Land valuation | Principles.tax

- Adjust value derived from comparator for relative condition

"[35] I consider that Mr Newell was a good expert witness, with a good understanding of the market in which he was giving an opinion of value. His approach to the valuation was logical in all respects but one - he did not stand back to consider whether his final figure was appropriate and realistic when viewed in the range of market prices as at the valuation date. I consider that by adopting and maintaining a valuation based on floor area Mr Newell overstated the value of the property at the valuation date and did not account for the fact that it was an outlier in the market in terms of both its size and its poor condition. The marketing advice put in evidence by the appellant is not determinative, but it does reinforce my conclusion.

[36] In considering what would be a more appropriate valuation, I note that the four properties without outside space achieved the lowest prices, ranging from £626,567 to £753,132. (In case it appears there is a duplication error, 71 Cathnor Road sold for the same price as 9A Devonport Road and the house price index was identical in October 2015 and March 2016.) The two smallest properties with three bedrooms and a single bathroom lie at the bottom of the range, despite being in good condition. The adjusted prices for 61B Percy Road (£677,508) and 9A Devonport Road (£753,132) are significantly apart for two properties of apparently similar size and description. The reasons for difference may well lie in the detail of condition, or possibly lease length, which we do not have.

[37] Doing the best I can with the evidence I consider that, given its very poor condition and that it has only a single bathroom, and despite offering extra space, the property would have achieved a price below that of 61B Percy Road. I determine the value at £670,000. This would have given a purchaser scope to spend at least £130,000 on refurbishment, in the expectation of adding value above that cost to achieve a potential future sale price over £800,000 for a property still limited by lack of outdoor space." (Downey v. HMRC [2026] UKUT 228 (LC))