Non-statutory water undertakings
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

Definition of a private water supply

1.1 A private water supply is any supply of drinking water by someone not licensed by the Water Services Regulation Authority (Ofwat). These drinking water supplies are regulated under the provisions of The Water Industry Act 1991 which defines the powers and responsibilities of local authorities in relation to private water supplies. Enforcement of standards are covered in England by The Water Act 2016 as amended by The Private Water Supplies (England) (Amendment) Regulations 2018 and in Wales by The Private Water Supplies (Wales) (Amendment) Regulations 2010 and The Private Water Supplies (Wales) Regulations 2017.

1.2 A private water supply may, therefore, be defined as any water supply intended for human consumption or water used for food-production purposes which is supplied from someone other than a company or person licensed by Ofwat. Where water from an Ofwat licensed water company or licensed water supplier is distributed by another person (that is a private distribution network) this will also be classified as a private water supply.

1.3 The source of the private supply may be a well, borehole, spring, stream, river, lake, pond, rainwater reservoir. The supply may serve just one property or several properties through a network of pipes.

Non-potable private supplies

1.4 Non-potable private supplies are not intended to be covered in detail in this section of the RM. The comments below are simply included for the sake of completeness and to aid understanding of the subject.

1.5 Non-potable supplies that are part of the business of a statutory water company will be included in the Central List assessment of the company.

1.6 Most commonly, non-potable supplies will serve major industrial occupiers. Non-potable supplies in the same occupation as the consumer of the water (industrial works / power station and so on) may be included in the consumer’s hereditament, or shown separately in the rating list depending on the facts.

1.7 Non-potable supplies not in the same occupation as the consumer and not included in a statutory water company’s Central List assessment should be separately assessed. They are valued by the NVU Commercial, Industrial & Crown team on the contractor’s basis as cross country pipelines, Scat code 212V. Advice regarding assessment of cross country pipelines is contained in RM 780.

1.8 If there is a non-potable private water supply serving agricultural land in the occupation of a party different from the agricultural occupier, the water supply network itself is neither agricultural land nor agricultural buildings and is therefore not exempt. The supply should be separately assessed, again unless part of a statutory water company’s Central List assessment.

1.9 The rest of this section of the Rating Manual deals primarily with private supplies of drinking water as defined in 1.1 to 1.3 above as non-potable supplies are covered in the section on pipes (780) in the Rating Manual (https://www.gov.uk/guidance/rating-manual-section-6-part-3-valuation-of-all-property-classes/section-780-pipes-and-pipelines).

2. List description and special category code

2.1 The special category code 300 should be used. The properties are valued by Regional Valuation Units (RVUs) and the appropriate suffix letter is G. Description should be private water supply and premises.

3. Responsible teams

3.1 Valuations are to be undertaken in RVUs in liaison with National Valuation Unit (NVU) Technical Advisors or NVU Utilities Telecoms and Transport team in the event of difficulties arising.

4 Co-ordination

4.1 The VP5 Class Co-ordination team has overall responsibility for the co-ordination of this class. The team are responsible for the approach to and accuracy and consistency of private water supply valuations. The team will deliver practice notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. 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 co-ordination team
- seek advice from the co-ordination team before starting any new work
5. Legal framework

5.1 The Private Water Supply Regulations 2009 came into force on 1 April 2010 and arose from EU legislation. These stand apart from the Water Act provisions applying to statutory water companies. The regulations required local authorities to complete a risk assessment of all “regulated supplies” by 31 March 2015. Later regulations require them to monitor water quality in respect of “Large supplies and those used in commercial or public buildings” on an ongoing basis. Figures obtained by Local Authorities are reported to the drinking water inspectorate annually.

5.2 Distinction between statutory water companies and private water undertakings

5.3 Statutory Water Companies are licensed and regulated by Ofwat. They will be responsible for a determined geographic area, and for the supply of water to the majority of buildings within its designated area. A statutory water company is obliged by law to supply water to any domestic customer within their designated area who requests such a supply. The Ofwat regulated statutory water companies are designated persons for the purposes of the Central List Regulations and will have Central List assessments. Further details concerning the Central List may be obtained from Rating Manual: section 2 part 2 (https://www.gov.uk/guidance/rating-manual-section-2-maintaining-the-rating-list/part-2-hereditaments-valued-by-the-central-valuation-officer).

