Garden centres and plant nurseries
Source: gov.uk (2025-02-24)

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 garden centres including retail nurseries

1.2 This class of property is widely disparate in type, ranging from the small nursery selling plants to the large national chain operated centres.

2. List description and special category code

List description: garden centre and premises

Primary description code: CX

SCAT code: 114

Suffix: S

Bulk class: M (Miscellaneous)

3. Responsible teams

3.1 The Garden Centre Class Co-ordination team (CCT) has overall responsibility for the co-ordination of this class. The team is responsible for the approach to and the accuracy and consistency of garden centres and plant nurseries.

4. Co-ordination

4.1 This is a Specialist class. The National Valuation Unit (NVU) is responsible for valuation.

4.2 The Garden Centre Class Co-ordination 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 – practice notes are mandatory
- 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 on any new work
5. Legal framework

5.1 There is no specific legal framework in relation to garden centres but this class also includes land and buildings used in connection with market gardens and nursery grounds which are generally exempt under Schedule 5 Paragraph 3 (c) Local Government Finance Act 1988 (LGFA 1988) (as amended by Non-Domestic Rating (Nursery Grounds) Act 2018).

A building is an agricultural building if it is not a dwelling and:

(a) It is occupied together with agricultural land and is used solely in connection with agricultural operations on that or other agricultural land.

(b) It is or forms part of a market garden and is used solely in connection with agricultural operations at the market garden, or

(c) It is or forms part of a nursery ground and is used solely in connection with agricultural operations at the nursery ground.

Exemptions

5.2 Exemptions from non-domestic rating are discussed in VOA Rating Manual Section 2 Valuation Principles Part 6 Exemptions D Agricultural Premises (https://www.gov.uk/guidance/rating-manual-section-2-maintaining-the-rating-list/part-6-exemptions-part-d-agricultural-premises).

If a garden centre hereditament includes a plant nursery which meets the exemption criteria and is therefore exempt from rating under Schedule 5 of LGFA 1988, the words ‘part exempt’ should be added to the description in the Rating List.

5.3 Nursery grounds

Definition

5.4 ‘Nursery ground’ is not defined in LGFA 1988, but can be taken to mean land in, or on which, young or immature trees and/ or young plants are reared (not necessarily being grown in the actual soil of the nursery) until fit for transplanting or sale: the emphasis on young plants should be noted. Even though plants are raised in containers on the land rather than by rootstock in the soil, such ‘grounds’ should be treated as exempt.

The Provisions of Para 3(c) Schedule 5 LGFA 1988 – Nursery Grounds

5.5 The Non-domestic rating (Nursery Grounds) Act 2018 has extended the exemption of agricultural premises by the addition of a new sub section Para 3 (c) to Schedule 5 so that a building now also qualifies as an agricultural building if “it is or forms part of a nursery ground and is used solely in connection with agricultural operations at the nursery ground”. The Act has effect to both England and Wales and is retrospective having effect in England for financial years beginning on or after 1 April 2015 and in Wales for the financial years beginning on or after 1 April 2017.

5.6 The purpose of this new legislation was to remove the effect on valuation practice for non-domestic rating of the 2015 Court of Appeal decision in Tunnel Tech Ltd v Reeves (Valuation Officer) [2015] EWCA Civ 718 (9 July 2015). The VO argued that the use of the building was in keeping with a nursery ground and as the activities went on within a building it could not be exempt from rating.

5.7 The judgment noted that paragraph 3(b) did not include nursery grounds in the definition of agricultural buildings. Therefore, a nursery ground that is located entirely indoors did not constitute an agricultural building and was not exempt from business rates. The Court of Appeal dismissed Tunnel Tech’s case but Para 3(c) has now rendered this decision obsolete by extending the definition of Nursery Ground to include buildings used for nursery purposes.

5.8 As noted above “nursery ground” is not defined in LGFA 1988, but can be akin to mean land in, or on which, young or immature trees and/or young plants are reared (not necessarily being grown in the actual soil of the nursery) until fit for transplanting or sale: the emphasis on young plants should be noted. Often these sites are known as plant nurseries. Even though plants are raised in containers on the land rather than by rootstock in the soil, such ‘grounds’ should be treated as exempt. The effect of paragraph 3(c) is to extend the exemption to buildings used in the same way. These will typically be (but not exclusively) glasshouses or polytunnels used for the rearing of seedlings, plugs or small plants which will be sold on to someone else for growing on to their mature state, for sale to or for use by the end consumer.

5.10 Generally, garden centres where container-grown plants and young trees are displayed and sold retail to the public will not come within the definition of nursery grounds. There may, however, be parts of the more traditional type of garden centre (which may, indeed, have once been called a nursery) where some rearing of seedlings and young plants or trees still takes place. The land or buildings on within which this work is carried out will be exempt as “nursery ground”. It is unlikely that the general public will have access to such areas. In such cases regard should be had to the guidance given in Section 2 Part 6D of the Rating Manual (https://www.gov.uk/guidance/rating-manual-section-2-maintaining-the-rating-list/part-6-exemptions-part-d-agricultural-premises).

