Whilst the basis for most valuations and determinations under RTB are in accordance with s.127 HA 1985 as amended there are exceptions (see para 21). Particular care must be taken to ensure that the correct valuation basis is applied.

Valuers must be acquainted with the express provisions of s.127 and Sch 6 HA 1985 (previously s.6 1980 Act) as amended by HPA 1986. Particular points are:-

a. relevant time

S.122(2) HA 1985 defines relevant time as the date on which the tenant's notice claiming to exercise RTB is served upon the authority.

b. definition of value

Under s.127 and Sch 6 HA 1985 the value of a dwelling-house at the relevant time, is the price which at that time it would realise if sold on the open market by a willing vendor subject to certain assumptions (see c, d, e, g and h below), disregarding any improvements made by certain persons (see f below) and any failure by those persons to keep the dwelling-house in good internal repair.

c. assumption on service charges etc

S.127 HA 1985 is amended by the insertion of para (1)(c) by s.4(3) HPA 1986. This adds the important assumption in the valuation of a dwelling-house for purposes of RTB that any service charges or improvement contributions payable in the initial period will not be less than the amounts to be expected in accordance with the estimates contained in the landlord's s.125 notice.

d. freehold assumptions

The assumptions for a conveyance of the freehold are that the vendor is selling an estate in fee simple with vacant possession and that neither the tenant nor a member of his family residing with him want to buy.

e. leasehold assumptions

The assumptions for the grant of a lease are that the vendor is making the grant normally for 125 years with vacant possession at a ground rent not exceeding £10 per annum and that neither the tenant nor a member of his family residing with him wants to take the lease. Whilst the term may be for over 125 years it may not be less, except where the landlord's interest is leasehold for a lesser term, or in the case of flats where there has been an earlier lease granted in a building in which all the leases are to have a common expiry date. (Para 12 Sch 6 HA 1985).

f. improvements

Improvements are defined in s.187 HA 1985 and are referred to in para 23. In accordance with s.127(4) HA 1985 they qualify if carried out by the secure tenant: or any person who under the same tenancy was a secure tenant before him/her; or by any member of his/her family who, immediately before the secure tenancy was granted, was a secure tenant of the same dwelling-house under another tenancy. Qualifying improvements should wherever possible be agreed between the tenant and the authority before the valuation is made.

g. rights and burdens

It is also to be assumed in d. and e. above that the conveyance or grant is to be made with the same rights and burdens as mentioned in Pts I and II Sch 6 HA 1985. These include such matters as rights of way; rights of support; passage of water, electricity, telephone and other cables etc, which are a beneficial right or a burden on the property.

For the avoidance of doubt the right to a discount are not included as these are personal to the tenant whose bid is excluded under s.127(2)(b) and (3)(b) HA 1985. There may also be covenants or conditions required by the landlord to be included in the conveyance or grant (paras 4 and 5 Sch 6 HA 1985) which must also be taken into account.

h. flats: covenants

In the case of flats the landlord will covenant to keep in repair the structure and exterior of the flat and building and the common parts together with the services and reinstate where necessary. These obligations may be amended by consent of the parties by order of the county court if it appears to the court that it is reasonable to do so. Unless otherwise agreed the tenant is to keep the interior in good repair including decoration. (Para 16 Sch 6 HA 1985). Covenants may be imposed requiring the tenant to bear a reasonable part of the cost of carrying out repairs and improvements which are subject to restriction on recovery during the 'initial period' of the lease (para 16B Sch 6 HA 1985); and to pay fire insurance premiums etc. (Para 16A Sch 6 HA 1985 as substituted by s.4(5) HPA 1986).

Where a landlord's interest in a flat or house is leasehold see para 15 Sch 6 HA 1985.

i. structural defects

All structural and other defects should be fully reflected in the valuation of houses. In the case of flats regard should be had to the estimates of repair and improvement costs provided by the landlord, which limit the extent of the reimbursement that can be demanded by the landlord from the tenant during the initial (5 to 6 year) period of the lease. However, regard should also be had to costs likely to arise after that period for which the tenant will be liable (see para 30).

j. s.157 HA 1985 covenants

Regard should be had to any covenants imposed by the landlord authority under s.157 HA 1985. (For a covenant imposed under s.157(3) - see also paras 56-57).

k. development value

Right to Buy valuations should be carried out on the unrestricted value of the properties, fully reflecting any development or hope value that exists at the date of valuation so far as the market would reflect it, even if this would put the purchase price outside the reach of a normal tenant.

