A valuation for commercial rates purposes is arrived at by estimating the Net Annual Value of the property in question, at a specified valuation date. For Reval 2019 this is 15th September 2017. The term “net annual value” has a legal definition and is set out in section 48 of the Valuation Act 2001 as “the rent for which, one year with another, the property might, in its actual state, be reasonably expected to let from year to year, on the assumption that the probable average annual cost of repairs, insurance and other expenses (if any) that would be necessary to maintain the property in that state, and all rates and other taxes payable in respect of the property, are borne by the tenant”. This definition of Net Annual Value is applied to all rateable properties and classes of business on a nationwide basis.
Estimating the Net Annual Value of a rateable property is an evidence-based exercise. During a revaluation, the Valuation Office analyses relevant market rental transactions for all rateable properties in accordance with the legislation, best practice internationally as set out in published Practice Guidance Notes, well-established valuation principles and case law arising from the independent Valuation Tribunal and the Higher Courts. The conclusions drawn from that analysis is applied to similarly circumstanced property using the “comparative” method of valuation which, as the name implies, employs direct comparison with other similar properties.