5.11 Market gardens

Definition

5.12 The term “market garden” is not defined in LGFA 1988. However, the words should be taken to mean a holding cultivated wholly or mainly for the production of vegetables, fruit and flowers for sale in the course of a trade or business. The phrase “market garden” was considered by the Court of Appeal in Hood Barrs v Howard (VO) [1966] RA 212; CA [1967] RA 50, where it was regarded as applying to an area in which produce is grown for sale, as opposed to an area in which produce is grown for consumption by the occupiers.

5.13 A watercress bed has been held to be a market garden.

The Provisions of Para 3(b) Schedule 5 LGFA 1988 – Market Gardens

5.14 A building qualifies as an “agricultural building” under paragraph 3(b) if it “is or forms part of a market garden and is used solely in connection with agricultural operations at the market garden”.

5.15 Where buildings are themselves solely used for the commercial growing of fruit, flowers or vegetables, (eg glasshouses, mushroom houses etc) such buildings will be exempt as they will comprise, or form part of, a market garden, notwithstanding the fact that they may not be occupied together with “agricultural land”. Such exemption will also extend to any buildings in the same occupation used solely in connection with agricultural operations carried on in the market garden, if they are situated in such proximity to the market garden that they can reasonably be said to fulfil the requirement of forming part of a market garden.

5.16 It is not necessary that the plants should be grown in natural soil; it has been held that a building used for the propagation and growing of mushrooms in trays filled with compost specially prepared from wheat straw and horse manure was a “market garden” - see J Beveridge & Co Ltd v Perth and Kinross Assessor [1967] LVAC RA 482. Nor need the building have what might be regarded as the traditional appearance of a market garden - a disused multi-floor cotton mill utilised for the growing of mushrooms would appear to satisfy the term “market garden”. Similarly a building in an urban area growing bean sprouts would satisfy the term “market garden”. However, if the product was then packed together with other bought-in vegetables, this part of the premises would not be exempt.

6. Survey Requirements (See appendices 1 and 2)

6.1 Inspections should be carried out in accordance with the Valuation Office Agency Code of Practice. Arrangements for inspecting properties (Non-Domestic Rating)

6.2 Garden centres should be measured to Net Internal Area (NIA) for rating purposes in accordance with the RICS Code of Measuring Practice 6th edition or its replacement.

6.3 When inspecting a garden centre, property inspectors should record the location and description of the garden centre to include the following:
- location
- site - size, shape and topography.
- buildings infrastructure - age, quality, construction, yard surface
- services - heating energy source, fixed irrigation, mains drains, water source
- car parking
- plant Display areas including surface type (tarmac/ chippings/ concrete/ paviors)
- details of any third party occupiers within the centre. See paragraph 6.4 below.
- conservatory display areas
- main glasshouse sales areas
- ancillary storage
- plant display areas
- exempt areas
Unit of Assessment

6.4 On inspection it is first necessary to consider the unit of assessment. Details should be gathered of any third party occupiers within the garden centre including the extent and location of the occupation and also the terms that the occupation is held. These are typically conservatory display areas, retailers commonly found on the high street, aquatics, cafes, car washes in car parks etc. See Rating Manual: Section 3 Part 1 - Occupation and The Hereditament.

6.5 See Appendix 1 Referencing Aid for an example of a layout plan. An inspection checklist is appended to this section (Appendix 2) and should be completed for all new properties and updated for maintenance work and stored in the property folder of the Electronic Document Records Management (EDRM) system.

7. Survey capture

7.1 Rating surveys should be captured on the Rating Support Application (RSA). Plans and Surveys should be stored in the Property Folder of Electronic Document and Records Management (EDRM)

7.2 Separately assessed third party occupations should be SCat coded using the 500 series codes as shown in Survaid and suffixed G. For example a separately assessed coffee shop within a Garden Centre should be SCat coded 500 G, and a separately assessed occupation which trades garden sheds or patios should be SCat coded 508 G

7.3 Historically, many different sub-location codes have been used to value this type of property across the country. For Revaluations after 2017 the following should be used:

7.4 The common use codes used to record the various structures and land comprising a Garden Centre are outlined in the table below:

Refer to Survaid for the comprehensive list of use codes and percentages to be adopted.

Sales and storage land should be recorded as an accommodation use code, not within the ‘other additions’.

All the non-domestic element (including any exempt areas) of the hereditament must be recorded in the survey as held in RSA.

8. Valuation approach

8.1 Primary valuations are to be derived from local and national rental evidence. Secondary valuations may be undertaken as a check reference based on a percentage of gross turnover (excluding VAT).

8.2 Due to the disparate nature of this class of property, particular care should be taken in rental adjustment and analysis. Commonly, rent reviews are geared to turnover, retail price index or some other formulae, they may exclude tenant’s improvements or include goodwill; there are increasing examples of garden centres being leased as going concerns with goodwill reflected in the rent rather than separated by way of a premium.