Following the Court of Appeal decision in R v Braintree District Council, ex parte Halls [2000] EGCS 32, a covenant reserving to the landlord any future development value in the property is likely to be held unenforceable. If the landlord authority proposed to impose such a covenant the DV should refer the matter to the Director of District Valuer Services. However, covenants imposed for the purposes of good estate management or to promote the wider duties of the landlord as a housing authority would be lawful as in Caradon District Council v Paton; Caradon District Council v Bussell [2000] EGCS 59.

Apart from s.127 valuations referred to in para 20 et seq there are various other valuations under Part V HA 1985. Whilst the considerations applicable to s.127 valuations generally apply to them there are differences and/or modifications. These are referred to as follows:-

a. S.157(2) and (3); and s.157(4) HA 1985 for dwellings in National Parks and AONBs etc - see para 48-65.

b. S.452 and Sch 17 HA 1985 - vesting of mortgaged dwellings in authority etc - see para 70-75.

Each property must be separately inspected and full and accurate details recorded. Neither an earlier inspection for another purpose nor a recent inspection of similar dwelling-houses will suffice. Whilst it is extremely difficult to lay down general guidelines it is considered that where a valuer notes, or has drawn to their attention, defects that might affect the valuation, they have a duty to investigate them so far as it is reasonable to do so.

a. definition

“Improvements” as defined in s.187 HA 1985 means any alteration in, or addition to, a dwelling-house and include:-

i. any addition to, or alteration in, landlord's fixtures and fittings and any addition or alteration connected with the provision of any services to a dwelling-house;

ii. the erection of any wireless or television aerial; and

iii. the carrying out of external decoration;

But iii. above does not apply in relation to a protected or statutory tenancy if the landlord is under an obligation to carry out external decoration or to keep the exterior of the dwelling-house in repair. Improvements carried out by the tenant or other specified person fall to be disregarded in making the valuation under s.127 (see para 45(i)).

b. inspection

Normally tenants' improvements should be agreed between the landlord and tenant and notified to the DV. On inspection the improvements should be noted and in all cases the DV should enquire of the tenant what improvements have been made. Further improvements may come to light, or it may transpire that improvements listed by the authority were not carried out by the persons referred to in s.127(4) HA 1985 Act. In such or other cases of difficulty the DV should refer back to the landlord authority. All doubts must be resolved before the valuation is made. The DV must not adjudicate on whether or not improvements fall to be disregarded. Legal opinion has been obtained that this is ultimately a question for the court to determine.

a. works of repair etc in progress

Problems may arise where RTB is being exercised when an authority's repair and improvement programme is in midstream. The tenant's notice may fix the valuation date at a time when the house is actually undergoing works. In such cases the authority may agree with the tenant how the situation is to be dealt with. For instance it may be agreed between them that the tenant agrees to pay separately for the works, or else, probably more likely, that the dwelling be valued on the basis that the authority completes the works. The DV will need to establish the terms of any such agreement which cannot override the provisions of statute and record them in the report.

b. works contracted but not started

In other instances the authority may have contracted to have works carried out but which have not started at the valuation date and for which the authority could be liable for damages if they revoked the contract. In such circumstances it is for the authority to decide how to proceed and what arrangements to make with the tenant, whose concurrence might be necessary before any work is carried out. The authority may come to an agreement with the tenant. Alternatively the authority might make use of para 5 Sch 6 HA 1985 and impose such covenants and conditions as are reasonable to deal with the particular circumstances. The DV should reflect the actual position adopted in his valuation and record it in the report.

c. position where no agreement

In the event of no agreement between the parties and the authority not intending to impose any covenants or conditions the DV should value the dwelling in its physical condition at the valuation date. The valuation should reflect, to the extent if any that the market would, the likelihood or otherwise of the particular landlord authority completing works in progress or carrying out other work contracted for the future.

