Petrol stations (practice notes for non-domestic valuations) (2023)

Domain

The scope of this practice note is solely to ensure a consistent valuation approach for this property class/sub-class/type for non-domestic revaluation 2023 and subsequent inclusion in the new valuation list effective April 1, 2023.

The basis of valuation for new valuation list entries and rating revision events after April 1, 2023 is Schedule 12 (2)(1) of the Rates (NI) Order 1977.

Description

This practice note refers to real estate classified as:

Class:Filling stations
Subclass:Gas Station, Supermarket Gas Station, Unmanned Gas Station
Type:N/A

Legislative background

Schedule 12 Part 1 Paragraph 1 of the Tariffs (NI) Order 1977 applies.

"Subject to the provisions of this Schedule, the Net Annual Value of an Inheritance for the purposes of this Decree is the lease for which, one year with another, the Inheritance may reasonably be let in its present condition from year to year, the probable average annual cost of repairs, insurance and other expenses (if any) necessary to maintain the property in its present condition, and all tariffs, taxes or public charges (if any), to be borne by the tenant” .

The primary legislation for service stations seeking a license to dispense motor fuel is the Petroleum (Consolidation) Acts (Northern Ireland) 1929 and 1937, the Health and Safety at Work (Northern Ireland) Order 1978 and the Dangerous Substances and Explosive Atmospheres Regulations (Northern Ireland) 2003 regulates, among other things, the way in which day-to-day activity is carried out. There are additional laws and regulations pertaining to housekeeping, product handling, construction, development and refurbishments, but these are not directly linked to the NAV assessment and so are not mentioned here.

Valuation approach for 2023

A hybrid approach, the abbreviated R&E method for the Petroleum site and the comparative method for the petrol station shop and non-foreground buildings, will be retained as the approach for this type of yard.

The methodology set out below maintains the established segmentation of the assessment into the four primary valuation elements, i.e. forecourt, forecourt shop, car wash and off-premises buildings.

Forecourt

The methodology below applies throughout Northern Ireland and for volume based assessment all grades (e.g. super unleaded) and fuel types (petrol, diesel, red diesel and sometimes kerosene) must be aggregated. The established concept of maintainable throughput will be retained and generally defined as the volume of fuel that can reasonably be expected from a hypothetical tenant operating competitively, both in terms of price and hours of operation, with comparable locations nearby. The maintainable throughput can be derived by adjusting the actual throughput to account for variations in prices and hours of operation.

No correction may be made with respect to fuel paid for by credit card or sold on account.

There are three elements to the assessment of the forecourt:

1. The size of the developed forecourt layout.

2. The portion of maintainable throughput that exceeds the relevant zero-rating thresholds (excluding any fuel dispensed through the service station under an agency/bunkering agreement).

3. Agency/bunkered fuel.

Element (1) – Developed layout of the forecourt

Determine the number of fill positions that can be used simultaneously, each estimated at £300 per simultaneous fill position (£150 if the forecourt has no canopy). See appendix 1 for the possible classifications.

Red diesel and kerosene pumps are not included in the calculation of simultaneous filling positions.

Element (2) – Serviceable throughput above zero speed threshold

This element relates to the volume of the throughput and the normal starting point should be the actual fuel throughput. If actual throughput figures are not available, comparisons should be made with other comparable locations with similar facilities in the locality to determine the hypothetically achievable throughput.

The weighted average sales price as of October 1, 2021 is 136.9 ppl.

To arrive at the maintainable throughput NAV, consider and apply the following 5 steps where applicable;

1. Subtract all agency/bunker throughput.

2. Multiply the actual volume (excluding agency/bunkering) by the appropriate factor in Table 1.

table 1

Factors applied for the difference between the weighted average selling price (WMSP) and the post board price

** Weighted average sales price as of October 1, 2021 (AVD) is 136.9ppl.

3. The predominant operating hours for most gas stations are 108 to 112 hours per week, but if a gas station is open more than 130 hours per week to dispense fuel, the volume resulting from step (2) above should be more reduced by apply a factor of 0.9. No opening hours may be adjusted for unmanned 24-hour filling stations.