5.4 Statutory Licensed Water Suppliers (licensed by Ofwat) who operate within a water company’s area are not private supplies as they are licensed by Ofwat and included in the Ofwat Register of Licensees under Section 195 of the Water Industry Act 1991. These are different from the Non-Statutory water undertakings which are the focus of this section of the Rating Manual. Nevertheless, when identified their treatment and or distribution networks will require Local List entries as they are not named persons in the Central List Regulations. All queries regarding this relatively new class of properties which are distinct from both statutory water undertakers and private water suppliers should be referred to NVU Utilities, Telecoms and Transport Team.

5.5 Private water suppliers in contrast are normally able to select their customers and are not licensed or regulated by Ofwat. Typical examples of private supplies are found on private (landed) estates where a source of water is tapped, treated and then piped to occupiers of tied residences, and other properties both domestic and non domestic, on and in close proximity to the estate. Many large industrial premises obtain water used in the manufacturing process from non-statutory water undertakings. In this case the water undertaking may only abstract and supply one customer. Careful consideration of the facts of each case will be required to determine whether such a supply should be included in the assessment of the property using the water or constitutes a separate water supply hereditament.

5.6 Under the Private Water Supply Regulations there are broadly three types of private supply:

1) Non-regulated supplies

Over 60% of private supplies are in respect of single dwelling supplies which are not regulated under the act. These form part of the domestic assessment under Local Government Finance Act 1988 s66(b) “a yard, garden, outhouse or other appurtenance belonging to or enjoyed with property used wholly for the purposes or living accommodation” and as such are not rateable.

2) Regulated supplies

a) Regulated, small shared domestic supplies make up in excess of 20% of all private supplies. These may be rateable but are very difficult to identify and may have very low values.

b) Regulated, large supplies are those used to supply commercial or public buildings (Large is defined as in excess of 10 cubic metres per day). This category makes up in the region of 13% of private water supplies.

A significant number of the regulated large supplies will be part of another hereditament and will not fall to be separately assessed. In these cases the private supply should be shown or reflected in the value of the hereditament it supplies. Typical examples may be caravan sites, festival sites, factories, breweries, distilleries and other public or commercial properties that use their own private supplies. The benefit of a private supply of potable water will in most cases be shown in the land value attributed to such properties when valued on a contractor’s basis in addition to the value of rateable plant and machinery, such as well linings.

All remaining regulated supplies falling into the large regulated, commercial or public buildings category are likely to be separately rateable.

5.7 The monitoring of regulated supplies is undertaken by local authorities.

5.8 Water sources supplying a commercial property for use as a bottling plant. An example would be mineral water bottling plant. If the water supply is controlled by the Natural Mineral Water, Spring Water and Bottled Drinking Water (England) Regulations 2007 it is exempt from the Private Water Supplies Regulations, but the water supply element of the hereditament will still need to be reflected in the rateable value. This is likely to be best achieved by adopting a receipts and expenditure valuation where there is no rental evidence indicating the rental value of the water supply.

6. Survey requirements

The rateable elements of a non-statutory water undertaking will generally comprise the site, rateable plant and machinery and easements.

The object of the survey is to provide a factual picture of the hereditament as a whole with sufficient detail of items to enable the caseworker to form an accurate and comprehensive appreciation of the property having regard to the method of valuation. There may be extensive amounts of plant and machinery present in a private water supply hereditament.

Survey details will still be required in the event of the receipts and expenditure method of valuation being adopted as the caseworker may need to adjust the accounts to reflect depreciation on non-rateable items only and to assist determining the tenant’s share of the divisible balance.

Rateable plant

The main component of the rateable plant and machinery is likely to include the distribution pipe network, well casing, storage reservoirs and so on.

