Appeal No. VA06/3/042
AN BINSE LUACHÁLA
AN tACHT LUACHÁLA, 2001
VALUATION ACT, 2001
Stanford Woods Care Centre Ltd. APPELLANT
Commissioner of Valuation RESPONDENT
RE: Nursing Home at Lot. No. 4 La/2, Kiltipper Road,
Tallaght Kiltipper, Tallaght West County Dublin
B E F O R E
John O'Donnell - Senior Counsel Chairperson
Michael F. Lyng - Valuer Member
Joseph Murray - B.L. Member
JUDGMENT OF THE VALUATION TRIBUNAL
ISSUED ON THE 29TH DAY OF JANUARY, 2007
By Notice of Appeal dated the 2nd day of August, 2006, the appellant
appealed against the determination of the Commissioner of Valuation in
fixing a rateable valuation of €525.00 on the above described relevant
The Grounds of Appeal as set out in the Notice of Appeal are:
"On the basis that the NAV as assessed is excessive, inequitable
and bad in law.
Part of the property is occupied as domestic accommadtion and should not
be rated per schedule 4 s.6 and schedule 4 s.7."
The appeal proceeded by way of an oral hearing which took place in the
offices of the Tribunal, Ormond House, Ormond Quay Upper, Dublin 7 on
the 4th December, 2006. Mr Eamonn Halpin B.Sc. (Surveying) M.R.I.C.S.,
M.I.A.V.I. represented the Appellant. Ms. Claire Callan, , B.Sc. Surveying,
Dip Prop. Ec., a District Valuer in the Valuation Office, represented
the respondent. At the oral hearing, both parties, having taken the oath,
adopted their précis, which had previously been received by the
Tribunal and exchanged between the parties, as their evidence-in-chief.
The subject property is a purpose-built nursing home located near Tallaght,
in the townland of Kiltipper, Dublin 24. The property is approximately
five years old and comprises 56 beds with 43 rooms. There are 34 single,
7 double and 2 four-bedded rooms. All accommodation is on the ground floor.
The first floor area was not valued. All bedrooms are ensuite with the
exception of 2 double rooms and one 4-bedded room.
The nursing home has specialised units for day care, respite care and
rehabilitation care. The services include:
Arts and crafts
Social activities and entertainment
The ground floor accommodation consists of:
Sitting and dining area
The total floor area has been agreed at 2,433.53 sq. metres.
On the 18th of October, 2005, a certificate of proposed valuation issued
with RV of €628. Following representations on the 10th November,
2005 the RV was reduced to €525. On 7th July, 2006 the Commissioner
upheld this valuation. By Notice of Appeal of the 2nd August, 2006 the
appellant appealed the Commissioner's decision to the Tribunal.
Submissions of the Appellant
The appellant is of the view that when reaching a proper tone of
the list with regard to nursing homes, some consideration should be given
to the bed space. He does not rule out the rate per square metre method
but simply says that it should be tempered by the number of beds.
The number of beds is what determines profitability. There appears
to be an inequity in the system when you simply apply a rate based on
square metre only. In the past the Valuation Office looked at the number
of beds and this was the key element. What was asked was the number of
beds, what was the charge, and where was the location. This was how the
valuation was arrived at. If you simply look at the square metre method
without regard to the number of beds you produce an anomaly. Mr. Halpin
said that his client has been penalised for providing extra space. A smaller
nursing home with the same number of beds would have less operating costs
and with less space would not need to employ as many staff. He took the
example of 2 nursing homes side by side with the same number of beds and
charging the same rate, yet one pays twice the amount of rates to the
County Council as the other one simply because it is larger with more
space. This appears unfair. In Mr. Halpin's view the hypothetical tenant
would look to the number of beds as a source of income, rather than the
size of the building.
The rate applied by the Valuation Office does not reflect the additional
floor area associated with the Health Regulations. Even if Mr. Halpin's
client wanted to increase the number of beds he would be restricted by
the regulations. The hypothetical tenant would not increase his bid to
reflect the extra size unless there was clear evidence of earning potential
from the extra space.