With careful analysis of open market transactions, valuation of most houses should not present great difficulty. In the absence of direct sales evidence co-ordination assumes importance (see para 18). In considering evidence of open market sales of similar private houses due regard must be held to any enhancement of the price that may be due to improvements that are either absent or are to be ignored in the valuation of houses under RTB.

The valuation for RTB of houses designated as defective under Part XVI HA 1985 (previously Housing Defects Act 1984) may present particular problems. All types of prefabricated reinforced concrete houses or flats designed before 1960 were initially designated as defective (due to the ineffective protection of the embedded steel in the reinforced concrete load bearing parts of the building) under the Housing Defects Act 1984 which came into force on 1 December 1984. The cut-off date on initial designations (with the exception of Aireys which was 8 September 1982) was 26 April 1984.

Further types of dwelling may be designated as defective under national schemes (s. 528 HA 1985) or local schemes (s. 559 HA 1985) and these need to be considered where relevant.

The Secretary of State (in the case of national designations) or the local housing authority (in the case of local designations) may vary a designation but not vary the cut-off date or alternatively may revoke a designation (ss. 529 or 560 HA 1985).

There is no entitlement to assistance under Part XVI HA 1985 for a purchaser in the 12 month period after a cut-off date where on the date of disposal the purchaser was aware of the association of the dwelling with the qualifying defect (s.531(3)(b) HA 1985), nor, of course for any purchaser beyond the 12 month period. The fact that the authority will have already notified the defect to the tenant, or at any rate will have to do so at the latest by the time of conveyance, should be borne in mind (s.563 HA 1985).

DVs may have difficulty in arriving at the open market value of such defective dwellings and DVs should arrange co-ordination between Groups where necessary. It is likely that over a period of time open market evidence will become available for designated defective dwellings that are not entitled to assistance under Part XVI. In all cases DVs should request a full specialist report from the authority in respect of the dwelling. Whilst the authority is probably not likely to wish to incur this expenditure it may have such a report of a similar house nearby. In the absence of a report of the dwelling provided by the authority, the DV should consult the RBS as appropriate when the latter is not under pressure (see para 32).

All DVs must keep abreast of their local mortgage market so that they are aware of the lending policy towards such property. It should be borne in mind that blanket refusals to lend may be modified later. Dwellings repaired under approved schemes should be likely to be mortgageable with private lending institutions. Where unapproved repair schemes have been used DVs will have to carefully consider whether the repairs are adequate and whether mortgages on normal, or any, terms would be likely to be available. It should be borne in mind that, whilst the qualifying defects are in all cases likely eventually to cause the collapse of dwellings, they may provide satisfactory accommodation for many years without any works being carried out. The values would in any event be underpinned by the site values which in many instances may be fairly substantial.

Leasehold houses sold under RTB may have leases as short as 21 years. The possibility of leasehold enfranchisement should be borne in mind (except where the landlord is a housing association and the freehold is charitably owned).

The Leasehold Reform Act 1967 is amended by s.175 HA 1985. The price payable for enfranchisement by leasehold owners of houses purchased under RTB is to be determined in accordance with the higher basis of valuation under s.9(1A) of the 1967 Act regardless of the rateable value. In other words in arriving at the value for enfranchisement no extension of the original lease is to be assumed, the reversion would be to an assured tenancy under Pt I Landlord and Tenant Act 1954 and the leaseholder would not be excluded from the market and the amount of marriage value to which he would be entitled would not exceed one half.

The length of lease, ground rent and implied covenants by the landlord under RTB are likely to be more favourable to the tenant than those applicable in the majority of private sector sales of comparables. Consequently evidence of the latter may require careful adjustment before being used in the valuation of RTB flats. Further adjustments are likely to be required to reflect the type of structure and size of block, the locality, state of demand etc. DVs should ensure that there are no wide disparities in such adjustments made in local offices in respect of similar types of flats.

In considering adjustments to private sector transaction evidence, regard should be had to the effect, in appropriate cases, of a preponderance of the nearby flats continuing to be occupied by local authority tenants. This is particularly so in the case of tower or other large blocks. Instances of re-sales on the open market by former tenants, or of local authority sales of such flats with vacant possession, should be carefully looked for. The effect on value of the likelihood, particularly in high rise blocks, that mortgages (other than statutory mortgages which are excluded in s.127 valuation assumptions) may be unavailable on normal or any terms at least until private ownership is well established in a block must be borne in mind: DVs must make local enquiries. "Pioneering" allowances in valuations for initial RTB sales in large blocks should be considered in the absence of market evidence.