8.3 The Notice Requesting Statutory Information (Form of Return) for this class of property is typically obtained using VO 6030. Turnover information will be stored in EDRM in the FOR folder.

8.4 Relativities

This class represents a diverse range of occupations and the relativities provide a framework for analysis and valuation. Relativities may require tuning to reflect individual circumstances following the exercise of valuer judgement.

8.5 Average / Standard sales glasshouse: 100%

8.6 Average/ standard sales glasshouse refers to traditional rod & truss retail glasshouses or more modern examples constructed of steel / latticework providing equivalent accommodation.

8.7 There may need to be an addition of up to 25% on ‘average/ standard’ sales glasshouse value to reflect additional quality. The percentage addition should reflect the extent to which the quality exceeds average / standard. It would be expected that the maximum 25% addition would be appropriate for retail accommodation highly superior to the average, where quality confers a substantial trade / value benefit (eg high bay, steel portal frame buildings that can be clad in a variety of finishes (brick/ profile steel/ glass); or cavity brick / block buildings which offer a superior retail environment by virtue of clear height, span etc). Although in most circumstances a superior finish to standard glass will warrant the application of uplift, there can be instances where, for example, profiled metal cladding to buildings may not necessarily add value, particularly where the finish is not in harmony with the other buildings on site or with the location/ setting.

8.8 Similarly a discount from the ‘average / standard’ rate may be justified where the building provides a particularly low standard of accommodation compared with the average, for example where there is minimal conversion / improvement from a primarily horticultural-standard building or due to specific ‘disabilities’ such as low internal height, closely-spaced supporting columns, lack of heating, frequent changes in floor levels etc.

8.9 In deciding whether an addition or discount for quality is warranted as conferring a trade/ value benefit, the turnover generated by the property may give a good indication as to whether or not such an addition or deduction is justified. It is important not to double count value in this respect by e.g. adopting a value at the top or bottom of the main space range and then adding or deducting for quality. This may be incorrect if the fair maintainable turnover does not support the end valuation figure.

8.10 Where the garden centre has no average glasshouse, the valuation approach will be to adopt a notional main sales space value of 100% based on an average/ standard glasshouse and to value the actual accommodation by reference to that adopted rate using the appropriate relativities normally applied to average/ standard sales glasshouse.

8.12 Warehouse / storage buildings

8.13 These will represent a wide range and quality of building. The general range of values would usually be from 30% to 75% of the main glasshouse space rate.

8.14 If part of the main sales building is used for storage a view may be required if no other storage facility is available on site, the range is likely to be between 75%-100%

8.15 Covered Sales areas -

8.16 These are open sided structures generally attached to the main glasshouse sales areas.

8.17 30% - lightweight tubular steel construction with a domed roof covered with thick gauge plastic sheeting.

8.18 40% - for a serviced and more substantial framework construction and roof covering.

8.19 50% - canopied areas which have its own structure, are enclosed on three sides and of generally the same construction as the main glasshouse. If the canopy is enclosed on fewer than 3 sides the standard percentages to be adopted will be between 30 - 40%.

8.20 Metal storage containers

30% of standard glasshouse space.

8.21 Portable buildings

40% of standard glasshouse space (if used as offices).

8.22 Offices and mess rooms partitioned from main space

If of the same quality, adopt same rate as for the building in which they are located.

8.23 Restaurants / coffee shop / kitchens / prep rooms etc

If of the same quality, adopt same rate as for the sales building in which they are located.

8.24 Land (display / sales)

20% of standard glasshouse Space. To apply to all surfaces except grassed land. No allowance is appropriate for circulation space. It may be appropriate to adjust the rate for retail nurseries particularly where a large proportion of plants sold are grown on site and/or the open display areas are unusually large because they are used as a material part of the nursery process. See paragraphs 8.28 - 8.32 below “Seasonal Sales”

8.25 Land used for storage

5% for a clearly defined area of land used exclusively for storage. The 5% of the standard glasshouse space applies to all surfaces.

8.26 Special features

Special features such as outdoor play areas etc should be valued at the display area rate.

8.27 Car parking

Car Parking is reflected. However, there may be instances where there is considered to be insufficient parking provision. Investigation into the turnover of such a property may provide assistance in consideration of this matter.

8.28 Seasonal sales

8.29 If the property is a retail nursery and / or there is a planning restriction imposing a requirement to grow a proportion of the plants sold on site, or if the site is physically constrained by its origins as a growing nursery and a substantial proportion of the sales is seasonal (either overall or in the necessary practical use of individual buildings and areas of open display), it may be appropriate to make an allowance on the survey line against the percentage of main sales rate adopted. This may relate to the length of the sales season or the length of the pure growing season, or may relate to the size of the area in relation to what would normally be anticipated for the sale of a normal range of plants for a good average mainstream garden centre.

8.30 In particular, there are some garden centres that have large areas of ex-growing houses, which will be used very extensively (rather than intensively).

8.31 In addition, adjustments should be made where buildings or display areas are used all year round for growing, and to which retail customers have access, but little in the way of sales per m² actually occur, or where buildings are not used at all other than at seasonal peak periods.

