Day nurseries, nursery schools and other day care facilities for under fives
Source: gov.uk (2025-04-28)

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

1.1 This instruction applies to all hereditaments occupied as a Day Nursery, or a Nursery School.

1.2 The definitions of these classes are discussed at paragraph 5 below.

1.3 This instruction does not apply to compulsory age schools, which incorporate nursery elements. Children’s centres also do not form part of the class and further advice should be sought from the Class Co-ordination Team (CCT).

2. List Description and Special Category Code

2.1 List Description: Nursery and Premises or Nursery School and Premises.

2.2 Scat Code: 085 Suffix G

3. Responsible Teams

3.1 This is a generalist class and responsibility for valuation will lie with the business unit. Queries of a complex nature arising from the valuation of individual properties should be referred to the NVU class facilitator via the Class Co-ordination Team (CCT)

4. Co-ordination

4.1 NVU Valuation Panel 4 has overall responsibility for the co-ordination of this class. The team is responsible for the approach to and accuracy and consistency of valuations for Day nurseries and Nursery Schools. The team will deliver Practice Notes prior to each Revaluation, describing the valuation basis for revaluation and provide advice as necessary during the life of the rating list.

4.2 Caseworkers have a responsibility to: follow the advice given at all times, not depart from the guidance given on appeals or maintenance work, without approval from the CCT seek advice from the CCT should any issues arise that are not covered in this instruction.

5. Legal Frame work

5.1 These instructions apply to non-domestic hereditaments used for “early years provision” that is the provision of childcare for a young child (Childcare Act 2006 s.20).

5.2 “Childcare” means any form of care for a child and includes education for a child, and any other supervised activity for a child (Childcare Act 2006 s.18 (2)). Exceptions are listed elsewhere in the section.

5.3 A child is defined as a “young child” during the period beginning with their birth, and ending immediately before the 1st September next following the date on which they attains the age of five (Childcare Act 2006 s.18 (2)).

5.4 It is compulsory for providers of early years provision to register with the government’s childcare register (Childcare Act 2006 s.34) The Childcare (General Childcare Register) Regulations 2008

5.5 A Nursery School is defined as “… used wholly or mainly for the purpose of providing education for children who have attained the age of two but are under compulsory school age” (s.6.1 Education Act 1996).

5.6 Early years provision in Wales is regulated by The Childcare Act 2006 (Local Authority Assessment) (Wales) Regulations 2016 (Welsh Statutory Instruments 2016 No. 88 (W. 42)).

6. Survey Requirements

6.1 Day nurseries will generally be valued by the rental comparative method but exceptionally some nursery schools of a size and type for which no rental evidence exists or otherwise located in areas where there is little or no rental evidence will be valued by reference to the contractor’s basis. The basis of valuation will determine the method of measurement required: - Net Internal Area (NIA) in respect of the rental comparative method and Gross Internal Area (GIA) in respect of the contractor’s basis. It will be necessary to ascertain the basis of valuation prior to inspection but in case of doubt sufficient measurement and survey information should be recorded to enable valuations to be carried out using either basis.

6.2 Description

6.2.1 Provider’s premises have to meet required standards as are contained within Regulations made by the Secretary of State under the auspices of the primary legislation. The space and standards requirements are not stipulated here as they are subject to amendment from time to time but can be readily obtained by reference to the relevant regulations as stated in 5 above.

6.2.2 Subject to standards being met, Day nurseries can be located within purpose built or converted premises.

6.2.3 Nursery schools provide a more direct and structured education for early years children aged 3 to 5. Some may be part of an independent school for older age groups. Such schools are more likely to be located in purpose-built premises but not exclusively so. They may be state funded academies, maintained by the Local Authority or be privately run.

6.3 Survey Requirements​​​

6.3.1 Unit of assessment

The correct unit of assessment or what constitutes a rateable hereditament, should be determined by applying the principles referred to in Rating Manual-section-2-valuation-principles/part-1-hereditament; paragraph 2 (https://www.gov.uk/guidance/rating-manual-section-2-maintaining-the-rating-list/part-2-hereditaments-valued-by-the-central-valuation-officer).

6.3.2 Survey Details

The following information is required:

A plan (CAD) or otherwise should be obtained where available and check dimensions made on site as necessary; otherwise, a plan should be drawn up.

Method of construction - e.g. traditional brick and tile or steel framed.

Dimensions (where measured to NIA) and description of the accommodation.

Where the contractor’s basis is to be the method of valuation only the GIA of individual building(s) is required unless there is a significant variation in the type of accommodation.

Description and detail of services to the hereditament e.g. heating, air conditioning, security systems (to include CCTV, barriers, gates and perimeter fencing), solar panels, wind turbines etc.

Number of car parking spaces for staff and visitors- or/and parking area, the nature of the surface, a note of the extent of site landscaping and, where present, outside play areas.

Establish by enquiry the type of childcare being provided, the age profile and number of registered children and a note of recent Ofsted/ESTYN inspections. Further information can normally be obtained from the establishment’s own web site and other web sites such as that relating to Ofsted, ESTYN, Edubase and CISW.

7. Survey Capture

7.1 Survey information including plans are to be stored on EDRM. Where the hereditament is to be valued using the contractor’s basis the GIA of the building(s) is to be entered onto the dedicated valuation spreadsheet held on the non-bulk server (NBS). Where the hereditament is to be valued using the rental comparative method then data, utilising appropriate BCI and sub location codes, should be captured within RSA.

8. Valuation Approach

8.1 With the exception of some from the local authority nursery schools (see below) It is expected that sufficient rental evidence will exist in the locality to enable valuations to be carried out on a rental comparative basis. All rental evidence should be identified and appropriately adjusted and analysed on price per m2.

8.2 The type of facility provided must be properly identified to consider how the evidence reflects the type of operation being run including quality and adequacy of the accommodation having regard to the required space standards.

8.3 Consolidated guidance on the legal requirements for nursery operators and their premises are contained in the Department for Education document “Early years foundation stage statutory framework for group and school-based providers”.

