Rating Manual section 5a: valuation of all property classes - bus garages

Rating Manual section 5a: valuation of all property classes

From:

Valuation Office Agency

Published

5 May 2017

Updated:

22 February 2023, see all updates

Bus garages

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

The basic function of a bus garage is the secure parking and day to day servicing of vehicles. Some garages may, in addition, be used for:

i. the administration of bus routes including the collection of, and accounting for, fares received ii. the provision of canteen and recreation facilities for employees.

A bus garage is likely to be one of the following 3 types:

a. the larger purpose-built bus garages constructed prior to deregulation incorporating facilities for washing, garaging and day to day maintenance of single and double-decker buses under cover. The main area is used for garaging and a lesser area is equipped with inspection pits and workshops for bus maintenance. There will be smaller areas used as canteens and administrative offices. The garage and workshops may have wide clear spans up to 30 metres and a clear height up to 5.5 metres. Large steel shutter doors provide easy access in and out of the buildings for double-decker buses. The buildings are usually heated, with arrangements to clear exhaust fumes. All the floors of the garage and the workshop buildings are built to a fall throughout their length, with cambers across the fall to facilitate drainage. There may be considerable areas of raised pavement running for most of the length of the garage buildings to keep buses away from the structural supports. There is adequate space for the free circulation of buses in and out of the buildings but usually no extensive external parking arrangements for buses or cars, therefore the plot ratio is likely to be relatively high. Buses are parked undercover when not in use.

The main bus service and maintenance area is likely to be either (i) semi-basement construction, approximately 1.4m deep, with columns supporting the bus runways, and designed to allow simultaneous servicing of a number of buses; or (ii) have individual inspection pits set in the floor.

This category of garage is deemed to be sui generis.

b. Purpose built garages for generally (but not always) between 100 and 275 buses with open parking ( garages with uncovered bus parking space), covered maintenance and workshops area usually of steel frame construction, staff accommodation and ancillary offices and stores, diesel tanks and plant & machinery. The maintenance and workshops area will not be built to a fall throughout their length and there will be no cambers across the fall to facilitate drainage. The hard surfaced parking area will be drained, illuminated and fenced. Garages of this type are also sui generis and outside of London to be valued on a contractors basis. (see 8.1 below). Most larger bus garages will now be of this specification, with the older type town centre bus garages having been sold for redevelopment.

c. Bus garages of the adapted shed type - these non-sui generis bus garages may be simply defined as smaller garages, often situated on industrial estates, in units which have undergone little special adaptation. These garages are likely to consist of an open area for parking of buses and employees’ cars, offices, staff accommodation, covered maintenance area with or without inspection pits, bus wash, tyre and general stores, diesel tanks and plant & machinery.

Even though the mode and category of use will be a bus garage, there is a good chance that rental evidence exists to show that bus garage operators have competed with other industrial uses in order to secure the tenancy. If it can be shown by evidence that the bus garage operator would be in the market to acquire standard industrial units at market levels, it will not offend rebus to import those rents. It is generally accepted this will be more applicable to smaller bus garages, often occupying non-purpose built accommodation. (see Section 5 above.)

8.1 Valuation methods

The basis of valuation will either be the rental/comparative method where evidence exists; or the contractor’s basis where the hereditament is, rebus sic stantibus, so different from other warehouses/commercial garages/depots that it may be regarded as “sui generis” and no rental evidence is available. The majority of large bus garages (if not all of those outside of London) will fit into the category of sui generis and be valued on a contractor’s basis.

8.2 The substitute hereditament

Where the bus garage is a traditional old style sui generis garage, a substitute bus garage, in accordance with the rates per square metre and formula listed below, should be cost for Stage 1 of the contractor’s basis. The substitute hereditament will consist of the following buildings as are necessary for maintenance and cleaning of vehicles, accommodation for administrative purposes, staff amenities, storage and housing of plant. It should normally be assumed that in the substitute hereditament vehicles will not be garaged, but parked on hard-standing of appropriate specification with kerbs, drainage, illumination, security fencing and gates. Planning requirements may dictate that within certain localities buses must be garaged within enclosed buildings and in such cases the substitute hereditament to be cost will include an enclosed garage. There may be occasions where the garage accommodates open top buses more especially in tourist areas. These buses will need to be stored undercover.

In respect of the 2010 and 2017 Rating Lists all bus garages built after 1995 are to be valued on the actual GIA areas and not on the basis of a substitute hereditament.

8.3. Components of the substitute bus garage

Calculation of the areas (to GIA) to be used for calculating the size of the substitute *hereditament** are as follows:

8.3.1 Parking space (used for the parking of buses)

This is to be calculated on the basis of fleet footprint x 4. Fleet footprint is defined as the aggregate area of the total number of buses regularly stationed at each garage. A standard bus being taken to cover an area of 24m2. The relevant date for the calculation is the AVD, subject to Material Change of Circumstances.

