ABSTRACT
The contractor’s basis of valuation has developed over a substantial period of time. During substantial period it has been constantly refined to deal with the ever-changing problems that arise from the rating system and the property market. It is difficult to trace the exact origins of the contractor’s basis of valuation. As a result, valuations based upon the contractor’s basis may be disproportionately high when compared to the industries turnover and profits. During the nineteenth century valuers were required to value for rating public utilities such as canals, gas, water and electricity. The chapter looks at each of the stages of a contractor’s basis valuation in more detail. The contractor’s basis valuation stages are estimation of cost construction; deductions from cost to arrive at effective capital value; estimation of land value; application of the appropriate decapitalisation rate; ‘stand back and look’ and effect of negotiations.