In earlier Tribunal decisions a dual approach was taken to valuations
with regard to "tone" using both the rate per square metre and
the bed space approach. Now the Valuation Office seems to be departing
from this and relying solely on the rate per square metre method. Mr.
Halpin did not ask that the rate per square metre method be abandoned,
but that it be tempered with the number of beds.
Hypothetically, looking at two buildings, one large and one small,
with the same number of beds, both producing the same income, the hypothetical
tenant would ask himself what he could save on a smaller building with
less running costs and less rates.
The foregoing is the essence of the appellant's submissions.
In support of his estimate of valuation Mr. Halpin introduced the following
No. 1 - Lisheen Nursing Home, Rathcoole, (a common comparison) with RV
€350 (2004) based on a floor area of 1,478 square metres at €37.58
per sq. metre. Mr. Halpin contended that the hypothetical tenant would
only offer a modest increase in rent for the subject premises with 56
beds over what might be paid for Lisheen with 55 beds, despite the fact
that the subject is almost 1,000 square metres larger. It is the beds
which produce the profit. This, he said, was the best comparison.
No. 2 - Glencarrig Nursing Home - also a common comparison - is much
smaller than the subject. It catered for 21 patients when it was revised
in 1990 with approximate floor space per bed of 25 per sq. metres. It
was revised again in 1999 with an RV of €167.61.
Mr. Halpin submitted the following estimates of valuation using three
"Estimated NAV based on the established tone of the list by direct
comparison with Comparison No. 1.
7 double rooms @ €1,750 each = €12,250.00
34 single rooms (ensuite) @ €1,200 each = €40,800.00
2 x 4 bedded rooms @ €2,000 each = €4,000.00
Total = NAV €57,050.00 @ 0.63%
Say RV €360
Note: The amount of floor space per bed is approximately 43.44 sq. metres
this is approximately 62% higher than comparison no. 1 (adjoining) where
1,478 sq. metres accommodates 55 beds i.e. 26.87 sq. metres per bed
Or average NAV per bed = €1,010
From Comparison No.1 (for 55)
€1,010 x 56 = €56,560 @ 0.63% = €350.33 say RV €355
Nursing Home 2,433 sq. metres @ €22 per sq. metre = €337.21
Say RV €340."
In cross examination Ms. Callan referred to Tribunal decisions cited on
page 7 of Mr. Halpin's précis: VA95/4/029 - John Shinnick, Monfield
Nursing Home Ltd. and VA98/2/047 - Ashbrook House Ltd. and said that these
cases were prior to the Valuation Act, 2001. Mr. Halpin agreed this was
so. While the calculations were primarily on a square metre basis, he
said, the Tribunal nevertheless did take account of the bed space approach.
To further questions put by Ms. Callan, Mr. Halpin conceded that in two
Tribunal cases under the Valuation Act, 2001, namely VA04/3/020 - Brookfield
Care Services Ltd. and VA04/2/051 - Craddock House Nursing Home the Tribunal
used the square metre method rather than bed space. Mr. Halpin was also
asked how he reached the rate of €22 per square metre on the subject.
To this question he replied that he made calculations based on comparisons,
the number of beds and the rate charged.
Submissions of the Respondent
Ms. Callan said that the rate per square metre is the accepted
method of valuation and the only one that she is familiar with. She referred
to the Tribunal decisions in VA05/1/018 - Brindlley Manor Fed. Nursing
Home Ltd. and VA04/2/051 - Craddock House Nursing Home, both of which
were heard under the Valuation Act, 2001.
The subject is a building constructed to a very high standard with
landscaping and with the highest quality accommodation.
It had a good location with access to the M50 motorway.
The valuation was assessed in line with the tone of the list, which
was based on comparisons, and was fair and equitable.
Ms Callan rejected the valuation method using the number of beds.
