This class is subject to the co-ordination procedures outlined in the relevant Practice Note.
Outdoor advertising takes many different forms, from the large hoarding panels adjoining busy main roads to the smaller illuminated panels which decorate bus shelters and the cylindrical pillars commonly seen in pedestrianised precincts. The market for suitable sites is fiercely competitive, with most of the key locations for larger sites controlled by a relatively small number of national companies. These companies tend to specialise in certain aspects of the outdoor advertising market - See Appendix 1.
Larger posters comprise a number of "4-sheets" pasted together and so a hoarding of four "4-sheets", placed side by side, one above another, is known as a "16-sheet". The "48-sheet" is half the maximum size of the "96 sheet" and is the most common. Appendix 11 of the VO Code of Measuring Practice for Rating Purposes provides the actual sizes.
Early cases highlighted the difficulties encountered with this class of property when trying to determine rateable occupation - namely what constituted "occupation" and who should be regarded as "the occupier".
Various efforts were made to clarify the position but the statutory provisions often themselves raised fresh problems. The General Rate Act 1967, Section 28, sought to consolidate these but this too has now been repealed.
As the statutory provisions relating to advertising appear in a number of different places it is hoped that the table overleaf will provide some assistance.
LGFA, 1988 refers to the Local Government Finance Act, 1988.
Rating Manual Section Statutory Reference
2.4 |
LGFA, 1988 - S. 64 (1) and (2) | ||
2.5.1 |
LGFA, 1988 - S. 64(2) | ||
LGFA, 1988 - S. 64(11) |
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2.5.2 |
SI 1990/582 - Para 5(1) | ||
2.5.3 |
SI 1990/582 - Para 5(2) | ||
2.5.4 |
LGFA, 1988 - S. 65(8) | ||
2.6 |
LGFA, 1988 - S. 65 (8A) | ||
2.7 |
SI 1989/2303 - Para 4 | ||
2.10 |
SI 1989/2263 - Schedule to regulations | ||
2 and 3 - part 4 |
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2.11 |
SI 1989/2263 - Schedule to regulations | ||
2 and 3 - part 1 |
|||
4.1 and 3 SI 1989/2303 - Para 4(1) and (2) respectively |
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Currently there are two ways in which an advertisement can be a separate hereditament:-
(i)when a right is granted permitting the use of land for advertising, (advertising right) or,
(ii) when land is used for advertising, or for the erection of an advertising structure (advertising station).
It is most important to ensure that there is no confusion as to which event is being rated as their legal provisions are quite distinct.
2.5.1 A separate hereditament is created by s.64(2) Local Government Finance Act 1988 in respect of a "right" to use any land for the purpose of exhibiting advertisements and -
(a) the right is let out or reserved to any person other than the occupier of the land, or
(b) where the land is not occupied for any other purpose, the right is let out or reserved to any person other than the owner of the land.
The usual definition of 'land' is extended to include any wall or other part of a building and any sign, hoarding, frame, post or other structure erected or to be erected on land.
Although for valuation purposes the extent of the sign or structure is important, it should be remembered that the hereditament is and will remain the right originally granted.
The facts should be reported to the Technical Advisorif, due to the lack of written evidence, any difficulty is encountered in determining whether a definite "letting" or "reservation" exists, (see Peak (VO) v Henley's (Bournemouth) Limited 52 R&IT 305).
2.5.2 Alteration of Rating List - Coming into Existence
The hereditament ("advertising right") shall not be treated as coming into existence until the earlier of either:
(a) the time at which any structure or sign is erected (after the right constituting the hereditament has been let out or reserved) to enable the right to be exercised, or
(b) the time at which any advertisement is exhibited in carrying out the right.
2.5.3 Subsequent Changes to Advertising Rights
Once an advertising right has come into existence, the erection, dismantling or alteration of any structure or sign for enabling the advertising right to be exercised shall be treated:
(i) for the purposes of a VO alteration to a Rating List, as a matter affecting the physical enjoyment of the hereditament, and
(ii)for the purposes of proposals to alter a Rating List, as a material change of circumstances.
2.5.4 Rateable Occupier
The person for the time being entitled to a right as mentioned in 2.5.1 is to be treated as the rateable occupier; and the four tenets of rateable occupation need not, therefore, apply.
2.5.5 Description
Such hereditaments are properly described in the Rating List as "Advertising Right".
Land will be assessable as an "advertising station" where it is not otherwise occupied, the right is not "let out" or "reserved" and its use (permanently or temporarily) is
(i)for the exhibition of advertisements; or
(ii)for the erection of a structure used for the exhibition of advertisements.
The hereditament should be treated as occupied by the person permitting it to be so used or, if that person cannot be ascertained, its owner; and the four tenets of rateable occupation need not, therefore, apply.
Where a hereditament, rateably occupied for other purposes, is used either temporarily or permanently for the exhibition of advertisements, with or without any structure thereon, and no right is so "let out" or "reserved", then the assessment should include the increased value of the land for advertising purposes. An example description of such would be "Shop and advertising station".
The four tenets of rateable occupation must be present.