Para 26 also applies to flats. The designation of defective dwellings which came into operation on 1 December 1984 included some 2, 3 and 4 storey blocks of flats. Further designations may occur from time to time. The effects on value of any non-traditional methods of construction must be carefully considered including the acceptability of such structures as security for a mortgage n a statutory mortgage which is excluded by the valuation assumptions in s.127). System built flats constructed of large load bearing panels, particularly if over 6 storeys in height, require very careful consideration ie the Taylor-Woodrow-Anglian system of which Ronan Point was an example. Such blocks present particular structural and fire problems. Other problems may be presented by the use of high alumina cement concrete.

For large panel dwellings authorities should inform DVs of the conclusions of the BRE report and of the result of any structural appraisals which they have carried out on the block (see para 32).

The landlord authority will be responsible for repairs. Recovery of the apportioned cost of such works falls on the tenant where he has covenanted to pay his share. During the initial five - six year period of the lease such recovery is limited to repair estimates contained in the landlord's s.125 notice together with a prescribed inflation allowance. There are similar restrictions on the recovery of improvement contributions.

DVs may have to consider whether the estimates given to them, which they have to fully reflect in their valuation, may be deliberately held down by an authority in an attempt not to reduce the s.127 valuation: whilst specifying structural defects and improvements an authority may endeavour to ensure that costs are not incurred in respect thereof, nor of other works until after the initial five to six

year period strictly restricting recovery of costs has expired. The likelihood of any substantial repair or improvement contributions having to be paid under the lease terms after the expiry of the initial period must be borne in mind in valuations by DVs.

Prospects of any improvement and other grants and also the fact that any service charges etc payable for such works carried out by landlord authorities over the period of the lease are to be reduced by the amount of grant are among the matters to be considered by DVs in their valuations. Para 9(3) Sch 5 HPA 1986 adds s.47(4) HA 1985 whereby relevant costs in carrying out grant-aided works are to have the amount of grant deducted from the cost of such works and the amount of the service charge payable reduced accordingly came into force on 17 February 1988.

Apart from any liability to contribute towards the costs, the major disturbance to occupation which may occur from extensive repair and improvement to flat-blocks seems to be a factor likely to affect value. There may also be the prospect of a material uplift in value in the future if extensive up-grading occurs to a flat-block.

For the purposes of all s.127 valuations and s.128 determinations DVs must have regard to the question of mining subsidence in every case where properties are within areas where the MV has indicated that Mining Subsidence Reports should be requested. Wherever possible the MV will supply 'block reports' embracing the whole or parts of council estates or groups of properties owned by housing associations etc to obviate the need for reports on individual properties. The MV will update the 'block reports' as necessary. In most cases, particularly for valuations under s.127, the DV should be able to arrive at an accurate and defendable valuation having regard to the evidence of open market sales in the locality that indicate the extent to which the market has regard to the mining subsidence risk.

In respect of s.127 valuations, where on inspection there are clear indications of site damage or instability and the DV is of the opinion that an individual up to date Mining Subsidence Report is required, the landlord authority must first be consulted since it will have to bear the cost of any such report. If the landlord authority refuses to commission such a report, either from the MV or other source, the DV should nevertheless provide the valuation report but qualify it with a caveat stating that the property is or is likely to be affected by mining subsidence but that no Mining Subsidence Report has been made available to the valuer.

In respect of s.128 determinations, where representations have been made concerning mining subsidence or where for any other reason, eg visible evidence of damage or site instability, an individual Mining Subsidence Report becomes essential, a request should be made to the MV. (The cost of the report in this case will be borne by the DTLR). The MV's report will relate to the stability of the site and not any buildings thereon. Furthermore, it will be concerned solely with mining subsidence and associated matters (eg geological faults and mine shafts) and may not always comment on general soil conditions as for example whether the site is on made land or not.