Under Class 3 (g) of the Valuation for Rating (plant and machinery) (England) Regulations 2000 (SI 540) and the corresponding Wales Regulations 2000 (SI 1097 (W.75) the following is named as being rateable:

“A pipe-line, that is to say, a pipe or system of pipes for the conveyance of any thing, not being-

(i) a drain or sewer, or

(ii) a pipe-line which forms part of the equipment of, and is wholly situated within relevant premises

together with any relevant equipment occupied with the pipe-line; and where a pipe-line forms part of the equipment of, and is situated partly within and partly outside, relevant premises, excluding-

(aa) in the case of a pipe-line for the conveyance of any thing to the premises, so much of the pipe-line as extends from the first control value on the premises; and

(bb) in the case of a pipe-line for the conveyance of any thing away from the premises, so much of the pipe-line as extends up to the last control value on the premises;

but not excluding so much of the pipe-line as comprises the first or, as the case may be, last, control value;”

In this paragraph “relevant premises” means a factory.

The Regulations then go on to say that “factory” has the same meaning as that in the Factories Act 1961.

A water treatment plant is considered to be a factory within the meaning of the Factories Act 1961. Accordingly none of the pipework within a water treatment facility is rateable.

Where, for example, the undertaking is wholly contained within a private landed estate, then only the pipelines within the treatment facility will be non rateable. The system of pipes that make up the raw water and treated water networks will be rateable. The reasoning behind this being that in such a scenario the whole estate would not reasonably be said to be a factory. The network of pipelines could not be said to be part of the equipment of, or wholly situated within the relevant premises of the treatment facility.

Survey requirements further detail

6.1 Identify source of water.

Sources include wells, boreholes, springs, streams, rivers, lakes, man-made reservoirs or ponds. Structures and rateable plant and machinery may exist. Note size, age and construction.

6.2 Identify raw water distribution (water prior to treatment) pipework and storage facilities.

The pipes used to transfer water to storage reservoirs and/or treatment plant(s). Details should include length, size (bore), age and pipe material.

6.3 Identify Treatment process of the water

Abstracted water requires treatment to bring it up to an appropriate standard, normally so that it is fit for human consumption. Typically one or more of the following processes will treat water:
- screening
- settlement
- injection of ozone gas and or chlorination
- filtration
- passage through granular activated carbon
- chlorination prior to distribution
The degree of treatment necessary will be dependant upon the purity of the water abstracted and type of contaminants present.

6.4 Identify treated water distribution network

After treatment water will be distributed to point of use via a distribution network. This may be a simple pipe run or involve intermediate storage points, reservoirs or water towers. Survey details of the length, age, bore and pipe construction materials is required, as are full details of any structures and land.

Other considerations

Water source supplying a single non-domestic property only for use on the property

The identity of the rateable occupier of the water supply and of the non-domestic premises should be considered.

Where the rateable occupier of the water supply is different from the rateable occupier of the non-domestic premises then the two will constitute separate hereditaments, Here the water supply constitutes a private water supply.

In cases where the rateable occupier of the water supply and the rateable occupier of the non domestic premises are the same and the water supply is considered ancillary to the main use of property, the result will be a single hereditament. This hereditament will not be a non-statutory water undertaking.

7. Survey capture

See section 9 below regarding valuation support. The generic contractor’s or receipts and expenditure templates on the Non-Bulk Server must be used to capture survey information in preparation for valuation.

8. Valuation approach

8.1 It is unlikely that any private water supply will be rented. However, if suitable open market rental evidence exists this should be considered as primary evidence. Where no evidence of rents exists other methods of valuation need to be examined.

8.2 Receipts and expenditure method is the preferred valuation approach when the hereditament is operated for profit. Therefore, where accounts are available caseworkers should adopt the Receipts and Expenditure method. See Rating Manual: section 4 part 2 (https://www.gov.uk/guidance/rating-manual-section-4-valuation-methods/part-2-the-receipts-and-expenditure-method) for further details.