8.4 Nursery premises welfare standards, including space standards are contained in “Early years foundation stage statutory framework for group and school-based providers” paragraphs 3.64 to 3.72.

8.5 Current indoor space requirements where indoor activity in a building(s) forms the main part of (or is integral) to the provision are as follows:
- Children under two years: 3.5m2 per child.
- Two-year-olds: 2.5m2 per child.
- Children aged three to five years: 2.3m2 per child.
(the above based on useable areas of the rooms used by the children, not including storage areas, thoroughfares, dedicated staff areas, cloakrooms, utility rooms, kitchens and toilets).

8.6 Separately assessed Local Authority nursery schools are to be valued as vacant and to let, restricted to a use with the same mode and category but not specifically as a local authority nursery school. It is therefore appropriate to consider whether having regard both to its location and its physical nature it would be likely, if vacant and to let, to attract a bid from a private operator. If so, it should be valued by rental comparison drawn from comparable private nursery schools and day nurseries. If the hereditament by virtue of its nature and/or location would not be likely to attract a private operator as a hypothetical tenant, then a rental comparative basis cannot be used and the contractor’s basis should be adopted.

8.7 Further guidance on the application of the contractor’s basis can be found in the Practice Note relevant to the Rating List in question.

8.8 Nursery elements which form part of a primary or all age school should be assessed in accordance with the guidance in Rating Manual Sections 590 and 820 as appropriate.

9. Valuation Support

9.1 Valuations on the rental comparative method are to be carried out on the Rating Support Application. Valuations undertaken using the contractor’s basis are to be carried out using the dedicated Nursery Schools template spreadsheet held on the non-bulk server (NBS).

Appendix 1

Library of Useful Websites and URLs - Appendix I

Day Nursery UK Data base

(http://www.daynurseries.co.uk/)http://www.daynurseries.co.uk/

National day Nursery association

(http://www.ndna.org.uk/)http://www.ndna.org.uk/

Sure start

(http://www.surestart.gov.uk/)http://www.surestart.gov.uk/

OFSTED

(http://www.ofsted.gov.uk/)http://www.ofsted.gov.uk/

ESTYN

(http://www.estyn.gov.uk/)http://www.estyn. (http://www.estyn.gov.uk/)gov.uk/

Care and Social Services Inspectorate Wales

(http://www.csiw.gov.uk/)http://www.csiw.gov.uk/

Appendix 2

http://www.surestart.gov.uk/

Sure Start Full Day-Care PDF (http://vwspvweb466.voa.gpn.gov.uk/LINKNOTFOUND?url=../../../../Rating%20Manual/Section%206/Part%203/documents/Sure-Start-Full-Daycare.pdf)

City Of Bradford: “Setting up a Day Nursery (http://vwspvweb466.voa.gpn.gov.uk/LINKNOTFOUND?url=../../../../Rating%20Manual/Section%206/Part%203/documents/Early-Years-Bradford-Childcare.pdf)

Practice note: 2023 - day nurseries and nursery schools (private and local authority)

1. Market Appraisal

1.1 The Department of Education’s (D of E) “Child Care and Early Years Providers” Survey 2021 recorded a fall in both the number of Group based providers (from 25,700 to 21,300) and the number of childcare places in England between 2016 and 2021. During the same period the average number of children per group-based provider fell from 48 to 47. Not surprisingly this corresponded with an increase in available spaces with 70% of providers having spare full day capacity and similar levels of availability for part time capacity. On average group-based providers had 20% full day capacity during 2017/18 with higher percentages for morning and afternoon only. These statistics varied regionally with fewer places available in London and a larger number of places in some of the other regions e.g. the North East and East Midlands.

1.2 The underlying funding regime for nursery provision was boosted significantly in September 2017 when funding for 30 hours a week of nursery care was introduced in respect of those children of working parents who meet certain eligibility criteria. As previously all places for age 3 and 4 years and some 2-year-olds are state funded within set limits (2019/20 £4.88 for 3- and 4-year-olds and £5.39 for 2-year-olds). There is a ceiling on the maximum hours per year which are stated funded (1140).

1.3 There is no obligation upon a nursery operator to provide places at the state funded rate and actual rates charged will be determined by the market. In 2018/2019 DfE statistical research utilising a large sampling exercise (Providers finances 2018) indicated that private nurseries in England charged an average rate of £5.48/hr for age 3 to 4 years, £5.63/hr for 2-year-olds and £5.71/hr for under 2 years. As would be expected that masked both locational and regional variations.

1.4 In Wales Nursery provision is governed by the Foundation Phase Nursery Provision which offered 10 hours per week of funded early education to 3 and 4 years. Under the Childcare offer for Wales state funding is or, in some local authority areas, will shortly be available for up to 30 hours per week for a mix of early education and childcare for children of eligible parents.

2. Changes from the 2017 practice note

2.1 As for 2017 the approach to valuation that will be adopted in assessing the large majority of stand-alone day nursery premises will be the rentals method. However, the recommended approach to the analysis of the available rental evidence and the way in which that evidence is expressed and then applied in the valuation approach has changed as is referred to in section 4 below.

2.2 However, there will be some nursery accommodation provided by Local Authorities for which there will be insufficient rental evidence due to either size or location to form a reliable opinion of value. In those circumstances the property will fall to be assessed using the Contractors basis. The approach to a valuation using the contractor’s basis has not fundamentally altered although the derivation and formulation of allowances at stage 2 has altered as it has in regard to other non-industrial buildings.

3. Ratepayer Discussions

3.1 No discussions have taken place with representatives of ratepayers in this sector.

4. Valuation Method

4.1 Rentals Method

4.2 It is anticipated that there will be sufficient rental evidence to value the large majority of day nurseries by reference to the rentals method of valuation. Rental analysis for previous revaluations has been expressed in terms of a £/m2 main space, however research by the Class Co-ordination Team (CCT) has indicated that a more reliable method of analysis which is more closely aligned to the market is to express rents in terms of a rent per registered child space (as stipulated by Ofsted).

