ABSTRACT

An alternative approach to the valuation of property where there is no, or only limited, rental evidence is the use of what is termed the ‘receipts and expenditure approach’. The receipts and expenditure approach, then termed the ‘profit’s method’ also owed its development to the valuation of statutory undertakings or public utilities – railways, canals, dock ports and gas, electric and water undertakings. The name change from ‘profits’ to ‘receipts and expenditure’ has been increasingly accepted and has been encouraged by the publication of the Rating Forum Practice Note. Properties valued on the receipts and expenditure basis can often be complex in character and can involve parts of the property being let or licensed to other occupiers. Expenditure has also often been adjusted by reference to the Retail Price Index, although this is a rather rough and ready approach. Money transferred to reserve funds is not deductible from gross receipts being a form of profit distribution.