed in terms of single-panel 6-sheet.
*It will be noted that the “Unadjusted” and “Adjusted” figures are exactly the same for these supermarkets, as it is understood that the licences for these supermarkets do not specifically retain within their control any part of the right to display. 4.6 Petrol filling station forecourt panels – 2017 list values to be adopted Central guidance is provided in respect of 6-sheet panels displayed at petrol filing station forecourts. Available rental information indicates that around 85% of forecourt advertising displays can be valued by reference to a single figure. This means 85% of 6-sheet displays are located on stand-alone petrol filling station forecourts on classified A and B roads in urban and suburban locations. On either side of this broad range, other displays are located in popular “honey pot” locations or on country lanes and in village centres. The figures shown in the table below should not be adopted for displays on petrol station forecourts at motorway service stations, which should be dealt with by reference to paragraph 4.8 below. Neither should the figures be adopted for displays in petrol station forecourts in superstores where the petrol station is included in the superstore assessment. The figures provided below are expressed in terms of single-panel 6-sheet. The approach to dealing with scrollers and electronic displays at paragraph 4.4.3 above should be adopted. However, there it is not appropriate to discount for multiple displays or additional static panels.
If rental information becomes available in support of any challenge to the application of the above figures, full details of the rent must be ascertained and further advice sought using the protocols for seeking advice as appropriate. In respect of applying figures more widely, attention is also drawn to the guidance provided in paragraph 4.10 below. 4.7 Lamppost advertising on 6-sheets – 2017 values to be adopted Double sided 6-sheet advertising displays mounted within the vertical structure of lampposts appear from time to time. The arrangements in respect of lamppost advertising displays are often similar to that which operates in respect of bus shelter advertising, in that the local authority is provided with new lampposts (or some other benefit) in exchange for the right to advertise on them being granted. The panels are typically two and a half to three metres above ground level and not only display advertising on in roadside locations, but also display 6-sheet advertising on lampposts and poles within shopping centre and retail park car parks. 4.7.1 Lampposts on roadside locations in towns and cities The following values are recommended in respect of 2017 valuations in the absence of any better evidence of value derived from an analysis of rental or other direct comparable evidence.
The considerations made when determining the correct categorisation of “City” or “Town” as described in the left hand column of the table are the same as those made in respect of the bus shelter scheme (see above). 4.7.2 Lampposts in shopping centre and similar retail car parks Where 6-sheet panel advertising rights are identified on lampposts in shopping centre and retail park car parks, available rental details should be obtained, adjusted, analysed and adopted as appropriate. However, in the absence of rental evidence, the figures shown in the table below should be adopted.
Where there is any difficulty determining those situations at the boundary of the “Normal” and “Poorer” categories outside the M25, guidance from National Valuation Unit (NVU) should be sought using the usual protocols. The figures provided for supermarkets at paragraph 4.5 should not be used to value lamppost 6-sheets, as they relate to named supermarkets only. Figures for 4-sheet advertising displays are not provided as they rarely constitute the type of lamppost advertising display intended to be dealt with in this paragraph. Therefore, should it become necessary to place a value a 4-sheet (or any other) display on a lamppost, guidance should be sought from National Valuation Unit (NVU) using the usual protocols. 4.8 Motorway service areas – 2017 list values to be adopted Unless there is rental evidence to the contrary, Valuation Officers should adopt £400 per single sided 6-sheet at motorway service areas. 4.9 Advertising from telephone boxes – 2017 list values to be adopted Generally, 6-sheet advertising displays from telephone boxes should be dealt with by adopting the bus shelter scheme figures (See Paragraph 4.4 above) 4.9.1 “StreetTalk” telephone boxes - “stick on” or “wrap around” types Valuation Officers should adopt £550 per telephone box. 4.9.2 “StreetTalk” telephone boxes - 6 sheets Valuation Officers should adopt the bus shelter scheme figures per single sided 6-sheet on a telephone box. (See Paragraph 4.4 above) 4.9.3 “StreetTalk 6” kiosks - 6 sheet “scrollers” StreetTalk 6 kiosks have a ‘cowl’ or ‘cover’ and a scrolling 6-sheet advertising display on the rear. It is understood that all have scrolling displays on the other side to the telephone cowl. It is understood StreetTalk 6 Kiosks always have multiple scrolling display faces on one side, and a telephone under a ‘shelter’, ‘cover’ or ‘cowl’ on the other. Valuation Officers should adopt the bus shelter scheme figures with the uplift for scrollers as appropriate. (See Paragraph 4.4 above). StreetTalk 6 kiosks are generally located in town and city centres so the price to adopt is expected to be the “Town Centre” bus shelter price for the particular town or city. 4.10 Sponsored roundabouts – 2017 list values to be adopted There are a wide variety of display sign types and sizes in use on sponsored roundabouts, ranging from small “plaques” or “nameplates” up to the size of six-sheets. Typically there are four displays per roundabout; the actual number tends to depend on the size of the roundabout and the amount of roads feeding into it. This potential for variation makes it inappropriate to promote a single figure on sponsored roundabouts and instead a step-by-step approach is recommended as outlined in this paragraph. In addition, the