8.32 Some ex-nursery garden centres also have very extensive display areas which again may be unusually large and which may generate very low sales per m². In such cases it will be appropriate to reduce the standard percentage of 20% by a substantial factor, depending upon individual circumstances.

8.33 Concessions

8.34 Concessions are third party occupations of space which do not satisfy the tests of separate rateable occupation. These are usually partitioned from the main sales floor, they often have no apparent divide between the concession and the main garden centre operation.

8.35 As a check to the primary valuation method a range of 30% to 50% of a fully inclusive concession rent as being attributable to rental value of the land and buildings. The balance represents the costs of the concession (e.g. repair, services, use of common parts, voids, type of concession etc). Particular care should be taken when considering garden centres where the concessions form a substantial proportion of the garden centre.

8.36 The quality of the concessionaire, strength of covenant and likely longevity may have an impact on the value of the host garden centre.

8.37 Let outs to third parties may meet the criteria for a separate assessment, provided they meet the four tenets of rateable occupation. Such let outs need to be considered on a case by case basis.

8.38 Upper Floors

8.39 No prescribed relativity is suggested for upper floors as these vary greatly. Any upper floor should be valued having regard to its particular characteristics such as floor level; access; use of space; quality of space. So for example, top end upper floor accommodation used for say a restaurant or café with customer toilets on a first floor accessed by lift and stairs in a centre where the ground floor rate was say £50/m², then £25/m² (50%) looks low but if it was low quality storage with poor access then £25/m² might look high. Refer any particular issues of disagreement to National Valuation Unit.

8.40 Exempt areas

Exempt areas must be recorded as a separate line entry in the survey. The accommodation use code adopted should be based on what the land or building physically is and with ‘EXE - EXEMPT’ as a line adjustment code. For example, if the exempt area is within a glasshouse, the accommodation use code will be GHS with a line adjustment code of EXE.

9. Valuation support
- Rating Support Application (RSA)
- Survaid
- Valuation Panel (VP1) and Class Co-ordination team (CCT) Members
- National Valuation Unit (NVU)
Appendix 1 - Referencing Aid

Garden centres inspection checklist referencing guide (https://assets.publishing.service.gov.uk/media/67bc5b704ad141d90835344b/Inspection_Check_List_-_Garden_Centres_Referencing_Guide_Appendix_1.docx)

Appendix 2 - Inspection checklist

Garden centres inspection checklist (https://assets.publishing.service.gov.uk/media/67bc5be3ff9676313f35344d/Inspection_Check_List_-_Garden_Centres_Appendix_2.docx)

Practice note: 2023 - garden centres

1. Market appraisal

1.1 There are approximately 2,400 hereditaments in Scat code 114. Many of these are small to medium sized centres operated locally. Ownership is fragmented. Many operators run single sites, or just a few centres. The national chains tend to operate from larger centres. Garden centres as a category of retail property cover a wide and disparate range of properties and it is difficult to make a general statement on the condition of the market which would cover all properties.

1.2 Since the 2015 antecedent valuation date (AVD) The number of newly constructed flats and new houses sold with much smaller plots have continued to increase, reducing potential gardening spend. Garden centres are answering this by continuing to diversify into non-horticulturally based sales such as clothing and furniture.

1.3 Up until the advent of COVID 19, it was widely accepted by market experts that the weather is the biggest determining factor in garden centre income. Small garden centres that rely heavily on outdoor plant sales are more likely to see turnover fall when there is poor weather.

1.4 2020 was a year of records as far as the weather was concerned, which fluctuated between extremes. The first couple of months in 2021 were wet and cold but by the end of March the weather had turned unusually warm for the time of year.

1.5 At the antecedent valuation date, non-essential shops in England were closed due to the Coronavirus pandemic but with the expectation of non-essential retail units opening on 12 April 2021 and, subject to the Rule of Six, restaurants following from 17 May 2021. The situation in Wales both leading up to and after the AVD was similar in that all shops were able to open on 12-Apr-2021, although there were some differences in the detail.

1.6 Whilst there have been garden centre closures as a consequence of economic circumstances and redevelopment opportunities, there is evidence of market activity within this sector and garden centres have still been changing hands in the lead up to the 1 April 2021 AVD.

1.7 Growth in both online retailing and in the number of high street discounters has altered the market over the last few years. Many garden centres have their own internet sites. The majority of the larger Garden Centres have their own website and operate a telephone sales service. Many small independent garden centres will operate a telephone sales service only. There are also pure play internet sites that serve the gardening consumer specifically.

1.8 At one time concessions were a feature of the garden centre operation but this has become less common in recent years. Concessions are now more likely to be granted if the trade is outside the garden centre operator’s line of expertise. Examples of concessions that continue to be granted include car valeting, the sale of hot tubs, conservatories, sheds, quality meat and the operation of farm shops.

1.9 As at the AVD, the outlook for garden centres looked reasonably strong with the sector reporting year-on-year sales growth. Some new garden centres have opened in the past year and it is apparent that significant interest has been shown in garden centres that have come on to the market.

