IRRV ANNUAL SCOTTISH CONFERENCE & EXHIBITION 2010 ‘YEARS OF CHALLENGE – securing the future for public services’ 1-2 SEPTEMBER 2010 Crieff Hydro Hotel Crieff

VALUATION IN A RECESSION Alastair Kirkwood BSc. MRICS. Dip Rat. IRRV. Depute Assessor & ERO Ayrshire Valuation Joint Board

Ryden’s Scottish Property Review (April 08). The Scottish economy is performing at around trend levels. Forecasts for 2008 and 2009 are weaker, although still positive. Property market demand is currently stable, but expansion and investment in some sectors is clearly being curtailed. Forecast UK economic growth averages 1.7% for 2008 and 1.8% for 2009.

Ryden’s Scottish Property Review (April 08). Office market activity in Aberdeen continues at exceptional levels. Annual take up in Glasgow and Edinburgh is around average. Rents for good quality industrial property in Edinburgh increased steadily in 2007 and early Consumer expenditure growth is slowing. This is increasingly reflected in retailers’ trading performance and in weak rental growth in the retail property market.

Invista Real Estate Investment Management Market Overview March 2008 “We expect the re-rating of yields to continue into the second quarter of 2008, with values stabilising by the end of the third quarter... Despite the downside risk from a global economic slowdown in 2008, we believe the UK economy should prove resilient enough to continue to provide positive nominal rental value growth over the coming two years.”

Lloyds TSB Commercial Property Review [May 2008] The UK commercial property sector has been especially hard hit by the credit crunch, but our view is that price falls may be as deep, but not as prolonged, as the crash in the early 1990s. We expect average rental growth of 3-4% in to give some support to the sector.

Types of appeal that are being lodged today: Material Change of Circumstance appeals against the 2005 – 2010 Valuation Roll Revaluation Appeals 2010 Material Change of Circumstance appeals against the 2010 – 2015 Valuation Roll

MCC Appeals against the 2005 – 2010 Valuation Roll. (Downturn appeals) Definition of MCC in the Local Government (Scotland) Act 1975 amended to remove: “but does not include a change in the rent of the said or any other lands and heritages or any change in the general level of valuations or in the values of lands and heritages situated in the area of a particular rating authority”.

Tone of the Roll Local Government (Scotland) Act 1966 (S15) the value or altered value.. shall not exceed the value which would have been ascribed... if the lands & Heritages... had been subsisting throughout the year before the last year of revaluation, on the assumption that...

S15 Tone of the Roll - Assumptions The lands and heritages were in the same state as at the time of valuation* and any relevant factors... were the same as those subsisting... [as at the time of valuation] The locality in which the lands and heritages are situated was in the same state,... [as at the time of the valuation]. Time of valuation means the time the valuation would have been carried if this section had not been enacted.

Tone of the Roll – Relevant Factors Assumed to be as at the time of valuation: The mode or category of occupation of the lands and heritages The quantity of minerals materials or other substances in or extracted from the lands and heritages The volume of trade or business carried on in the lands and heritages

Local Government (Scotland) Act 1975 “3(4) Without prejudice to subsection (2) above, the proprietor, tenant or occupier of lands and heritages which are included in the valuation roll may appeal against the relevant entry but only on the ground that there has been a material change of circumstances since the entry was made...

IRRV ANNUAL SCOTTISH CONFERENCE & EXHIBITION 2010 ‘YEARS OF CHALLENGE – securing the future for public services’ 1-2 SEPTEMBER 2010 Crieff Hydro Hotel Crieff