main manual section at Rating Manual 5:20 provides guidance on how to identify and deal with various size of small format display. The contractual arrangements between operators vary, but sponsored Roundabouts typically result from an arrangement between an authority with responsibility for the maintenance of a roundabout (or roundabouts) and another person. The authority responsible for roundabouts tend to see the revenue from advertising sponsorship as a way of contributing to the costs associated with maintaining its roundabout(s). Whatever approach is considered appropriate, advertising on roundabouts on busy routes and with prominent and sizeable displays should be treated with care to ensure they are not valued at an insufficient level and, conversely, roundabouts with very small, permanent, tailor made “plaques” or “nameplates” should be carefully considered so they are not valued too highly. Where in doubt, advice should be sought from National Valuation Unit (NVU) following the current protocols as necessary. 4.10.1 Firstly, consider rental evidence As a start point, Valuation Officers’ should examine rental evidence available. Where there is a rent paid either in respect of an individual roundabout, or for the ability to place sponsored advertising displays on more than one roundabout, it should be carefully considered and adjusted as appropriate to see if it offers a reliable indicator of value. However, when making the first ever valuation of a particular advertising display based on the rent passing, care should be taken to adjust the rent to reflect the inevitable impact a newly imposed rate payment would have on it. 4.10.2 Secondly, where the accounts show there is potential for a profit, look for a ‘profit share’ or divisible balance In the absence of a rent, where sufficient details are known to enable it, and the answer is positive, consider an approach that examines how much is left for rent after expenditure. In other words arrive at a divisible balance. In many cases there is a “profit share” arrangement between the council and operator in respect of sponsored roundabouts, and this is a good indication of the amount available from the divisible balance. Even where such an arrangement is in place and a payment is being made to the council, it may be necessary to arrive at a divisible balance separately. For example, the VTE considered it appropriate in the 2010 list for York to apply such an approach; a divisible balance was calculated which, once divided, resulted in a valuation of £600 for a particular ‘roundabout’ (VTE Appeal Number 274118698930/538N10). When making the first ever calculation to reach the divisible balance, care should be taken to reflect the inevitable impact a newly imposed rate payment would have on it. 4.10.3 Finally, adopt the 2017 6-sheet “bus shelter” figures, adjusted as appropriate In the absence of any rental evidence or where there is no “profit share” or divisible balance or where insufficient details enable a divisible balance to be determined, valuation officers’ should utilise the appropriate 6-sheet bus shelter figure specified in the table above. Caseworkers should adjust the appropriate 6-sheet bus shelter figure to take into account the display sizes and numbers of displays on the roundabout as appropriate. For example, the VTE considered it appropriate in the 2010 lists for Suffolk to place one third of the prevailing bus shelter rate on 2 roundabouts containing signs measuring 90cm by 45cm (around 15% of the size of a six sheet). The prevailing bus shelter rate was £240, resulting in a valuation of £80 for each “roundabout” (VTE Appeal Number 353023683145/538N10). Such an approach would result in the following prices per roundabout displaying three or four signs of approximately that size: Where sizes are significantly larger or smaller, adjustments should be made as mentioned above. For the sake of clarity, only the 6-sheet bus shelter figures should be used as the reference point. The 4-sheet bus shelter figures (or any other figures in this note) must not be used as a reference point. 4.11 Wider application of these figures - general It is possible that the figures provided in this practice note will be taken and applied more widely to other small format displays. It is therefore important to re-iterate that the figures provided in this note are expressed in terms of single panels and may also include structure, planning and illumination costs as appropriate. They must never be used to value large format advertising displays, such as 48-sheets. 4.11.1 Bus shelter figures Although wider use of the bus shelter figures given above is acceptable, it is important to consider “non-bus shelter” displays on their own merits. For instance any local rental and other evidence should be considered when making valuations in respect of “non-bus shelter” small format advertising panels and due account taken of location and positional differences. 4.11.2 Supermarket figures The wider application of any figures provided in respect of supermarket panels is not recommended as they relate to named supermarkets only. 4.11.3 Petrol filling station forecourt figures The wider application of the catch-all figure provided in respect of Petrol Station Forecourt panels is not recommended as it is by nature a broad scheme, subject to increase or reduction if rental evidence in the locality on similar forecourt display sites emerges. It is not considered likely that the forecourt figure will have any bearing on the figures used for bus shelters and superstores in the vicinity. However, if questions are raised regarding the differentials in value between panels in the same locality, the facts on the ground will need to be considered in each case. Care must be taken to ensure that a true comparison can be made before adjusting any figures, seeking advice following the current protocols as necessary. 4.11.4 Lampposts, motorway service areas, phone box and sponsored roundabout figures The wider application of figures provided in respect of lampposts, motorway service areas, phone box and sponsored roundabouts is not recommended. |