The Tribunal had used the rate per square metre method in VA04/3/020 -
Brookfield Care Services Ltd. and VA05/1/018 - Brindley Manor Fed. Nursing
Because of the size of the subject property a quantum allowance
In support of her valuation Ms Callan introduced the following 4 comparisons.
No 1: Lisheen Nursing Home - (a common comparison - see above)
described as a modern nursing home with spacious accommodation and smaller
than subject. This, she said, was the best comparison.
No 2: Griffeen Valley Nursing Home, located near Lucan in a predominantly
residential area and much smaller than the subject with floor area of
705 sq. metres valued at €44.17 per sq. metre.
No 3: Glencarrig Nursing Home - (also a common comparison - see
above) - has a floor area of 528.80 sq. metres valued at €44.44 per
sq. metre. It is situated in a residential area and is much smaller than
subject. It was recently built and had planning permission for extra bedrooms.
No 4: Padre Pio Nursing Home was not as good quality as the subject.
It had no landscape gardening and was in fact 2 semi-detached houses.
The floor area was 328.50 sq. metres valued at €41 per sq. metre,
i.e. at a higher rate than the subject. However, as the subject was some
five times larger than this comparison, a quantum allowance was given
to the subject.
Ms Callan contended for a RV of €525 calculated as set out below.
Nursing Home 2,433.53 sq. metres @ €34.17 per sq. metre = €83,
Total NAV = €83,153.72
(Measured gross externally)
Rateable Valuation = Total NAV @ 0.63% = €523.86 Say €525.00
In cross examination Mr. Halpin asked what quantum allowance had been
made and how it was arrived at. Ms. Callan replied that she gave a 9 per
cent allowance considering the subject was almost twice the size of Lisheen
Nursing Home. Mr. Halpin asked whether this was a subjective view. Ms.
Callan replied that this percentage was reached after discussions with
the Appeal Officer.
Mr. Halpin put it to Ms. Callan that the subject nursing home pays approximately
€35,000 to South Dublin County Council in rates while Lisheen pays
€21,500 approximately and that this was a considerable difference
considering that they have approximately the same number of beds. Ms.
Callan replied that this was due to the rate per square metre on the extra
space. She rejected the bed space method.
Findings and Determination
The Tribunal, having considered the evidence, the submissions of the parties
and precedents of the Tribunal makes the following findings:
1. The proper valuation methodology to be applied to nursing homes is
the rate per square metre method. We base this approach on previous Tribunal
determinations under the Valuation Act, 2001 including VA05/1/018 - Brindley
Manor Fed. Nursing Homes Ltd. and VA04/2/051 - Craddock House Nursing
2. We have considered the appellant's argument that the hypothetical tenant
would be influenced by the number of beds to generate profit. We also
appreciate that he is not abandoning the rate per square metre method
but arguing that it should be tempered with the bed space method. However,
it could also be said that the hypothetical tenant could easily be influenced
by the extra space, whereby the patients living in a more spacious environment
could be charged a higher rate than patients in a smaller nursing home,
where the quality of life might be reduced due to confined space.
3. The Tribunal has seen no precedents under the Valuation Act, 2001,
where the bed space method was used. Perhaps this method was used to some
extent in the past. However, we are now focussed on the Valuation Act,
2001 and on a "tone of the list" established under this Act.
4. The Tribunal sees Lisheen Nursing Home as the best comparison, with
floor area of 1,478 sq. metres at a rate of €37.58 per square metre.
The subject premises with a floor area of 2,433.53 sq. metres is valued
at a lower rate of €34.17 per sq. metre which rate reflects the quantum
allowance of 9% applied by the Valuation Office in view of the fact that
it is almost 1,000 square metres larger than Lisheen, (955.53 square metres
to be precise). However, in view of the difference in size between these
two properties, and considering the levels applied to the other comparisons,
the Tribunal increases the quantum allowance further by reducing the rate
to €32 per square metre, as shown below:
2,433.53 sq. metres @ €32.00 per sq. metre = €77, 872.96
NAV @ 0.63%= €490.60
And the Tribunal so determines.