4.3 It is anticipated that the number of permitted registered child spaces will reflect any design and layout characteristics of and facilities in individual buildings utilised for day nursery provision. The rent per place will reflect the locational and regional advantages and disadvantages of each nursery. For example, in any particular general location it might be expected that those nurseries in prime locations perhaps in or en-route to city centres or in close proximity to major employers e.g., hospitals, and capable of attracting a sizeable proportion of fees in excess of state funding will attract the highest rent per registered child whilst those in tertiary low-income residential areas will be at the lower end.

4.4 It is for each unit to examine the evidence and formulate a robust and defendable scheme and as a consequence should a particular unit determine that another form of analysis and valuation i.e. based on a £/m2 approach is more akin to the local market then that unit may proceed accordingly.

4.5 Advice on how to approach the formulation of a scheme of valuation and the mechanics of carrying out a valuation when adopting the analysis of rents of and valuation of day nurseries using the £ per child approach will be issued to units by the NVU.

4.6 Further information relating to the Day Nurseries and Child Care sector generally can be found in the main body of section 590 of the Rating Manual.

4.7 Contractors Basis

4.8 Where there is insufficient rental evidence to form an opinion as to value either because the nursery is of a size for which there is no evidence or where the nursery (invariably a local authority provided nursery school) is in an area where there is no private sector demand then the application of the Contractors basis will be appropriate.

4.9 The costs shown in this section are for ease of reference. In all cases where a cost guide code is shown that must be input into the NBS template, not the costs shown here. Where the cost guide code shows options, the costs shown in this practice note should be used to aid selection. Should the cost guide show differing costs to those shown in a current version of this practice note, please refer to the Class Co-ordination Team (CCT).

4.10 Stage 1 – Estimated Replacement Cost

4.11 The first stage of the contractor’s basis is to establish what it would cost to construct a substitute hereditament of the same size on a cleared site.

i) Design Size

The actual area of the existing nursery school should already be known. However, it is possible that the actual school may be significantly larger than the maximum design size that has been set down by the Department of Education for the pupil numbers at the school, in which case the calculated overcapacity is disregarded in assessing the size of the modern substitute school.

The first areas that are discounted in this way are any temporary classrooms and only if there is still overcapacity, after this has been taken into account, should any allowance be applied to the main school accommodation – See paragraph 5 and Appendix A for design size calculations and further guidance.

ii) Building Cost

The costs to be applied for the various categories are set down in Appendix B1.

iii) External works

The costs to be applied for the various categories are set down in Appendix B2.

iv) Fees

The costs to be applied for the various categories are set down in Appendix B3.

v) Location Adjustment

Where appropriate costs should be adjusted for location by reference to the Location Factors set down in the 2023 Rating Cost Guide and included at Appendix C1.

vi) Contract Size Adjustment

Contract size adjustments should be made in accordance with Appendix C2 below.

vii) Multi Storey Allowances

The allowances set down in Appendix C3 should be made to the whole of individual buildings. Each principal building should be considered separately.

The allowances are intended to reflect the operational difficulties of housing a school in a multi-storey building. In particular, they reflect the problems of pupils moving between different storeys. Where the lower floors of a building are larger than the upper floors, the caseworker will need to make a judgement as to the extent to which the extended parts of the lower floors should also benefit from the multi-storey allowance. This will depend on the use of the extension in the context of the use of the building. Where the use in the extension is related to the use of the multi-storey element, then it will be appropriate to apply the allowance to the extended part.

These allowances do not apply to schools situated in Central London (as defined in the 2023 Land Value Practice Note).

4.12 Stage 2 – Age and Obsolescence

4.13 The Estimated Replacement Cost (ERC) established at Stage 1 above is converted to Adjusted Replacement Cost (ARC) by applying an age and obsolescence allowance.

The standard age and obsolescence allowances (non–industrial) to be applied to the ERC of the individual blocks of permanent buildings are set out in Rating Manual: section 4 part 3 - the Contractor’s basis of valuation. The main civic scale is applicable to main buildings and is replicated at Appendix D (Table 1: Civic Buildings Obsolescence Allowances). Where exceptionally a building is of an industrial nature e.g. an external store or workshop then the industrial age and obsolescence scale should be applied in accordance with Appendix D (Table 2 – Industrial Buildings Obsolescence Table). For temporary buildings i.e. Category 3 Appendix D (Table 3 – Temporary Buildings Obsolescence Table) will apply.

The scales contained in Appendix D take into account the following salient points:

a. The age and obsolescence scales set out in the rating manual have been agreed to represent the combined age-related physical depreciation along with functional obsolescence and technological redundancy exhibited by buildings of each age typical for their quality/specification and condition. It is anticipated that the stated allowances will be adopted in the majority of cases and only either moderated or increased in exceptional circumstances.

b. Extensions are to be given an allowance appropriate to their age unless of a lower specification than would be expected of a building of that age in which case the allowance should be increased to a level appropriate to reflect the specification of the building as a whole.

c. In respect of physical depreciation, the above scales are intended to reflect normal wear and tear and/or deterioration due to the age of the building. The scales assume an average degree of cyclical refurbishment work will have been undertaken, to include whole or partial renewal of building sub-components, most particularly relating to mechanical and electrical services and internal fit-out, but also including periodic renewal of roof coverings and windows.

d. It follows from the above that no adjustment away from the scales is required in the majority of cases where older buildings have been subject to modernisation and refurbishment works, as these are explicitly assumed to have occurred. An exception to this would be for a building taken back to shell and reconstructed with significant renewal of structural elements, where an abatement of age-related physical obsolescence may be required.

e. An example of a building requiring an abatement of the allowances provided by the scales (due to the mitigation of physical depreciation) would be where a major renovation has occurred utilising the original building foundations, frame (including upper floors) but with comprehensive replacement of the external envelope (walls, windows), a complete internal refit and wholescale replacement of mechanical and electrical services.

f. Conversely, the above scales will be insufficient to reflect physical obsolescence in cases where buildings are substantially un-modernised and in any case, the scales do not apply in instances where the hereditament is not repairable at reasonable cost and where it falls to be valued rebus sic stantibus.