8.3 Valuers should be aware that many tenants on agricultural and landed estates served by a non-statutory water undertaking may pay a reduced charge, or in some instances not pay any charge at all. This arises because the tenants are employees of the estate and benefit from cheaper water as a privilege of employment. Alternatively some estates will grant discounts to tenants for philanthropic reasons. Valuers may accordingly need to make adjustments to the accounts, since the hypothetical tenant of such an undertaking would not offer such discounts to customers. Estates may also supply separately rated commercial undertakings operated on the estate such as visitor attractions, restaurants, cafes and so on. The income shown will therefore need to be carefully scrutinised where charges for use of the supply may be between related parties.

8.4 Where no accounts are available recourse should be had to the contractor’s basis of valuation. When undertaking a contractor’s basis valuation the value of easements which permit the construction and continuing use of underground pipes should be included. Where evidence of the actual cost of easements (suitably adjusted to the Antecedent Valuation Date) is not available advice should be obtained from the Pipelines Valuer within the NVU Commercial, Industrial and Crown team.

9. Valuation support

All valuations on the receipts and expenditure method or contractor’s basis must be carried out, in accordance with the list specific guidance for non-bulk classes and should use the “Other (Non-Contractors)” template or “Other valuations on a contractor’s basis” which is available on the Non-Bulk Server.

Practice note: 2023 - non-statutory water undertakings

1. Market appraisal

1.1 There is no known market evidence available in respect of this class.

2. Changes from the last practice note

2.1 There have been no significant changes since the previous practice note.

3. Ratepayer discussions

3.1 None.

4. Valuation scheme

4.1 The preferred method of valuation for this class is the receipts and expenditure method but where accounts are not available recourse should be to the contractor’s basis of valuation.

4.2 Forms of return (FORs) should be issued in respect of all private water supplies that require separate assessment seeking 3 years’ accounts information to inform a receipts and expenditure valuation.

4.3 National Valuation Unit (NVU) Utilities, Transport and Telecoms Team should be consulted for advice regarding application of the receipts and expenditure method. All valuations on this method must be carried out in accordance with R2023 guidance for non-bulk classes, and should use the “Other (Non-Contractors)” template which is available on the non-bulk server.

4.4 Where valued on a contractor’s basis costs in respect of rateable plant and machinery should be derived from the Rating Cost Guide. All valuations on the contractor’s basis must be carried out in accordance with R2023 guidance for non-bulk classes, and use the “Other Valuations on Generic Contractors Basis” spreadsheet which is available on the non-bulk server.

4.5 Where undertaking a contractor’s basis valuation the value of easements which permit the construction and continuing use of underground pipes should be included. Where evidence of the actual cost of easements, suitably adjusted to the AVD, is not available advice should be obtained from the Pipelines Valuer within the NVU Commercial, Industrial and Crown team.

Practice note 1: 2017 - non-statutory water undertakings

1. Market appraisal

There is no known market evidence available in respect of this class.

2. Changes from the last practice note

There have been significant legislative changes in respect of the regulatory regime since Reval 2010. These are noted in the RM section relating to this class.

3. Ratepayer Discussions

None.

4. Valuation Scheme

The preferred method of valuation for this class is the Receipts and Expenditure (R&E) method but where accounts are not available recourse should be to the contractor’s basis of valuation.

FORs should be issued in respect of all private water supplies that require separate assessment seeking 3 years accounts information to inform an R&E valuation.

NVU, Utilities and Transport Team should be consulted for advice regarding application of the R&E method. All valuations on the R&E method must be carried out, in accordance with R2017 guidance for non-bulk classes and should use, the “Other valuations on an R&E basis” spreadsheet which is available on the non-bulk server

Where valued on a contractor’s basis costs in respect of rateable P&M should be derived from the Cost Guide 2017. All valuations on the contractor’s basis must be carried out, in accordance with R2017 guidance for non-bulk classes and where possible use the “ Other Valuations on Generic Contractors Basis “ spreadsheet which is available on the non-bulk server.

Where undertaking a contractor’s basis valuation the value of easements which permit the construction and continuing use of underground pipes should be included. Where evidence of the actual cost of easements, suitably adjusted to the AVD, is not available advice should be obtained from the Pipelines Valuer within the NSU Industrial team.