8.3.2 Workshop

This is calculated by multiplying the fleet number at the relevant date by 8.5m2. The fleet number is the total number of standard buses regularly maintained at the garage. Buses smaller or larger than the standard 24m2 are to be counted as a percentage of a standard bus size.

The relevant date for the calculation is the AVD, subject to any material change of circumstances.

8.3.3 Ancillary space

Ancillary space is taken to mean stores, plant rooms, amenity space, canteens, toilets, workshop, offices, paint shop, tyre fitting and body shop areas. The amount of ancillary accommodation required by the substitute hereditaments is determined by the size of the ancillary accommodation (all floors totaled) in use at the actual sui generis bus depot. Ensure all areas in use are included. This may include open areas located within the enclosed bus parking or workshop used for storage, spares etc.

The basis of measurement of the ancillary space is to GIA (Gross Internal Area).

8.3.4 Office space

For the purposes of this guidance note office means space within a purpose-built office block, within the curtilage of the sui generis bus depot. The ground and first floor areas within the sui generis bus depot are to be added together. Such office accommodation is often used as a regional or headquarters office. For treatment of office space ancillary to workshop and other functions, see 8.3.3 above.

The basis of measurement of the office space is to be GIA (Gross Internal Area).

8.3.5 Land

The land area of the substitute bus depot is the total in m2 of 8.3.1, 8.3.2, 8.3.3 and 8.3.4 (ground floor only).

8.4 Contractors Basis: Stage 1 - ERC the modern substitute

Building Cost information is available in the VOA Cost Guide and in the Practice Note relevant to the Rating List under consideration. In the case of a comparatively modern hereditament the VO should always examine the actual cost data if available. The modern substitute hereditament to be cost at Stage 1 recognises roofed-over garage space is rarely required and consequently the substitute to be cost will therefore consist of open parking land which is well surfaced, lit, drained and fenced and only such buildings as are operationally required for maintenance, administration and staff purposes. Where exceptionally roofed over parking is required - for example, for open top buses - a notional area of 30m2 per bus should be cost at Stage 1.

8.5 Contractors Basis: Stage 2 - ARC and superfluity

In order to arrive at adjusted replacement cost, it will be necessary to make deductions for physical and functional obsolescence. Superfluity is the one aspect of functional obsolescence not taken into account in this scale. The approach to valuation provides for this by a formula related to the size of the fleet as at the AVD which determines the size of the parking area and workshops to cost. No further adjustment for superfluity within the parking areas is required. In respect of superfluity in other parts of the hereditament, e.g. body shops, offices, staffrooms is recommended; it is for the Valuation Officer to establish whether superfluous accommodation exists and whether it merits allowance. This may be demonstrated where the areas in question are vacant at AVD with no intention on the part of the occupier to use in the future.

8.6 Contractors Basis: Stage 3 - site value

Bus garages do not generally need to be located in high value commercial areas, although there may be exceptions such as a hereditament containing a high proportion of office accommodation. In the majority of cases therefore it is anticipated that site values for bus garages will resemble warehouse/light industrial site values in suburban locations.

The selection of the site must have regard to keeping the “dead mileage” access to bus routes to a minimum. For this reason low-value sites in distant locations are unlikely to be a viable option for most operators.

8.7 Contractor’s Basis: Stage 5 - end adjustments

Stage 5 will involve the normal “stand back and look” exercise. For example it will be reasonable to consider any shortcomings in external vehicular access that may be sufficiently significant to justify an allowance.

8.8 Material changes

Where there are demolitions of neighbouring garages resulting in an increase in bus numbers the Valuation Officer should review the assessment - the material date being the demolition of the neighbouring depot. Similarly where there is the construction or redevelopment of a new bus depot within the immediate locality resulting in a fall in bus numbers the Valuation Officer will duly reconsider the situation.

Falls or increases in bus numbers due to route changes, bus company acquisitions or as a result of financial considerations are not normally considered to be a Material Change in Circumstances, and are not normally a trigger for the VO to increase or reduce assessments.

8.9 Special cases

Closed hereditaments

These should be treated as follows: closure on AVD or earlier:

The valuation should take into account that no demand exists from the previous operator and should reflect only such other demand (if any), which may exist within the same mode or category of occupation.

New hereditaments created post AVD

No superfluity allowance is normally applicable and the ARC adopted should be the full cost of providing the hereditament at AVD levels.

Physical alterations post AVD

Where physical alterations result in a reduction in the operational capacity below the actual Fleet Number as at the AVD, the assessment should be reduced to a level consistent with the new operational capacity.

8.10 Exclusions from the modern substitute approach

The contractor’s basis/modern substitute approach does not apply to sui generis bus depots in locations, albeit rare, where adequate rental or comparable evidence exists.