2. Changes from the last practice note

2.1 There have been no changes to the underlying valuation scheme since the 2017 Practice Note except that turnovers in the categories of garden centre in 4.1.1 have been increased at least by the Retail Price Index except for the top end of Category 5. The ranges of values to be applied to the various categories of garden centre at section 4.2 have also been adjusted upwards marginally.

2.2 The Market Appraisal section has also been revised.

3. Ratepayer discussions

3.1 Discussions have been held with industry representatives and a valuation scheme agreed.

4. Valuation scheme

4.1 Garden Centre Categories

4.1.1 As an aid to comparison of different garden centres and rental evidence, reference is made in this note to six categories of garden centres. The approximate turnover bands refer to fair maintainable turnover up to 01-Apr-2021 - the Antecedent Valuation Date (AVD).

Category 1 – (Plant Centres) Turnover less than £300,000

Category 2 – Turnover between £300,000 and £1,000,000

Category 3 – Turnover between £1,000,000 and £2,000,000

Category 4 – Turnover between £2,000.000 and £3,500,000

Category 5 – Turnover between £3,500,000 and £6,750,000

Category 6 – (Supercentres) Turnover in excess of £6,750,000 and at least one of the characteristics listed below:
- Wealthy or large (or both) catchment area
- Good access providing a large effective catchment
- Very high quality of buildings and/ or an extensive range of buildings much larger than normal, typically in excess of 5,000m² in terms of main glasshouse area. (Rating Manual: Section 6 Part 3 : Section 435 paragraphs 7 and 8)
- Other adjacent major attractions
4.1.2 The placing of a garden centre in any particular category should not to be taken as a specific determinant of a particular level of value, either per unit area of buildings and land, or overall. In many cases determining an appropriate category can assist in providing at least an initial indication of value before the specific physical characteristics of the property, such as the quality of buildings and the location, are taken into consideration.

4.1.3 When considering any classification of a property by reference to turnover there may be a number of instances where the personal goodwill of the operator is a factor to consider. ‘Celebrity’ branding may be indicative, but it has to be assumed that the hypothetical tenant is a reasonably prudent operator with experience and is fully conversant with the trade. In practice there will be examples of particularly poor or good management. Retail nurseries may generate a large proportion of their turnover based upon the reputation of the owner as a general ‘Plantsman’, or as a specialist in bedding plants, herbaceous plants, shrubs, trees, etc, or for holding a National Collection of a plant genus on site. Such issues are an indicator that personal goodwill may be reflected in the turnover.

4.1.4 Where a product stocked by the garden centre is sold via the telephone or internet site for collection at the garden centre, the cost of that product should be included in the turnover. However, if the product is a plant bought from the nursery which itself is exempt from non-domestic rating under Schedule 5 LGFA 1988 then the cost should be excluded from the turnover of the garden centre. If a product is sold via the telephone or website for delivery from an off-site warehouse, then its price should not be included in the turnover of the garden centre.

4.2 Range of Values

4.2.1 The value of the average/ standard glasshouse within the relevant range of values will depend upon a variety of factors including the location, catchment area, local planning policy, level and type of competition and general quality of the centre. The following advice has been prepared based on available rental evidence across the network.

4.2.2 Smaller garden centres and retail nurseries that fall within Categories 1 & 2 are likely to fall within a lower range of £13.00/m² - £28.50/m². The positioning within this range will depend upon the individual specific circumstances of the centre including location, construction, conversion from horticultural use, planning restrictions, extensive trading, poor car parking provision and duration of seasonal use of buildings for retail purposes. By way of general further assistance, a Category 1 centre would not normally be expected to be above £23.50/m² and a Category 2 centre would not normally be expected to fall below £18.50/m².

4.2.3 For the majority of centres in categories 3, 4 and 5 the range of values for ‘average/standard’ sales glasshouses can be expected to fall within the range of £26.50/m² - £57.50/m² with an uplift of up to a maximum of 25% for additional quality. By way of general guidance the range of values for each category is expected to be as follows:

Category 3 £26.50/m² to £36.50/m²

Category 4 £34.00/m² to £45.00/m²

Category 5 £42.50/m² to £57.50/m²

4.2.4 Category 6 (Supercentres) values are expected to exceed £52.50/m² again with an addition of up to 25% for quality as above. This is base line figure not a maximum price. Some garden centres will have rates well in excess of this. Turnovers will justify these enhanced rates.

4.2.5 In specific circumstances it may be appropriate to move outside of these value ranges.

4.2.6 It is not expected that the basic rate on a garden centre rate would drop between the 2017 and 2023 Lists unless there was a material change in the locality (for example, a new garden centre opening nearby).

4.3 Turnover

4.3.1 It has been established over previous Rating Lists that turnover can prove to be an appropriate aid to valuation as a check on whether the assessment arrived at by the conventional valuation method is broadly at an appropriate level.