Where the same goods as are sold by a particular trader are advertised by posters, painted metal, electric signs, hanging signs, etc attached to the building concerned, most of these advertisements are likely to be of minimal value. If the Form Of Return discloses the receipt of a rent for advertising, the VO should consider making such further enquiries as will enable a decision to be made as to whether the advertising warrants assessment.
Where buildings are let out in parts, it may be that the occupier of a part displays an advertisement on his own or some other part of the building. In cases where such signs are "directional" (ie to assist in locating an occupation) or for identification purposes rather than for advertising, they should have no value placed upon them. However if, by virtue of their size, prominence or obvious advertising value they are clearly advertisements, and distinguishable from directional and identification signs, they should be assessed.
Temporary signs to indicate their presence erected by building contractors on land where they are engaged on constructional or repair work may be disregarded as may unauthorised flyposting.
All advertising on bus shelters should be assessed, with the value of the structure usually being based on the cost of the whole shelter.
A typical agreement, usually in the form of a licence, for such displays as between the advertising company and a local authority will usually include terms that the former shall:
(i) |
supply and erect the shelters at their own cost at agreed locations | ||
(ii) |
pay fees for any necessary planning consent | ||
(iii) |
have exclusive rights for the display of advertisements | ||
(iv) |
pay for all electricity consumed | ||
(v) |
be responsible for all maintenance and repair | ||
(vi) |
be responsible for insurance; | ||
and that the Local Authority shall:
(i) |
make good all footpaths | ||
(ii) |
be responsible for the supply of electricity to the site | ||
(iii) |
keep the pavement swept beneath each shelter | ||
(iv) |
be permitted to affix bus time tables to any shelter. | ||
It is unusual for any rent to pass on the basis that the council presumably considers that the total value of the shelters which have been provided off-sets the revenue that could otherwise have been collected by letting out the rights. Sometimes a few additional shelters are provided but no advertising is included.
The position in respect of those railway hereditaments shown in Central Lists is that their advertising sites have been included in the formula valuations, and to date no agreements have yet been identified which have the effect of creating any rateable occupier other than the statutory operator.
Advertisements on BR Land: Included in the Central Rating List for British Rail are those advertising sites managed by British Transport Advertising or Mills & Allen under their central management agreements which are situated on land which is being used wholly or mainly for the purposes of the carriage by the British Railways Board of goods or passengers by rail. As a result no separate assessment in Local Rating Lists falls to be made for such sites. It is understood that there may also be a number of similar agreements with other poster companies which should be treated in the same way.
Where land is not being used wholly or mainly for the purposes of the carriage by the British Railways Board of goods or passengers by rail, then the advertisements would fall to be assessed in accordance with the ordinary law of rating.
Details of any disputes over such assessments should be submitted to the Technical Advisor.
Advertisements on London Underground; Docklands Light Railway; and Tyne & Wear Metro' Land: It is understood that no advertisements are situated on land which is not being used for the relevant purposes.
It is understood that all advertisements displayed by The British Waterways Board (BWB) on canal hereditaments are used for purposes ancillary to the provision of facilities for traffic by inland waterways or in harbours and as such are thus included in the formula valuations. Any other advertising right displayed on canal premises should be assessed and entered in the Local Rating List. Details of any disputed assessment on the grounds that a right is included in a BWB formula valuation should be submitted to the Technical Advisor.
These should include:-
A brief description of the site including details of visibility from passing traffic (ie pedestrian, train or vehicular).
Include the name of the advertising contractor and the site number (both of which are often stated on the edge of the display panel).
Appendix 11 of the VO Code of Measuring Practice for Rating Purposes deals with this class.
Please refer to the relevant Practice Note of this section.
Valuation will be on the rental method but care needs to be exercised when using the available evidence to ascertain whether or not the amount paid takes into account the value of any structure or sign. In assessing the RV it is not relevant that a structure or sign was provided by the occupier or was provided after the right was let out or reserved, it still falls to be valued.
Market evidence of rental values is usually widely available. Care must be taken in deriving evidence from comparables because as location is the key factor, rental values will vary considerably from site to site - See Appendix 1.
Where a right falls to be separately assessed from land no account is to be taken of the value or increased value of that land by reason of its use for exhibiting advertisements: this provision ensures that the value of the right is not the subject of duplicate assessment.
In arriving at the rental value care is necessary in considering the position of the hoarding relative to passing motorists and pedestrians, its visibility, the speed and volume of traffic passing the site, as well as the size and nature of the population of the area in which the hoarding is located.
A visible and well-located hoarding alongside a busy commuter route will be seen by large numbers of motorists, especially in urban areas where traffic is slow moving or stationary (road junctions for example) where there is time for the message to be absorbed.
Sites parallel to the road are likely to be less valuable than those which are angled; and sites visible to traffic from both directions are more valuable than sites which can only be seen from one direction; sites near traffic lights where the flow of traffic is interrupted will be more valuable. If the location is such that it is likely to be seen by a larger proportion of people in socio-economic groups A and B, it may well command a higher rent.
Where suitable evidence of similar locations is not available, particularly where a new site is being evaluated, it should be remembered that, ultimately, the rental value of the site derives from the revenue received by the hoarding company from advertisers.
Advertising display hoardings are subject to modernisation and innovation. In any case of doubt, and in particular where new types of advertising display have been identified, VOs should submit full details to the Technical Advisor for advice.