4. Subtract 2.4 million liters (or 1.2 million liters if the site is unmanned) to determine the sustainable throughput.

5. Once you have calculated the maintainable throughput, you need to consider the rate per £1,000 liters applied to any volume exceeding the zero speed threshold, which is 1.2 million liters for unmanned sites and 2.4 million for manned sites liter.

table 2

Rate per £1,000 liters applied to volume of maintainable throughput exceeding zero threshold throughput type/ volume of maintainable throughput rate

Element (3) – Agency and bunkering

This element of the service station rating refers to the volume of fuel dispensed by the service station on an Agency/Bunker basis, i.e. fuel held or available at this location, but paid for to a third party. This arrangement is commonly used by transporters and commercial vehicle drivers and for diesel may include the use of an above-ground tank and a high-speed pump that is completely separate from the forecourt. For every liter that is dispensed, the operator receives only administration costs. The contribution to NAV should be set at 0.3 ppl or £3.00 per thousand litres.

The Voorplein contribution to the NAV Tankstation is the sum of Elements 1, 2 and 3, if applicable.

Forecourt Store

The hypothetical retail rent for gas stations is determined using the comparative valuation method.

Examples include vacancy and letting of the following forecourt-like tires;

1. Gas station kiosks.

2. Stores with gas stations.

3. Service gas station shops.

Before the hypothetical retail rent can be assessed, it must be determined in which band above a gas station store fits.

Kiosk type stores (Band 1)are often associated with supermarket service stations, but can also be found at smaller brand operators and in more secondary and rural locations.

Shops with petrol stations (Band 2)must be valued in accordance with the Buurtwinkel Praktijknota.

Gas station shops (Band 3)are located on main roads, where there are several services in addition to the petrol station shop. This can be a combination of seating areas, restrooms and baby areas, play areas, cafes, food stalls, liquor stores. This list is not exhaustive and additional services may vary by store.

Gas station shops are not comparable to Neighborhood shops because they are not in the same condition and conditions. They should therefore be valued on a comparable basis in their own group, taking into account similar types in the Valuation List.

Unmanned filling stations fall into two groups, (1) where the site has been specially built as an unmanned filling station and (2) where the site was previously occupied by a tenant or permit holder and where the owner has fenced off the former shop and now operates the existing forecourt unmanned. If (2) applies and the former retail property remains structurally unchanged and is only foreclosed, the former retail property must be valued in line with similar shops in the area. The transit element is valued according to the unattended station threshold.

Carwash

If a car wash is on an unfenced open concrete pad with good drainage, be it a Lance or a Rollover, it should be valued at £1,200. If a car wash is behind a screen or housed in a building, it should be valued at £1,600.

The above approach only applies to car washes at petrol stations. All stand-alone car wash facilities are valued under a separate practice note.

Buildings outside the forecourt

Buildings/structures other than the forecourt, forecourt shop and car wash should be valued in accordance with comparable bulk class properties in the locality, modified as necessary for access, build quality and parking.

Charging points for electric cars

Reference should be made to charging points for electric cars at filling stations, but no value is given to their presence as part of the filling station rating.

ATMs

For the valuation of ATMs on location, these are valued under a separate practice note.

Questionnaires about renting and leasing

For this property class, RALQs were issued centrally by LPS.

Contacts

For advice on any aspect of this practice note, please contact LPS on 0300 200 7801.

Regulating body

The government requires those who store and deliver fuel to have a petroleum permit. Your petroleum permit will tell you who it was issued to, how long it is valid, and what other conditions a person must meet to safely store and deliver gasoline to their location. The Petroleum Storage License (Northern Ireland) is regulated by each individual district council.

• https://www.gov.uk/petroleum-storage-licence-northern-ireland

Antrim & Newtownabbey

• https://antrimandnewtownabbey.gov.uk/business/environmental-health/business-licensing-registration/business-licensing/petroleum-licence/

Ards & North Down Borough Council

• https://www.ardsandnorthdown.gov.uk/apply

Armagh, Banbridge & Craigavon ​​Borough Council

• https://www.armaghbanbridgecraigavon.gov.uk/business/licensing/#1488467397635-14970e40-9b24

Belfast City Council

• https://www.belfastcity.gov.uk/planning-and-building-control/licences-and-permits/petroleum-licence

Causeway Coast & Glens Borough Council

• https://www.causewaycoastandglens.gov.uk/live/health-and-built-environment/licensing/petroleum