g. To qualify as a substantially un-modernised building it is expected that the building will predominantly have the following:
- single glazed windows
- original internal layout
- original ceiling height, with no suspended ceilings
- original external walls
- pre-1980 internal finishes (flooring, ceiling and walls, internal doors and fixtures and fittings)
This is not intended to be applicable to prestige buildings that add character and esteem to the hereditament.

h. In respect of functional and technological obsolescence, for buildings that remain in operational use, the scales include adjustments to reflect functional and technological deficiencies observable in buildings typical of their original period of construction but taking account of the level of assumed cyclical refurbishment reflected in the physical depreciation element of the scales.

i.The type of functional and technological obsolescence factors already reflected in the scales include the following:
- poor energy efficiency and/or environmental sustainability
- inappropriate layout inhibiting flexible and efficient space utilization
- modern health and safety, fire or building regulations that preclude or limit the original purposes of the building
- dated design practices that restrict modern usage (such as lack of/or minimal floor and ceiling voids)
- the absence of modern space heating or air conditioning systems within a building
j. It follows that only where buildings display specific functional deficiencies or issues of technological redundancy, that are atypical for their age, the age-related allowances provided by the scales should be increased.

k. One indicator that additional functional obsolescence is present such that the allowance provided by the scales should be adjusted is the presence of new and/or replacement facilities making the existing building surplus. Such replacement or other material redundancy should be considered and may result in the total redundancy of the pre-existing building, i.e. 100% obsolescence.

l. If at the Antecedent Valuation Date, where there are buildings, or parts of buildings, that through an established pattern of use have been unused for a number of years the area of these buildings, or parts of buildings, is to be excluded from the GIA.

m. This adjustment takes into account deficiencies in the actual building from an occupational point of view, which is not reflected in the ERC.

4.14 Flat roof allowance

Permanent Category 1 and 2 buildings buildings built prior to 2005 with a flat roof are to receive an additional allowance. The allowance is not to be applied to temporary buildings, stores, workshops or garages.

a) £80 per m2 ARC of the footprint of the flat roof for buildings constructed up to and including 2004.

b) No allowance for flat roofs constructed from 2005 and onwards
- Where a building has varying roof types a reasonable apportionment should be made to arrive at the allowance.
- What is flat as opposed to a pitched roof will generally be self-evident. Flat roofing allowances will automatically apply here to all types of flat roof. In instances where an allowance is sought for pitched roofing caseworkers should seek advice from the National Valuation Unit before proceeding.
4.15 Stage 3 – Land Value

4.16 Land within the hereditament is to be valued in two categories. It is unlikely however that undeveloped land will be encountered with a nursery school.

i) Developed Land

Will consist of the footprint of all buildings, associated landscaped areas, roadways, car parks and hard standings, paths and playgrounds.

It will normally consist of the whole site of the school less playing fields (not normally present).

The value of this category of land will be taken as a percentage of total adjusted replacement costs. The percentages are set out in Appendix E1.

ii) Undeveloped Land

Will consist of the area of any grassed recreational areas. Areas which are of no practical use (e.g. shelter belts and steeply sloping banks) should be ignored.

The value of undeveloped land is to be taken as the appropriate level for amenity land as stated in the 2023 Land Value Practice Note and included at Appendix E2.

4.17 Stage 4 – De-capitalisation Rate

4.18 The ARC of the buildings is aggregated with the land value, and then de-capitalised to an annual equivalent at the statutory rate applicable to educational hereditaments in respect of the 2023 Rating List.

4.19 Stage 5 – End Adjustments

4.20 The main function of this stage is for the caseworker to be satisfied that the figure produced represents the rental value of the hereditament on the statutory hypothesis.

4.21 This stage has been referred to as the “stand back and look” stage, but it is important to recall that a number of adjustments and allowances may already have been made at earlier stages. Therefore, the caseworker must be careful to ensure that adjustments at this stage are only made for matters which have not already been considered.

4.22 The caseworker should review the preceding valuation stages and reflect upon whether any further adjustments are necessary. This allows for adjustments which cannot properly be made at the previous stages to be considered at Stage 5.

4.23 The value has already been adjusted prior to Stage 5 for (i) Physical and Functional Obsolescence, (ii) Location Factor and (iii) Multi-Storey Allowance.

4.24 Any physical attribute of the hereditament that may affect the rent agreed between the hypothetical landlord and tenant should be considered here, if not already taken into account elsewhere in the valuation.

4.25 The correct measure of any adjustment is the effect on the rent that would be agreed between the hypothetical landlord and tenant, and not any estimation of cost. On this basis, it is unlikely that in all but the most exceptional circumstances, the total adjustments for Stage 5 will exceed 15%.

4.26 Where disputes on the appropriate level of allowance are unresolved these should be referred to the National Valuation Unit for advice.

4.27 Application and Caps on Allowances
- Where only end allowances excluding flat roof allowance are applicable a cap of 15% will apply.
- Where only Flat Roof allowances are applicable a cap of 15% will apply.
- However, if either the end allowances or the flat roof allowances reach 15% the presence of non-reflected flat roofing or end allowance factors will extend the cumulative cap to 20%.
- As in previous practice notes relating to this class, it is recognised that basic caps on allowances can be exceeded in exceptional circumstances, regardless of whether the above “top up” position is reached.
- Caseworkers should note that it is intended that qualifying heating allowances should stand outside of the above capping arrangements. It follows that in instances where the cap has been reached, either at 15% or at 20%, a further 5% allowance would apply if a heating allowance is warranted.
4.28 Repair Assumptions

4.29 The property is deemed to be in a reasonable state of repair, in line with the rating hypothesis. Therefore the costs should not be varied for the state of repair of the actual hereditament. However, when the controlling body has, on or before the material date, resolved to demolish a school rather than repair (solely on the grounds of condition) then this may be taken as an indication that the expenditure for repair would be considered uneconomic by the landlord. Such repairs cannot be assumed to have been made to the hereditament, and the standard age-based scale deductions will not necessarily be adequate. In such cases the caseworker must arrive at his own estimation of the appropriate allowance.

4.30 In such cases, while the school is in use, Category 1 buildings can be treated as temporary (Category 3) structures.