4.3.2 In the majority of cases the rateable value should be expected to fall within 4.0% – 6.5% of the fair maintainable turnover for the last full trading year before 01-Apr-2021

4.3.3 However, this range of percentage of turnover is given as a guide only. Where the profit margin is likely to be low, or there is substantial competition or the centre is a smaller operation, the percentage of turnover may typically be at the lower end of the scale. Whereas larger garden centres with a high degree of prominence, less competition and with high quality buildings meriting a quality addition may typically be at the upper end of the range. All properties should be judged on their own specific merits.

4.3.4 When considering rateable value as a percentage of turnover, achievable profit margins may be of particular importance. Lower levels of net profit may typically be found in the following examples:
- small garden centres and retail nurseries, typically Category 1, but possibly higher categories in certain circumstances including those listed below
- garden centres operating in a locality with a considerable amount of competition from other garden centres and DIY superstores with garden sections
- garden centres and large retail nurseries that generate a substantial proportion of sales seasonally from bedding plants. This is a highly competitive market operating at low profit margins
4.3.5 At the other end of the range, Categories 4, 5 and 6 profit margins may be higher than the norm due to economies of scale, and the ability to offer a wider range of high margin merchandise.

4.3.6 It is therefore possible that certain centres, and particularly ‘Supercentres’, could fall within a higher range of 6.5% – 7.5%.

4.3.7 Conversely, some category 1 and 2 centres may fall below 4.0%. These are likely to be plant nurseries or small poorly located and low-quality centres.

4.3.8 Where the rateable value as a percentage of actual turnover falls outside the range specified above, the actual turnover may not reflect the fair maintainable turnover. The following are examples of where this might occur:
- there has been particularly good or poor management, so that the reasonably competent hypothetical tenant might be expected to achieve a significantly different level of turnover
- Tenant’s improvements have been completed after the year to which the turnover relates
- the nature of the tenant’s operations may result in a particularly low or high gross profit margin off-site sales have been included within the turnover figure. (This may be particularly pertinent with category 1 and 2 centres)
4.3.9 Turnover information has been requested from occupiers. It is important to remember that this information is always considered to be sensitive and should be treated with care.

4.3.10 It should also be borne in mind that garden centre turnover is seasonal and can fluctuate one year to another being very dependent upon the weather especially during spring and early summer. Accordingly, consideration of turnover should always be treated with a certain amount of caution.

Practice note: 2017 - Garden Centres

1. Market appraisal

1.1 There are approximately 2,500 garden centres in the UK. National chains account for approximately 12% of the market, with the very large super centres accounting for less than 3%.

1.2 Since the 2008 AVD there have been several factors which the garden centre industry has had to address. A steady reduction in home ownership which some have suggested is reducing the potential gardening spend. There is also an increasing amount of flats constructed and many new houses are sold with much smaller plots. Garden centres are answering this by diversifying into non-horticultural based sales such as clothing and furniture.

1.3 It is widely accepted by market experts that the weather is the biggest determining factor in garden centre income. Small garden centres who rely heavily on outdoor plant sales are more likely to see turnover fall when there is poor weather. It is worth noting that the spring/ summer of 2014 was average although there were significantly less frosts than the norm. Summer started well but August was wetter than average. 2013 started with near record cold but became a hot summer right through the autumn. 2012 started with a record wet spring season which left the market subdued.

1.4 Open A1 consent is desirable as garden centres can then offer a wider range of retail and lifestyle goods which will attract a wider range of custom. An essential element of garden centres is a cafe/ restaurant with some having farm shops. Such features increase dwell time and the frequency of customer visits.

1.5 Since the last AVD there have been major changes within Wyevale group, The Group changed its name to The Garden Centre Group and more recently it has reverted back to Wyevale. It has expanded its portfolio of centres during this period.

1.6 Whilst there have been garden centre closures as a consequence of the recession, there is evidence of market activity within this sector and garden centres are still changing hands.

1.7 Background

Webbs purchased Hurrans West Hagley and Hilliers took over Banbury Garden Centre, There were also plans to expand a number of centres with planning permissions approved. [2009]

Dobbies planned expansion of their portfolio in England (Peterborough, Speke, Liverpool and Ashford) [2010] It has been reported that garden centres were having quite a good 2011 but were still under pressure from the Banks and there was an increasing appetite from garden centre operators looking at leasing as an alternative (6-10% turnover being reported). There were also reports that the weather was having a detrimental effect on turnover [2011]

Squires Garden Centres acquired Shoots Garden Centre Chain of three centres and Blue Diamond purchased Friars Garden Centre Cheshire. The Garden Centre Group/ Wyevale purchased Country Homes and Gardens. [2011]

There were reports of closure of 5 garden centres, but also evidence of new openings (Hillier Eastbourne, Carr Home and Garden Centre - Ribble Valley- Since closed again and on the market) and also Centres in the course of refurbishment and extensions (Squires - Shepperton Garden Centre, Haskins, Roundstone and Planters Brentby) [2011]

