Private health and fitness centres (Non Domestic Valuation practice notes)

Scope

The scope of this Practice Note is solely to ensure a consistent valuation approach for this Property Class/ Sub Class/ Type for Non Domestic Revaluation 2023 and subsequent entry in the new Valuation List which becomes effective on 1 April 2023.

The basis of valuation for new entries in the Valuation List, and Rating Revision cases after 1 April 2023, is Schedule 12 (2)(1) of the Rates (NI) Order 1977.

Description

This Practice Note refers to the valuation of Private Health and Fitness Centres.

In Northern Ireland the majority of Private Health and Fitness Centres are set within retail warehouse or warehouse locations. Although occasionally they are situated in office locations. They can be categorised as either ‘dry centres’ providing gym facilities only or ‘wet and dry centres’ providing gym facilities, a swimming pool and normally a sauna, steam room and jacuzzi. Only those properties with extensive fit out and modifications for the purpose of health and fitness should be valued under this Practice Note.

This Practice Note deals with the valuation of those Private Health and Fitness Centres (converted or purpose built) which are fitted out and may include a swimming pool and other associated areas (i.e. ‘wet areas’). These properties tend to be occupied by chain operators.

This Practice Note does not apply to;

Properties which have had little or no modification in terms of fit out from a standard warehouse/office/shop. Such properties should be valued in tone with properties of a similar Primary Class in their respective locations.
Privately run gyms or property, occupied by non-profit making clubs, run for the benefit of their members, which may be entitled to sport and recreational relief under Article 31 of the Rates (NI) Order 1977 or to Council facilities either run by the Council or as part of a management agreement.

Legislative background

Schedule 12 Part 1 Paragraph 1 of the Rates (NI) Order 1977 applies.

“Subject to the provisions of this Schedule, for the purposes of this Order the net annual value of a hereditament shall be the rent for which, one year with another, the hereditament might, in its actual state, be reasonably expected to let from year to year, the probable average annual costs of repairs, insurance and other expenses (if any) necessary to maintain the hereditament in its actual state, and all rates, taxes or public charges (if any), being paid by the tenant”.

Valuation approach for 2023

The Comparative method of valuation is to be retained as the approach for this type of hereditament. It can be summarised as follows;

a. Value the ‘dry areas’ of the property by direct comparison to the valuation of similar surrounding bulk class properties (e.g. modern retail warehouses).

b. Make an addition to reflect ‘wet areas’.

For the purposes of reflecting fit out, the floor areas should be divided between ‘wet’ and ‘dry’ areas.

• ‘Wet areas’ These areas contain indoor swimming facilities usually combined with a steam room, sauna and jacuzzi.
• ‘Dry areas’ These areas contain all other space not included in the wet area such as gyms, weights rooms, cafes, offices and changing rooms.

‘Dry areas’ should be valued with reference to the relevant local tone for comparable bulk class properties. ‘Wet areas’ will have an addition for fit out to the base valuation rate as shown in Table 1 below.

Table 1: Additions for Fit Out

Quantum should only be applied where in line with tone.

Outdoor facilities such as tennis courts, swimming pools, 5-a-side pitches are usually part of larger racquet clubs and should be valued as per the Practice Note for sports clubs, and by reference to the Reval2023 LPS Cost Guide.

Rent and Lease Questionnaire

For this class of property Rent and Lease Questionnaires (RALQs) were issued centrally by LPS and analysed by the Practice Note author.

Contacts

For advice on any aspect of this Practice Note contact LPS on 0300 200 7801.

More useful links

• Valuation Lists