5. The Application of the Design Guidelines

5.1 The design guidelines are set out in Appendix A. The notes below give further guidance in relation to less straight forward matters which maybe encountered.

5.2 Supplementary areas within the school which are not used by pupils during the school day will fall to be assessed but are to be excluded from design size calculation/over-capacity.

Examples are as follows:
- Crèches
- Nursery provision for 0- to 3-year-olds and childcare provisions for out of school hours
- Adult Learning and Skills and centres for local authority learning such as staff training
- Specially resourced facilities such as a designated SEN or disabilities unit and pupil referral units
- Non-nursery school facilities such as community library facilities or youth centres
- Accommodation for local authority designated support services, including peripatetic and support staff.
- Parent or community room not available to the school
- Chapel or similar place of worship not available to the school except for that purpose.
6. The Estimated Number of Pupils (ENP)

6.1 The valuation must reflect overcapacity identified as likely to persist from the antecedent valuation date (AVD). To quantify any allowance appropriate for overcapacity, it is necessary to find the estimated number of pupils (ENP) as at the AVD. In doing so regard must be had to the actual registered number of pupils as at April 2021. The best guide to this is provided by nationally collected statistics of pupil numbers for Spring 2021. If this is a reliable indicator of long-term numbers, it may be accepted as the ENP. If there is a falling or rising trend the ENP should be reduced or increased from the Spring 2021 actual. In general, this variation is unlikely to exceed 20%.

6.2 Pupil numbers can be accessed at L:/National Valuation Unit/ VP’s&CCTs/R2023/VP4 Civics/CCT Education 1/Local Authority Schools/Pupil Numbers for 2023 Revaluation. Guidance on the use of the statistics is held in the same folder.

6.3 The Spring 2021 statistics may be affected by some anomaly, which is unlikely to be repeated in subsequent years. In such cases it is necessary to ascertain future trend in registered numbers as discernible at AVD.

a) In nursery schools which have a summer term intake, the maximum number which the school must accommodate will not be reached until the summer term; where this practice is followed, the January figure will need to be increased by the summer term intake.

b) There may have been a physical change in the hereditament or locality post AVD which will affect the numbers the nursery school will have to accommodate, e.g.:

An extension to or partial demolition of the subject school. A new nursery school or private day nurseries in the locality, the demolition or enlargement of an existing nursery school in the locality, new residential development in the locality, or clearance in the locality.

6.4 When schools have been closed on or before AVD without any prospect that they will reopen, a NIL assessment may be appropriate. Subsequent closures may justify a NIL assessment if they are caused by an MCC. But evidence of private demand as at AVD, must be taken into account.

7. Overcapacity Allowance

7.1 Where the GIA of the nursery school exceeds design size an allowance of 100% is to be made of the excess area in all cases.

7.2 A reduction should be applied firstly to any accommodation which is shown to be superfluous within the context of the overall operating needs of the nursery school and, any balance remaining spread pro rata to GIA among the accommodation. Where overcapacity is applied to a hereditament containing temporary buildings, investigations should be made so as to answer the following test: if the school was compelled to contract, which part(s) would be the first to be given up?

7.3 If the facts at the school provide insufficient direction, the opinion of a person in a position of responsibility (the school head or LEA official if appropriate) should be sought to provide an answer.

7.4 Appendix A has been compiled ignoring space requirements for community use and further education. The design size of the school should be increased by any accommodation used exclusively for these purposes. (see section 5 above)

7.5 While Appendix A gives general guidance, it should not be taken to justify an allowance for overcapacity where other evidence suggests that no overcapacity exists. This depends on the facts of particular hereditaments and it may be necessary to form a judgment having regard to the use of temporary classrooms and any new-build post AVD.

7.6 There are a variety of reasons why an education authority might undertake post AVD construction or continue occupying temporary accommodation and it is not possible to consider every scenario in this practice note, which must permit a degree of valuation tolerance. However, the following guidance is presented, to indicate whether an overcapacity allowance is warranted:
- Post AVD construction should not prevent an overcapacity allowance being given where the hereditament would have merited the allowance before the addition of the new floor space. But no overcapacity allowance should be given to the new floor space, except where it is provided to cope with demands expected to arise from an anticipated MCC, which has not yet materialised.
- As a particular illustration of that exception, an allowance may be appropriate even for new post AVD floor space when new classrooms are erected in anticipation of future demand from a residential development. There may also be a phased occupation of a new school year by year which should also qualify for an overcapacity allowance which is in progress (see section 6 above) or has not yet been occupied in anticipation of another MCC, such as the planned closure of another school.
Appendix A

Design size guidelines

Appendix B1

Building Costs

Appendix B2

The addition for external works

Appendix B3

The addition for fees

Fees should be added at the percentages shown in the VOA published Cost Guide at Section 7. For convenience these are shown below inclusive of the 2% complexity addition. Note that minimum fees may apply to counter inversion.

Appendix C1

Location adjustment

N.B. The Regions referred to are administrative areas and are not significant boundaries.

Appendix C2

Contract Size Adjustment

The adjustment for contract size should be made having regard to the total ERC (after adjustment for location but before the addition for fees) in accordance with the following scales:

Appendix C3

Multi-floor allowances

These allowances do not apply to schools situated in Central London (as defined in the land value practice note).