Derry City & Strabane-districtsraad

• https://www.derrystrabane.com/Licensing/Petroleum-Licence

Districtsraad Fermanagh & Omagh

• https://www.fermanaghomagh.com/services/licensing/petroleum-storage/

Lisburn and Castlereagh Town Council

• https://www.lisburncastlereagh.gov.uk/forms/payments/petroleum_licence_application

Central and East Antrim City Council

• https://www.midandeastantrim.gov.uk/resident/environmental-health/environmental-health-fees

Districtsraad Mid Ulster

• https://www.midulstercouncil.org/online-services/petroleum-licence

Districtsraad Newry Morne & Down

• https://www.newrymournedown.org/petroleum-licensing

Trade organisation/association

Petrol Dealers Association (PRA)
201 Grand Portland Street
London
W1W 5AB

Tel: 020 7580 9122
https://www.ukpra.co.uk/

Appendix 1: Detailed forecourt layout

The following sketches should cover most layouts, all of which are assumed to have an awning. If the site does not have an awning, multiply the number of simultaneous filling positions by €150.

Single island

single islandwith two pumps or a double-sided pump.

Estimated development value:

• 2 simultaneous fill positions X £300 = £600.

Small four square

Small Squarenormally has two large islands or four small islands. Important to note is that there is only enough space between the islands for a single row of cars.

Estimated development value:

• 6 simultaneous fill positions X £300 = £1,800.

Medium four square

Medium Four Squarenormally has two large islands or four small islands. With this layout, there is enough space between the islands for two rows of cars.

Estimated development value:

• 8 simultaneous fill positions X £300 = £2,400.

Large (or extended) quadrilateral

Large (or extended) four squarenormally has six small islands. In the layout below there is enough space for two rows of cars between the islands with enough space for cars to maneuver between the islands.

Estimated development value:

• 12 simultaneous fill positions X £300 = £3,600.

Start gate with three islands

Starter gate with three islandshas an easy entry and exit, but requires a considerable depth of the location.

Estimated development value:

• 4 simultaneous fill positions X £300 = £1,200.

Appendix 2: LPS Definitions

Agency (or low margin fuel cards)

There is a contract between the petrol station and the cardholders, the card company actually buys the fuel back from the petrol station operator at cost price and the petrol station operator receives a handling fee for delivering the fuel.”

Bunkered fuel

Bunker fuel is fuel that is stored and distributed by a service station operator, usually on behalf of another company, for which the operator receives a handling fee.

Zero rate threshold (breakpoint)

The Zero Rate Threshold determines the volume of throughput of the gas station at which the operator's revenue from fuel sales covers the minimum operating costs of achieving this while operating 110 hours per week. Simply put, this is the total throughput at the gas station required to break even. For unmanned sites the threshold is 1.2 million litres, and for manned sites the threshold is 2.4 million litres.

Unmanned location

Are unmanned fuel pumps that allow public access to fuel via card payment during extended hours of operation, e.g. 24/7. These can be purpose-built sites or former manned sites that have been converted for a particular purpose.

Manned location

Are manned fuel pumps that allow public access to fuel via till payment (or card payment at the pump), usually during specified hours. They generally have a store that sells convenience items, but not always. Please note that some locations may operate longer than the standard 110 hours per week and may have overnight pay periods (to close shop if applicable) or to operate with a minimum of staff.

Actual throughput

Is the actual throughput in liters per year provided by the site in question.

Hypothetically feasible throughput

If actual throughput figures are not available, comparisons should be made between the site in question and other comparable sites with similar facilities nearby. The appraiser will make an assessment of the Hypothetical Throughput in liters per year.

Serviceable throughput

Serviceable throughput is expressed in liters per year and is derived by adjusting actual throughput to account for variations in prices and hours of operation.

The weighted average selling price

This is the average price of the sum of both petrol and diesel figures in Northern Ireland, taken on the AVD date. For Reval 2023, the weighted average selling price is 136.9 pence per litre.

Pole Board Price

For the purpose of this Practice Note, this is the price of both petrol and diesel displayed at the petrol station on the AVD date.

Maintainable throughput

This is the rate per thousand liters applied to the volume of maintainable throughput that exceeds the Zero Rate Threshold. The rate varies depending on the type of site, e.g. manned or unmanned and also depending on the volume liters above the threshold.

More useful links

• Rating lists