VOA requires fit-out adjustments to car-showroom shell rents

The Valuation Office’s car-showroom guidance now tells valuers to obtain fit-out costs when analysing rents for new showrooms let as shellsGOV, conversions from other usesGOV and significant improvements to existing showroomsGOV. The manual says that merely analysing a shell rent to determine value for a finished showroom would be inappropriateGOV.

Valuers should identify what the headline rent covers and whether additions are needed for rateable fit-out items or improvements. The guidance recommends amortising relevant costs to the lease end or a break clause, using a percentage derived from market evidence, then adding the annualised figure to the shell rent. Rent-free periods and landlord capital contributions require careful consideration. Where market evidence is unavailable, the manual recommends a standard decapitalisation rate. The Valuation Office’s Built Environment and Minerals team can help identify and analyse costs, including through Form VO6065.

That recommendation needs to be read alongside the evidence-led approach in the cited judgments. In Hitchings v Shoosmiths LLP & The Mando Group, the Upper Tribunal accepted that amortised fit-out costs could be significant evidence of annual value, but preferred the available comparables for the Mando property over an unexplained cost calculation producing an apparently excessive figure. Its conclusion was that cost is the only appropriate measure where available comparables provide no assistance. It did not endorse replacing useful rental evidence with costs in every case.

The new end-allowance guidance similarly requires rental or comparable evidenceGOV. Disadvantages such as poor access or quality must not be counted twice where they are already reflected in the main space rate and comparable showroom values. For a purpose-built showroom designed to the occupier’s requirements, the manual presumes that an allowance for disability would not normally be warranted and urges caution over such requests. A building-specific disadvantage does not necessarily justify the same allowance on adjacent display or parking land; each case needs individual consideration.

Allowances from an earlier rating list also require fresh scrutiny. The manual says that carrying forward end allowances to subsequent rating lists requires careful scrutiny. The manual cites Vines Ltd v De Mauny as an example in which allowances for split or multi-franchised sites were rejected. Its burden-of-proof discussion quotes the tribunal’s finding that the ratepayer had to show that the base rate was too high.

These instructions concern premises with a showroom element, rather than car lots, car supermarkets or garages falling outside the manual’s car-showroom class.

The Rating Manual’s Car showrooms guidance, section 8, cites Hitchings (VO) v Shoosmiths LLP & The Mando Group 2025 UKUT 224 (LC) and Bunyan (VO) v Acenden Ltd [2023] UKUT 17 (LC) on reflecting fit-out costs in rental adjustment.