MV reports are confidential to DVs and for the purposes of DV's reports under s.127 and s.128 the following will apply:

a. If the property is not within an area where the MV has indicated that a mining subsidence report should be requested, the DV's report will contain no reference to the mining position.

b. If the property is situated in a 'block report' area the DV's report will contain the following statement 'The underground mining position has been considered in arriving at my opinion of open market value'. The MV in areas of current mining activity will supply an updated 'block report' on an annual basis. In mining areas where no current mining activity is taking place 'block reports' will be updated when circumstances require a review of the underground mining position or every three years at a minimum.

c. Where an individual Mining Subsidence Report has been supplied the DV should draw attention to particular possible dangers such as disused mine shafts in the vicinity that have been identified by the report. In such cases the wording at b. above may be modified by the DV to the effect that 'I have had regard to the underground mining considerations and the possible/likely existence of disused mine shafts in the vicinity and the purchaser should be strongly recommended to satisfy himself as to these matters'. There should be no need either to supply the MV's report or quote it. Its contents must not be paraphrased.

d. If, following the provision of a s.127 valuation, the landlord authority asks for more details regarding the underground mining position, the DV must consult the MV to confirm the validity of the 'block report'. The DV may then supply one copy of it (subject to the MV's concurrence) to the authority in accordance with the provisions of sub para f.

e. If, following the provision of a s.127 valuation, the landlord authority requests an individual Mining Subsidence Report, the MV will supply the DV with the report. The DV will forward one copy to the landlord authority in accordance with the provisions of sub para f.

f. Any single copy of a report from the MV authorised to be supplied by this para should be endorsed as follows:

'This report was supplied by the MV for the purposes of valuation only, and it is not to be used for any other purpose. A copy should not be supplied, nor the contents disclosed to the tenant or any other person.'

The endorsement should be signed and dated. In a covering letter the DV should specifically draw the attention of the authority to the endorsement.

In appropriate cases DVs should make proper enquiries of the landlord authority as to the incorporation of precautionary measures in the design and construction of the building, but there will be instances where positive advice is not provided.

Similarly the DV should enquire in appropriate cases whether, in their management of the estate or properties, the authority have encountered repair problems which could be attributable to subsidence and, if so, the scale and extent, and in particular whether compensation under the Coal Mining (Subsidence) Act 1991 has been paid or damage has been repaired by the Coal Authority or one of its Licensees. The RBS should be consulted where appropriate and is in turn expected to liaise closely with the MV. In a typical case of unspecified subsidence doubt the DV's report might include:-

'I am informed by Council that in the design and construction of the building/structural precautions were included which the council considered appropriate/no structural precautions were included/it is not known whether or not structural precautions were included/and I have had regard to this information in preparing my valuation but it is for the purchaser to satisfy himself as to the stability of the property in this area where subsidence from underground mining cannot be disregarded.'

Where the dwelling is:-

a. of a class designated as defective under ss.528 or 559 HA 1985 or

b. of system built construction; or

c. is subject to a structural defect which is serious enough to affect the value substantially,

the DV should (except where the landlord authority has already indicated that it is not prepared to commission a specialist report) inform the authority and request that a specialist inspection is carried out and a copy of the report submitted to him. If the authority is unwilling or unable to provide a report the DV should, except at times when the RBS service is under Revaluation pressure, obtain the services of the RBS where he has any doubt about the form of construction, or there are unusual or severe indications of defects or likely defects.

In the case of large panel systems (LPS) the DV must obtain a report from the authority (not the RBS). The following advice was given to all Authorities owning Large Panel System houses and blocks of flats in a letter dated 3 August 1987 from the Building Research Establishment (DOE) which accompanied the publication of the BRE report on 'The Structural Adequacy and Durability of Large Panel System Dwellings':

"Authorities are already required by law to inform purchasers of flats of any known structural defect affecting the block. Authorities will need to consult their legal advisers about any wider disclosure obligations they might be under but it would be helpful if they could make a practice of informing all prospective purchasers of large panel flats and houses of the conclusions of the BRE report, and of the results of any structural appraisal they have carried out on the block. Similar information should be passed to the officer who will be valuing the dwelling for sale purposes. This will ensure that tenants buy at appropriate valuations and in full knowledge of the condition and likely future maintenance needs of their homes".