Appendix D

Age and obsolescence scales

Table 1: Civic Buildings Obsolescence Allowances

Table 2 – Industrial Buildings Obsolescence Table

Notes Applicable to Table 2
- As noted above, the scale of allowances commonly referred to as “the Monsanto scale” (derived from the approach determined in Monsanto v Farris (VO) 1998 RA 217) continue to be applicable to Industrial buildings.
- The scales refer to the actual age of the specific item. A notional age can be adopted where the item has undergone significant improvement or refurbishment.
- The scales do not provide for physical obsolescence alone. They also reflect the expected degree of functional and technical obsolescence for an asset of that age.
- Any extraordinary functional or technical obsolescence may result in an additional allowance being considered. Examples include superfluity for modern purposes or where new technology evidences that the actual asset is relatively inefficient. Where an additional allowance is made the reasons for it must be stated in the valuation notes.
- An element of risk of failure and the requirement of the tenant to replace the item at the end of its useful life is incorporated in the allowances.
- It should not be automatically assumed that because a property is old it merits an allowance. Age in itself is not a disability but rather what often flows from age.
- The scales are intended to provide a degree of uniformity of allowance. They should be regarded as the maximum allowances to be given.
- The scales should only be used as guidance in accordance with the principles outlined in the Rating Manual.
- Allowances in excess of 50% for buildings or P and M should only be adopted in exceptional circumstances. It is unlikely that many very old buildings exist which have not undergone some form of modernisation or refurbishment. Where a building or piece of plant has obviously not undergone refurbishment or modernisation at some stage it is permissible to give allowances up to a maximum of 65% as indicated in the scales (below).
- Allowances may be up to 50% higher from those shown in the scales for structures which are of a temporary nature and have continued in use well beyond their intended life span.
- It should not be assumed automatically that because an item of plant or machinery is old it merits an allowance. If an asset is well maintained the amount of use may well not affect the item or its value. However, with age the risk of breakdown is likely to increase and functional and technological obsolescence factors are likely to become prevalent. These factors must be borne in mind when selecting an appropriate obsolescence allowance.
- The scales of allowances therefore take into account the average use of items over a period of time, bearing in mind the physical, functional and technical obsolescence that may occur during the stated period.
- Where judgement through actual knowledge of the item is inconsistent with the allowance scales the item should be valued accordingly recording the reasons for the divergence from the scale.
- In any instance of variation from the scales in accordance with these instructions, the reasoning for this must be recorded in the valuation.
Table 3 - Temporary Buildings Obsolescence Table (Category 3 buildings)

Appendix E1

Developed land value

The definitions of the areas referred to above can be found in the 2023 land value practice note.

Appendix E2

Undeveloped Land Value

Amenity land values to be use by region

Practice note: 2017 - day nurseries and nursery schools (private and local authority)

1. Market Appraisal

The number of child care places increased significantly between 2008 and 2014 as did the number of providers. According to official statistics the number of facilities offering full time day care in the private sector in England increased from 13,800 in 2008 to 17,900 in 2013. The number of primary schools offering both reception and nursery provision grew from 6,700 to 7,600 over the same period. According to figures produced by Ofsted there were some 1,023,404 nursery places in England in September 2013. Over the same period the number of stand- alone maintained nursery schools and children’s centres declined significantly as did the number of registered child minders.

The economic value of the nursery sector was estimated at £4.6billion in 2013 by a leading firm of analysts up from £4.1bilion in 2009

The five largest operators in terms of establishments provide around 42,200 places in 510 nurseries. In 2008 the top 5 had 476 nurseries and some 36,112 places this is an increase of 7.14% in nurseries and 16.86% increase in places. Schools in the private sector have also continued to expand into the nursery sector often by way of the provision of self-contained units in the grounds of pre-existing prep or pre prep schools. Demand has been partially fuelled by publically funded child care vouchers, which can contribute up to approximately £1,300 per annum. The coalition government was intending to introduce a new tax-free childcare scheme to support working families from autumn 2015, stated to be worth up to £2,000 per child each year and to increase the support available to lower-income families from April 2016, as part of universal credit. The government abandoned proposals to increase the number of child care places, by relaxing the staff to child ratios in June 2013 following a consultation exercise.

In general the rental market in the nursery sector throughout 2014 was perceived in the industry to be relatively buoyant. Specialists in the sector advise that typically tenants were seeking 10 year leases with options to extend at rents in the range £20,000 to £45,000 per annum.

It is understood that current average occupancy rates are around 80%. Occupancy rates in excess of this can impact upon necessary flexibility.

2. Changes from the 2010 Practice Note

As for 2010 the approach to valuation that will be adopted in assessing the large majority of stand- alone day nursery premises will be the rentals method. However there will be some nursery accommodation provided by Local Authorities for which there will be insufficient rental evidence due to either size or location to form a reliable opinion of value. In those circumstances the property will fall to be assessed using the Contractors basis
- The costs to be applied at Stage 1 relate to the modern substitute and do not relate to the cost of replacing the actual building as was the approach adopted for the 2010 List.
- The age and obsolescence allowances applied at stage 2 now reflect all of the attributes and disadvantages of the actual hereditament in comparison with the modern substitute.
- A formulated over capacity allowance calculated by reference to the guidelines contained within Building Bulletin 103 has been introduced
- The valuation spreadsheet is now identical to that utilised for LA schools save as to Building costs and the calculation of design size.
3. Ratepayer Discussions

No discussions have taken place with representatives of ratepayers in this sector

4. Valuation Method

4.1 Rentals Method

It is anticipated that there will be sufficient rental evidence to value the large majority of day nurseries by reference to the rentals method of valuation. Analysis should be expressed in terms of a £/m2 main space although where the information is available a secondary analysis to provide a rent per child place would be of assistance in the valuation process.

In considering the weight to be placed on the rental evidence and in formulating a valuation scheme regard should be had to the following –
- Whether the property is purpose built or converted
- If converted whether the accommodation offers optimum space requirements
- Favourable locations- proximity to schools or residential areas with favourable demographics etc.
- Is the toilet, ancillary and staff accommodation adequate
- Is there adequate car parking either on site or in the immediate vicinity for staff and parents.
Further information relating to the Day Nurseries and Child Care sector generally can be found in the main body of section 590 of the Rating Manual.

4.1.1 Valuation Scheme Relativities

Day nurseries assessed by reference to the rentals method are to be valued using the Rating Support Application (RSA). The relevant scale reference is WMNURSERY1, (Day Nurseries and Play Groups). Owning Site 501.

It is expected that address based matrices will be used in conjunction with the scale referred to above when formulating a valuation scheme for this class.

Class Co-ordination Team (CCT) members are responsible for ensuring rental information is ascertained and subject to formal co-ordination procedures between business units.

4.2 Contractors Basis

Where there is insufficient rental evidence to form an opinion as to value either because the nursery is of a size for which there is no evidence or where the nursery (invariably a LA provided nursery school) is in an area where there is no private sector demand then the application of the contractors basis will be appropriate.

