The Lands Tribunal for Scotland has issued its decision in NHS Greater Glasgow and Clyde v Assessor for Renfrewshire Valuation Joint Board and Assessor for Glasgow City Council (2014) (LTS/VA/2013/664-668 & others). The appeals concerned the rating assessments of 18 properties in Renfrewshire and Glasgow. The properties were all used as doctors’ surgeries, clinics, day centres or health centres.

The ratepayers contended that the properties should all be valued on the contractor’s method – that is to say with values derived from effective capital values – adopting the reduced decapitalisation rate of 3.33% prescribed for “healthcare” properties. The Assessors contended that they should be valued on the comparative method – that is to say by reference to agreed values for other properties – in these cases by comparison with office values.

The Lands Tribunal for Scotland has issued an interesting decision, determining that some of the properties should be valued on the contractor’s method and others on the comparative method. The Tribunal considered that there was evidence to show that smaller properties (up to 300 sq m) showed rental values derived from office uses nearby and could be straightforwardly converted to office use. The Tribunal decided that these properties should all be valued at the relevant office values for the localities concerned. The Tribunal decided that larger properties (between 300 sq m and 550 sq m) should also be valued at office values, if they were in a central location.

In the cases of the largest properties (over 550 sq m) the Tribunal considered that they would unlettable as offices and that conversion costs would be prohibitive. The Tribunal therefore valued these properties on the contractor’s basis, with the exception of a clinic in a city centre location in Glasgow which was considered also to be suitable for office use.

The decision gives helpful guidance on valuation of a type of property for which there is no readily discernible “market”, but is unusual in determining two different methods of valuation for properties in the same use. This seems likely to give rise to some further disputes at the margin between the two methods.