[2024] UKUT 232 (LC)

The Rating Forum Guidance provides at paragraph 5.59:

“when the valuer has completed a valuation on the R&E method…, it is essential to review each of the elements to ascertain whether they have been correctly applied and produce a credible result”

And at paragraph 5.60

“although it is likely that comparables will not be available in sufficient numbers to enable a valuation to be prepared on the rental/comparative basis… the valuer should consider the valuation produced against the background of valuations relating to similar properties and/or businesses. If the valuation does not appear to ‘fit the pattern’ so far as one is discernible, the valuer should again carry out a thorough review of the valuation adopted.”

Both experts sought to ‘sense check’ their valuations against agreed assessments from other farm attractions. Mr Davies provided five examples of attractions which he described as ‘truly comparable’ to the farm under consideration. These were are as follows:

Mr Davies considered that each of these properties to have a comparable location to Finkley Down Farm. He commented that the areas of land available for public access are very similar, particularly Longdown Activity Farm and Rare Breeds Church Farm. The farm buildings are all of a similar design, age, size, construction and area. He pointed out that a number of his comparable properties, namely Longdown, Church Farm, Marsh Farm, Whitehouse Farm Centre and Old MacDonalds Farm had all been the subject of appeals and had received a significant reduction in assessment.

In making these comparisons Mr Davies sought to make the point that all of the sites were assessed at figures that were substantially less than the current assessment on the farm. However, when properties are valued by means of the receipts and expenditure method there is rarely anything to be gained from such a simplistic comparison. It is their individuality and the nuances of their trading performance that makes these properties suitable candidates for this particular valuation methodology. Two of the properties were leasehold but Mr Davies did not adduce anything in evidence that would enable me to discern whether the rents could be relied upon, much less anything that explained how the assessments had been informed by the rents.

Mr Cox referred to rental evidence as well, but only to note that the Tribunal had, in Apple Jacks, placed no reliance on it. He was correct to do so, the rental evidence available in this appeal adds nothing to that considered in the earlier appeal.

He was also cognisant of the Tribunal’s comments in Apple Jacks and Blackrock about reliance on ‘the shortened method’ or in other words, valuation by means of taking a percentage of receipts. In this case he sought to use this method as means of comparison, but the Tribunal’s previous criticisms still apply. It appears to me that the expression, as a single numerical value, of all the characteristics, financial performance and valuer judgement that went into agreeing an assessment, is an exercise that will produce an answer of minimal utility.

Nevertheless, for completeness, I record below the details of Mr Cox’s comparisons.

The ‘stand back and look’ approach evinced by the guidance essentially asks ‘does the answer you have arrived at fit with the pattern established by other sites?’ recognising that when the receipts and expenditure method is used, all of the attributes and disadvantages are baked into the components of the valuation. The FMTs above are disparate, but without the costs of sales and working expenses the comparisons simply tell me that for some sites the notional rent as a percentage of receipts is higher or lower than at others. It enables the valuer to see whether the end figure fits within a range but that is where the benefit stops.

Mr Davies attached as an appendix to his supplemental report, a report by Briggs and Stone, a firm of land and property consultants based in Buckinghamshire. The report, which was produced for negotiation purposes, was commissioned by Mr Davies rather than Mr Waters and was based on a valuation date of 1April 2017 rather than the AVD. It was intended to support the valuation sought by Mr Davies. The report concluded that the market rent of the property in its current condition and assuming that the property was held on a ten year FRI lease was £50,000 per annum. The author of the report, Mr Will Taylor MRICS FAAV, adopted the comparative method of valuation but did not provide any details of comparable transactions. He reported that owing to a lack of rental evidence he had regard to a ‘layered’ approach in which he had assessed the likely achievable combined rent of the property if the buildings were to be let for commercial (non-leisure) purposes. I find this valuation of no use at all as it is not on the same basis as the statutory definition of rateable value and purports to relate to the market two years after the AVD.