This is a trade facing website. Visit the ACT's consumer site thecyclingexperts.co.uk for information and advice on cycling and find your local independent cycle retailer.

Search News

Results: 1-10 of 993


2 Feb 2023

Taking place from 21st-23rd April 2023 at the iconic Alexandra Palace venue in North London, The Cycle Show brings together a variety of exhibitors from the cycle and e-mobility sectors, aimed...

2 Feb 2023

Glasgow-based cycling charity Bike for Good, which is responsible for delivering the internationally renowned Cytech training and accreditation scheme for bicycle technicians and enthusiasts in...

30 Jan 2023

VOLT e-bikes today announces it is partnering with TFL for the ULEZ scrappage scheme to help eligible riders join the e-bike revolution. VOLT is offering exclusive purchase discounts this month...

30 Jan 2023

The number of shops lying vacant on British high streets fell during the final three months of 2022, despite pressure on both companies and consumers from the rising cost of living.

26 Jan 2023

The rapid growth in the use of Buy Now Pay Later (BNPL) services risks becoming the UK's next 'credit trap' scandal, a loan provider has warned.

25 Jan 2023

Under the banner of CONEBI, the Confederation of the European Bicycle Industry,15 national bicycle industry associations and 68 companies have become signatories to a self-commitment to prevent...

23 Jan 2023

As Glasgow gears up to host the 2023 UCI Cycling World Championships, community groups have been given a share of more than £160,000 to boost bike use in the city.

23 Jan 2023

British Cycling has published new research, which shows the rising popularity of off-road e-bikes and electric mountain bikes (e-MTB’s) and highlights the need for improvements to cycling...

18 Jan 2023

The article reports that, in 2021, Halfords saw its annual cycling sales double and stocks dry up. However, by the middle of 2022, it says, warning signs were appearing as inflation and supply...

16 Jan 2023

Weston-super-Mare seems to be one town in the UK bucking the national trend, with new shops opening and businesses reporting an increase in trade, according to a report by Bristol Live.

Back to news menu

How Are Small Shops Valued

Posted on in Cycles News

In this blog shared with us, Paul Dalling, National Valuation Lead at the Valuation Office Agency explains what is involved in valuing small shops.

Small Shops

Small shops are defined as any shop less than 1,850m² (or 20,000 ft²). There are around 500,000 small shops in England and Wales – accounting for £11.5bn worth of rateable value in 2017.

Typically, they are occupied by retailers of fashion, homeware, food and beverage.

Factors to Consider

When approaching the task of valuing a small shop, the actual rent paid on the property is a good starting point, but this doesn’t always tell us the full story. For example:

  • The rent may be between people who are related to each other
  • The rent may have been agreed a long time ago, or very recently, so may be too distant from the valuation date (which is 1 April 2021 for Revaluation 2023)
  • The tenant may have made improvements to the property such as adding air-conditioning or a lift, which may not be reflected in the rent paid
  • The rent may also include living accommodation, which we would not include in our valuation of the shop

To help build our picture of the property, we measure small shops to ‘net internal area’ (NIA). The NIA is the useable area inside a building. It excludes things like stairwells; pillars; lift shafts; and staff toilets. Dividing the rent by this area gives a price per square metre, which is useful as it helps us to compare one shop with another.

Zoning

Small shops are very location sensitive, but we would expect those of a similar size and in a similar location to be valued at the same rate per square metre. However, shops are unlikely to be exactly the same size, so we use a method called ‘zoning’ to take these different factors into account.

We divide the shop into 6.1 metre (20 foot) ‘zones’, starting with ‘zone A’ at the window. This is the most valuable part of the shop; it’s where customers are attracted and tempted in. We use ‘zoning’ to arrive at an ‘area in terms of zone A’ for each comparable shop.

‘Zone B’ is in the middle of the shop and is half as valuable as zone A. The deeper into the shop you go, the less valuable the floor space. ‘Zone C’ is half as valuable again as zone B. If the shop goes back any more than zone C (or 18.3m), the rest of the shop floor is called ‘the remainder’, which is half the value of zone C.

The reason we divide shops into zones is that a customer looking in through the window of a shop will see the goods on display at the front with greater ease than goods to the rear of the shop. A customer entering the shop is also more likely to stay near the front of the shop than venture to the rear. Using ‘zoning’ is currently the best way to interpret the approach a retailer takes when considering what rent to pay.

Adjusting and Analysing Rents

Once we have gathered all the evidence, we make adjustments to the rent. We consider the actual rent paid and adjust this to take into account the ‘factors to consider’ discussed above. We then divide this ‘adjusted rent’ by the area of valuable Zone A. This is an analysis of the rent, based on the relevant ‘area in terms of zone A’.

Making an Accurate Valuation

After analysing all the rents available, we can determine a ‘tone of value’ for a group of similarly sized shops in a similar location. This is more than just an average; it gives greater weight to rents agreed closest to the valuation date. We can then apply that ‘tone’ at the valuation stage.

Having valued a particular shop, we may need to make additions or allowances for things not reflected in the ‘tone’ of rents. For example, the tenant may have added air conditioning, or the shop may be on a corner with a sales window on two different streets, which could add value.

Conversely, the approach to the shop may be hampered by a flight of stairs or the shape of the shop might mask part of the sales area. We may decide that such a disadvantage requires an allowance.

The overall goal is to determine a rateable value that reflects an estimate of rent that would be reasonable for a particular small shop in a particular location at the relevant valuation date.

Back to news menu

Useful links

If you have any other queries please contact us.