The costs shown in this section are for ease of reference. In all cases where a cost guide code is shown that must be input into the NBS template, not the costs shown here. Where the cost guide code shows options, the costs shown in this practice note should be used to aid selection. Should the cost guide show differing costs to those shown in a current version of this practice note, please refer to the Class Co-ordination Team (CCT).

4.2.1 Stage 1

The first stage of the Contractor’s Basis is to establish what it would cost to construct a substitute hereditament of the same size on a cleared site.

i) Design Size

The actual area of the existing nursery school should already be known. However, it is possible that the actual school may be significantly larger than the maximum design size that has been set down by the Department of Education for the pupil numbers at the school, in which case the calculated overcapacity is disregarded in assessing the size of the modern substitute school.

The first areas that are discounted in this way are any temporary classrooms and only if there is still overcapacity, after this has been taken into account, should any allowance be applied to the main school accommodation – See paragraph 5 and Appendix A for design size calculations and further guidance.

ii) Building Cost

The costs to be applied for the various categories are set down in Appendix B.

iii) Location Adjustment

Where appropriate costs should be adjusted for location by reference to the Location Factors set down in the 2017 Rating Cost Guide

iv) Multi Storey Allowances

The allowances set down in Appendix C should be made to the whole of individual buildings. Each principal building should be considered separately.

The allowances are intended to reflect the operational difficulties of housing a school in a multi-storey building. In particular, they reflect the problems of pupils moving between different storeys. Where the lower floors of a building are larger than the upper floors, the caseworker will need to make a judgement as to the extent to which the extended parts of the lower floors should also benefit from the multi-storey allowance. This will depend on the use of the extension in the context of the use of the building. Where the use in the extension is related to the use of the multi-storey element, then it will be appropriate to apply the allowance to the extended part.

These allowances do not apply to schools situated in Central London (as defined in the 2017 Land Value Practice Note)

4.2.2 Stage 2

The Estimated Replacement Cost (ERC) established at Stage 1 above is converted to Adjusted Replacement Cost (ARC) by applying an age and obsolescence allowance.

The standard age and obsolescence allowances to be applied to the ERC of the individual blocks of permanent buildings are set out in Rating Manual: Volume 4: Section 7: The Contractor’s Basis of Valuation: R2017 Practice Note: Stage 2 - Age and Obsolescence Allowances.

This adjustment takes into account deficiencies in the actual building from an occupational point of view, which is not reflected in the ERC.

Exceptionally the age and obsolescence allowance maybe increased to a maximum of 65%, where a school building which was erected prior to 1980, has not been the subject of any significant works of modernisation or improvement. It is considered there is likely to be relatively few such buildings.

Although age related the allowances should be adjusted where a school has been substantially modernised/refurbished in the past 10 years. The figure adopted will depend upon the extent of the modernisation carried out and is a matter for caseworker judgement.

The table of allowances in appendix D relates to temporary buildings

4.2.3 Stage 3

Land within the hereditament is to be valued in two categories. It is unlikely however that undeveloped land will be encountered with a nursery school.

i) Developed Land

Will consist of the footprint of all buildings, associated landscaped areas, roadways, car parks and hard standings, paths and playgrounds.

It will normally consist of the whole site of the school less playing fields (not normally present).

The value of this category of land will be taken as a percentage of total adjusted replacement costs. The percentages are set out in Appendix E(1).

Caseworkers should use their own discretion in deciding between “urban” and “rural” categories, but it is suggested that the sites of hereditaments situated on the fringe of build-up areas with populations not exceeding 3,000 should be designated rural. While shading between the rural and urban percentages is permitted for schools sited on the urban fringe, it should only be applied where the developed land within the school hereditament falls within an area where it is likely no alternative development would be permitted.

ii) Undeveloped Land

Will consist of the area of any playing fields. Areas which are of no practical use (e.g. shelter belts and steeply sloping banks) should be ignored.

The value of undeveloped land is to taken as the appropriate level for amenity land as stated in the 2017 Land Value Practice Note.

4.2.4 Stage 4

The ARC of the buildings is aggregated with the land value, and then de-capitalised to an annual equivalent at the statutory rate applicable to educational hereditaments in respect of the 2017 Rating List

4.2.5 Stage 5

The main function of this stage is for the caseworker to be satisfied that the figure produced represents the rental value of the hereditament on the statutory hypothesis.

This stage has been referred to as the “stand back and look” stage, but it is important to recall that a number of adjustments and allowances may already have been made at earlier stages. Therefore the caseworker must be careful to ensure that adjustments at this stage are only made for matters which have not already been considered.

The caseworker should review the preceding valuation stages and reflect upon whether any further adjustments are necessary. This allows for adjustments which cannot properly be made at the previous stages to be considered at Stage 5.

The value has already been adjusted prior to Stage 5 for (i) Physical and Functional Obsolescence, (ii) Age Related Build Quality, (iii) Location Factor & (iv) Multi-Storey Allowance.

Any physical attribute of the hereditament that may affect the rent agreed between the hypothetical landlord and tenant should be considered here, if not already taken into account elsewhere in the valuation.

The correct measure of any adjustment is the effect on the rent that would be agreed between the hypothetical landlord and tenant, and not any estimation of cost. On this basis, it is unlikely that in all but the most exceptional circumstances, the total adjustments for Stage 5 adjustments will exceed 15%.

Where disputes on the appropriate level of allowance are unresolved these should be referred to the National Specialist Unit for advice.

Specific allowances are to be given in respect of the following:

Flat Roof Allowance

Category 1 and 2 buildings with a flat roof are to receive an end allowance of up to 15% as follows -

a) £80 per m2 ARC of the footprint of the flat roof for buildings constructed up to and including 2004.

b) £60 per m2 ARC of the footprint of the flat roof for buildings constructed after 2004.

Where a building has varying roof types a reasonable apportionment should be made to arrive at the allowance.

What is flat as opposed to a pitched roof will generally be self-evident. Flat roofing allowances will automatically apply here to all types of flat roof. In instances where an allowance is sought for pitched roofing caseworkers should seek advice from the National Specialist Unit before proceeding.