Quinton Edwards reported that in the 3 years following the banking crisis, values held up in contrast to other sectors but there was now evidence of a fall in values (10-15%) as a consequence of subdued appetite from chain operators to purchase and Dobbies preferring to build new stores. [2011]

The weather (wettest on record) was having a detrimental effect on trade reported to be at least 10% down or more but there was a feeling that the downturn could also be due to economic factors. Highgate Garden Centre was sold for redevelopment, Whiteleys Garden Centre, Huddersfield was placed into administration and Barton Grange Preston put development plans on hold. [2012]

There was however movement in the sector with the Hilltop Group acquiring Hilltop Garden Centre in Oxfordshire, The Garden Store took a lease of Burford House Garden Centre- Tenbury Wells, and Blue Diamond acquiring Grosvenor Garden Centre (Between Chester and Wrexham). The Klondyke Group leased Beverley Garden Centre near Hull. [2012]

Dobbies gained permission for New Centres in Kings Lynn (Joint Venture with Tesco),York and Harrogate. Next were also moving into the sector opening Home and Garden outlets (Ipswich and Warrington) with plans for 9 further stores nationwide. Morrisons also sought to open temporary centres in 100 stores. [2012] Gilbert Evans reported (Gardenforum) that 4 centres have been sold in-line or in excess of expectations with further disposals in the pipeline with about 10-20 companies actively looking to acquire Garden Centres including Notcutts, Blue Diamond, Haskins and Garden Centre Group - Blue Diamond purchased/ leased Redfield Garden Centre in Farnham, Hampshire. [2013]

The Garden Centre Group showed static growth but improved margins with its name changing back to Wyevale. The group was very active on the acquisition front purchasing, Brooks Garden Centre Bude, Moreton Park Wrexham, Raglan Abergavenny, Trelawney Ashford, Barnstaple, Podington Garden Centre, Wellingborough and four Golden Acres Garden Centres in the Wiltshire, Dorset and Hampshire areas. [2014]

Otter Nurseries purchased Styles Garden Centre in Torquay, QD Stores added Lowestoft Garden Centre bringing its number of outlets to 10 and Blue Diamond acquired Trelawney Garden Centre in Wadebridge, Cornwall. [2014]

In October, the first Dobbies was opened within a Tesco at Bar Hill, Cambridge. There are also other reports of Waitrose looking for joint ventures. [2014]

Reported closures of two centres in London (Fulham Palace and Moreden Hall) [2014] 2014 was the year when online and High Street retailers sought to profit from footfall in Garden Centres- Brantano, W H Smith, Viners, Bonmarche looking to lease space within Wyevale Centres. The addition of concessions within garden centres has been a developing feature since the last revaluation.

There has been continuing activity in the market this year with Blue Diamond purchasing Newbridge Nurseries, Horsham.

Generally speaking, since the last revaluation, the recession has had an effect on most commercial properties. However the impression is that as a sector, garden centres have fared better than others. However, garden centres as a category of retail property cover a wide and disparate range of properties and it is difficult to make a general statement which would cover all properties. It is considered therefore that the likelihood is that the higher category centres (high end 3, 4 & 5) have probably faired better than the lower end of the sector.

There has been further consolidation in the market with the multiples purchasing independent centres with Wyevale and Blue Diamond being particularly active. However, it is considered that the main activity within the market is for the higher category centres

The majority of garden centres have their own internet sites with many offering on-line sales. There are also specialist internet sites within the garden centre sector. Garden4less offer an Amazon type service where garden centres can advertise their product and fulfil the order when the sale is made but at less commission compared to Amazon. Primrose.co.uk is looking to have joint ventures with garden centres where some of their merchandise (garden furniture) is displayed within garden centres.

Wyevale have expanded their portfolio with the purchase of Armitage’s Garden Centre, Huddersfield.

2.Changes from the last practice note

2.1 Refinement of categorisation of garden centres by reference to turnover.

3. Ratepayer discussions

3.1 This Practice Note has been discussed with industry representatives and the approach in general agreed in principle.

4.Valuation scheme

4.1 Garden Centre Categories

4.1.1 As an aid to comparison of different garden centres and rental evidence, reference is made in this note to six categories of garden centres. The approximate turnover bands refer to fair maintainable turnover up to 01-Apr-2015 - the Antecedent Valuation Date (AVD).

Category 1 - Turnover less than c. £250,000

Category 2 - Turnover between £250,000 and £750,000

Category 3 - Turnover between £750,000 and £1.5 million

Category 4 - Turnover between £1.5 million and 3.0 million

Category 5 - Turnover between £3.0 million and £6.0 million

Category 6 (Supercentres). Turnover in excess of £6 million and at least one of the characteristics listed below:
- Wealthy or large (or both) catchment area
- Good access providing a large effective catchment
- Very high quality of buildings and/ or an extensive range of buildings much larger than normal, typically in excess of 5,000 sq metres in terms of main glasshouse area. (Rating Manual: Section 6 Part 3- Section 435 paragraph 8.2 Relativities)
- Other adjacent major attractions
4.1.2 The placing of a garden centre in any particular category should not to be taken as a specific determinant of a particular level of value, either per unit area of buildings and land, or overall. In many cases determining an appropriate category can assist in providing at least an initial indication of value before the specific physical characteristics of the property, such as the quality of buildings and the location, are taken into consideration. In addition to this, categorising in this way also aids co-ordination across and between Units and National Valuation Unit (NVU).