Neither does it apply to purpose built modern sui generis bus depots - which are defined as follows:

8.10.1 Purpose built garages with open parking as defined in 8(b).

Though the contractors basis will be applicable at Stage 1 in the case of modern purpose built bus garages, the actual hereditament will be cost (rather than a modern substitute based on the fleet footprint as adopted for the older traditional garages with the characteristics outlined in 8 (a) above).

8.10.2 Bus garages of the adapted shed type as defined in 8(c).

8.10.3 Smaller purpose built bus garages, constructed prior to deregulation, which contain a few pits and can be valued by comparison with other garages of a comparable nature.

8.10.4 Depots or garages of any description for which adequate rental evidence exists.

8.10.5 Purpose built maintenance depots from which no buses actually operate.

1. Market appraisal

The largest bus operator in Britain is the Scottish-based FirstGroup. After a period of building new garages between 1995 and 2008, this activity has now slowed. In June 2013 most of the group’s First London bus operations were sold to Go Ahead London, Metroline and Tower Transit.

Stagecoach is another major operator which in addition to providing local bus services runs a range of express coach services across the UK.

Arriva complete the picture of the “big three”. Arriva is Europe’s largest transport provider. Based in Sunderland the company became a subsidiary of Deutsche Bahn in 2010. Arriva are also active in Greater London.

On a smaller scale, Go Ahead Group are also an active player in the market, originally formed in the North-East in 1987 it has since expanded across the UK.

Since the last rating list, all bus operators have continued to introduce new technology. For example, Arriva have introduced a dynamic throttle controller that automatically adjusts the rate of acceleration, which helps reduce emissions and regulates fuel consumption. There are also examples of bus operators experimenting with biofuels, electric and compressed natural gas for powering buses.

There is no evidence to show that the design of bus garages has changed since 2008.

2. Changes from the last practice note

There are no changes (other than costs) from the broad principles followed for the 2010 List and the approach therefore remains the same as for the last list.

3. Ratepayer discussions

None at present.

4. Valuation scheme where contractor’s basis applies

The Costs shown in this section are for ease of reference. In all cases where a cost guide reference is shown that must be input into the NBS template, not the costs shown here. Where the cost guide code shows options, the costs shown in this practice note should be used to aid selection. Should the cost guide show differing costs to those shown in the current version of this practice note, please refer to the Class Coordination Team.

4.1 Stage 1 - Costs

The substitute bus garage is to be cost using the following rates:

Notes

a) Outside London it is assumed that the substitute bus garage will have one bus wash for garages with less than 100 buses and two bus washes for garages with more than 100 buses, unless the evidence suggests otherwise. In London two bus washes are the norm and hence two are to be included. The cost referred to above only includes a base, drainage and other ancillary work, together with plant housing, water recovery system and screens. Any building is to be cost separately. The cost of a drive-through wash unit would be an additional £35,000.

b) It is assumed that the substitute bus garage will have 2 rotary screw compressors where bus numbers exceed 50 buses. Bus depots with less than 50 buses, one rotary screw compressor is to be assumed.

4.1.1 External Works

7.5% is to be added to the total ARC

4.1.2 Location Factors

Location factors are to be applied as shown in the 2017 VOA Cost Guide.

4.1.3 Fees

Fees are to be applied in accordance with the 2017 VOA Cost Guide.

4.2 Stage 2 – age and obsolescence

Adjustments for age and obsolescence should be made in accordance with the industrial building scales contained in Rating Manual section 4 part 3 - subject to the following

*Age and Obsolescence allowances applicable to surfaced land will be less (in accordance with the civils scale) as a general rule than those applicable to the buildings .However the facts have to be considered in each case. For example where the modern substitute for the actual building is an open parking area, it is appropriate to apply the age related industrial buildings allowances (rather than the civils allowance to the substitute building open parking area) to reflect the obsolescence of the actual building.

*In the case of buildings that have been significantly refurbished a lower allowance than that indicated in the scale solely by reference to the building’s age may be applicable, particularly where the works undertaken have enabled internal re-modelling to improve the functional aspects of the bus garage.

*In all cases the actual age of the building is to be recorded for the purposes of determining the appropriate age and obsolescence allowance. When refurbishment has taken place the allowance and not the building’s age should be overwritten.

4.3 Stage 3-Land Value

Subject to the caveats in the Rating Manual section at 8.6 it is anticipated that the land will be added for by reference to the appropriate industrial land value for the region concerned as stated in the Land Values Practice Note. The area of land to be valued will be the actual site when valuing the actual hereditament but where a substitute hereditament is being valued then the land value will be calculated in accordance with the Rating Manual at 8.3.5.

4.4 Stage 4- De-capitalisation rate

The higher statutory de-capitalisation rate should be applied to the Effective Capital Value (ECV) to arrive at an annual equivalent.