Oil, LPG or Electric Central Heating

Where a school has oil, LPG fired central heating or electrical heating, an end allowance of 5% shall be applied to the valuation.

Application and Caps on Allowances

Where only end allowances excluding flat roof allowance are applicable a cap of 15% will apply.

Where only Flat Roof allowances are applicable a cap of 15% will apply.

However, if either the end allowances or the flat roof allowances reach 15% the presence of non-reflected flat roofing or end allowance factors will extend the cumulative cap to 20%.

As was accepted in the 2005 and 2010 practice notes, it is recognised that basic caps on allowances can be exceeded in exceptional circumstances, regardless of whether the above “top up” position is reached.

Caseworkers should note that it is intended that qualifying heating allowances should stand outside of the above capping arrangements. It follows that in instances where the cap has been reached, either at 15% or at 20%, a further 5% allowance would apply if a heating allowance is warranted.

Repair Assumptions

The property is deemed to be in a reasonable state of repair, in line with the rating hypothesis. Therefore the costs should not be varied for the state of repair of the actual hereditament. However, when the controlling body has, on or before the material date, resolved to demolish a school rather than repair (solely on the grounds of condition) then this may be taken as an indication that the expenditure for repair would be considered uneconomic by the landlord. Such repairs cannot be assumed to have been made to the hereditament, and the standard age-based scale deductions will not necessarily be adequate. In such cases the caseworker must arrive at his own estimation of the appropriate allowance. In such cases, while the school is in use, Category 1 buildings can be treated as temporary (Category 3) structures.

5. The Application of the Design Guidelines

The design guidelines are set out in Appendix A. The notes below give further guidance in relation to less straight forward matters which maybe encountered-

Supplementary areas within the school which are not used by pupils during the school day will fall to be assessed but are to be excluded from design size calculation/over capacity.

Examples are as follows
- Crèches, Nursery provision for 0 to 3 year olds and child care provisions for out of school hours
- Adult Learning and Skills and centres for local authority learning such as staff training
- Specially resourced facilities such as a designated SEN or disabilities unit and pupil referral units
- None nursery school facilities such as community library facilities or youth centres
- Accommodation for local authority designated support services, including peripatetic and support staff.
- Parent or community room not available to the school
- Chapel or similar place of worship not available to the school except for that purpose.
6. The Estimated Number of Pupils (ENP)

The valuation must reflect overcapacity identified as likely to persist from the antecedent valuation date (AVD). To quantify any allowance appropriate for overcapacity, it is necessary to find the estimated number of pupils (ENP) as at the AVD. In doing so regard must be had to the actual registered number of pupils as at April 2015. The best guide to this is provided by nationally collected statistics of pupil numbers for spring 2015. If this is a reliable indicator of long-term numbers it may be accepted as the ENP. If there is a falling or rising trend the ENP should be reduced or increased from the spring 2015 actual. In general this variation is unlikely to exceed 20%.

The spring 2015 statistics may be affected by some anomaly, which is unlikely to be repeated in subsequent years. In such cases it is necessary to ascertain future trend in registered numbers as discernible at AVD.

a. In nursery schools which have a summer term intake, the maximum number which the school must accommodate will not be reached until the summer term; where this practice is followed, the January figure will need to be increased by the summer term intake.

b. There may have been a physical change in the hereditament or locality post AVD which will affect the numbers the nursery school will have to accommodate, e.g.: An extension to or partial demolition of the subject school, A new nursery school or private day nurseries in the locality, the demolition or enlargement of an existing nursery school in the locality, new residential development in the locality, or clearance in the locality.

When schools have been closed on or before AVD without any prospect that they will reopen, a NIL assessment may be appropriate. Subsequent closures may justify a NIL assessment if they are caused by an MCC. But evidence of private demand as at AVD, must be taken into account.

Overcapacity Allowance

Where the GIA of the nursery school exceeds design size an allowance of 100% is to be made of the excess area in all cases.

The reduction should be applied firstly to any accommodation which is shown to be superfluous within the context of the overall operating needs of the nursery school and, any balance remaining spread pro rata to GIA among the accommodation. Where overcapacity is applied to a hereditament containing temporary buildings, investigations should be made so as to answer the following test: if the school was compelled to contract, which part(s) would be the first to be given up?

If the facts at the school provide insufficient direction, the opinion of a person in a position of responsibility (the school head or LEA official if appropriate) should be sought to provide an answer.
- Appendix A has been compiled ignoring space requirements for community use and further education. The design size of the school should be increased by any accommodation used exclusively used for these purposes.(see section 5 above)
- While Appendix A gives general guidance, it should not be taken to justify an allowance for overcapacity where other evidence suggests that no overcapacity exists. This depends on the facts of particular hereditaments and it may be necessary to form a judgment having regard to the use of temporary classrooms and any new-build post AVD.
- There are a variety of reasons why an education authority might undertake post AVD construction or continue occupying temporary accommodation and it is not possible to consider every scenario in this practice note, which must permit a degree of valuation tolerance. However, the following guidance is presented, to indicate whether an overcapacity allowance is warranted:
Post AVD construction should not prevent an overcapacity allowance being given where the hereditament would have merited the allowance before the addition of the new floor space. But no overcapacity allowance should be given to the new floor space, except where it is provided to cope with demands expected to arise from an anticipated MCC, which has not yet materialised.

As a particular illustration of that exception, an allowance may be appropriate even for new post AVD floor space when new classrooms are erected in anticipation of future demand from a residential development. There may also be a phased occupation of a new school year by year which should also qualify for an overcapacity allowance which is in progress (see section 6 above) or has not yet been occupied in anticipation of another MCC, such as the planned closure of another school.

Appendix A

Design Size Guidelines

Appendix B 1

Building Costs

Appendix B 2

The Addition For External Works

Appendix B 3

The Addition For Fees

Appendix C

Multi-Floor Allowances

Appendix D

Age And Obsolescence Scales

Temporary Buildings

Appendix E

Developed Land Value

The definitions of the areas referred to above can be found in the 2017 Land Value Practice Note.