4.1.3 When considering any classification of a property by reference to turnover there may be a number of instances where the personal goodwill of the operator is a factor to consider. ‘Celebrity’ branding may be indicative, but it has to be assumed that the hypothetical tenant is a reasonably prudent operator with experience and is fully conversant with the trade. But in practice there will be examples of particularly poor or good management. Retail nurseries may generate a large proportion of their turnover based upon the reputation of the owner as a general ‘Plantsman’, or as a specialist in bedding plants, herbaceous plants, shrubs, trees, etc, or for holding a National Collection of a plant genus on site. Such issues are an indicator of personal goodwill.

4.2 Range of Values

4.2.1 The value of the average/ standard glasshouse within the relevant range of values will depend upon a variety of factors including the location, catchment area, local planning policy, level and type of competition and general quality of the centre. The following advice has been prepared based on available rental evidence across the network.

4.2.2 Smaller garden centres and retail nurseries that fall within Categories 1 & 2 are likely to fall within a lower range of £12.50 - £27.50/m2. The positioning within this range will depend upon the individual specific circumstances of the centre including location, construction, conversion from horticultural use, planning restrictions, extensive trading, poor car parking provision and duration of seasonal use of buildings for retail purposes. By way of general further assistance, a Category 1 centre would not normally be expected to be above £22.50/m2 and a Category 2 centre would not normally be expected to fall below £17.50/m2.

4.2.3 For the majority of centres in categories 3, 4 and 5 the range of values for ‘average/standard’ sales glasshouses can be expected to fall within the range of £25.00 - £55.00 per m2 with an uplift of up to a maximum of 25% for additional quality. (Rating Manual: Section 6 Part 3 - Section 435 paragraph 8.2 Relativities). By way of general assistance the range of values for each category is expected to be as follows:

4.2.4 Category 6 (Supercentre) values are expected to exceed £50.00/m2 again with an addition of up to 25% for quality as above. Rating Manual: Section 6 Part 3 - Section 435 paragraph 8.2 Relativities).

4.2.5 In specific circumstances it may be appropriate to move outside of these value ranges.

4.3 Turnover

4.3.1 It has been established over previous Rating Lists that turnover can prove to be an appropriate aid to valuation as a check on whether the assessment arrived at by the conventional valuation method is broadly at an appropriate level.

4.3.2 In the majority of cases the rateable value should be expected to fall within 4 – 6.5% of the fair maintainable turnover for the last full trading year before 1 April 2015.

4.3.3 However, this range of percentage of turnover is given as a guide only. Where the profit margin is likely to be low, there is substantial competition or the centre is a smaller operation, the percentage of turnover may typically be at the lower end of the scale. Whereas larger garden centres with a high degree of prominence, less competition and with high quality buildings meriting a quality addition may typically be at the upper end of the range. All properties should be judged on their own specific merits.

4.3.4 When considering rateable value as a percentage of turnover, achievable profit margins may be of particular importance. Lower levels of net profit may typically be found in the following examples:
- small garden centres and retail nurseries, typically Category 1, but possibly higher categories in certain circumstances including those listed below
- garden centres operating in a locality with a considerable amount of competition from other garden centres and DIY superstores with garden sections
- garden centres and large retail nurseries that generate a substantial proportion of sales seasonally from bedding plants. This is a highly competitive market operating at low profit margins
4.3.5 At the other end of the range, Category 4 and Super Centre profit margins may be higher than the norm due to economies of scale, and the ability to offer a wider range of high margin merchandise.

4.3.6 It is therefore possible that certain centres, and particularly Super Centres, could fall within a higher range of 6.5 - 7.5%.

4.3.7 Conversely, some category 1 and 2 centres may fall below 4%. These are likely to be plant nurseries or small poorly located and low quality centres.

4.3.8 Where the rateable value as a percentage of actual turnover falls outside the range specified above, the actual turnover may not reflect the fair maintainable turnover. The following are examples of where this might occur where:
- there has been particularly good or poor management, so that the reasonably competent hypothetical tenant might be expected to achieve a significantly different level of turnover
- Tenant’s improvements have been completed after the year to which the turnover relates
- the nature of the tenant’s operations may result in a particularly low or high gross profit margin
- off-site sales have been included within the turnover figure. (This may be particularly pertinent with category 1 and 2 centres)
4.3.9 Turnover information has been requested as part of the FOR process. It is important to remember that this information is often considered to be trade sensitive and should be treated with care.

4.3.10 It should also be borne in mind that garden centre turnover is seasonal and can fluctuate one year to another being very dependent upon the weather especially during spring and early summer. Accordingly, consideration of turnover should always be treated with a certain amount of caution.