Valuation of trees for amenity and related non-timber usesNational Tree Safety Group

RICS Practice Standards, UK

Guidance Note

Charles Cowap MBA MRICS FAAV MRAC

Want to Know

St Ives, 25 November 2010

November 2010

What?

• RICS Guidance Note• Part of the Red Book suite• Guidance on the valuation of:

– Trees– Groups of trees– As part of property– As separate asset

• Scope: UK• Interest: worldwide!

The Red Book

• RICS Valuation Standards

• Suite of:– Practice Statements– Guidance Notes– Information Papers

Purpose of Red Book

• Integrity, clarity, objectivity• Use of recognised bases of

valuation• Valuers are qualified• Independence and objectivity• Conditions of engagement• Minimum Reporting Standards• Disclosure

• RICS first published Valuation Standards in 1974

• Now a Global set of standards

• Compulsory for RICS members

Why?

• The need to value trees for various requirements

• Emergence of various methods

• Need for guidance on their relationship to Red Book concepts like Market Value

How?

Valuation Basics:• Methods• Skills and knowledge• Terms of engagement• Specific information which

may be needed• Valuation Basis

– Market Value– Worth– Fair Value– Existing Use Value

How?

The Facts• Site and legal interest• Statutory designation and

other forms of protection• Current and proposed site

uses• Health and condition, signs of

stress• Liability issues• Assumptions and special

assumptions

METHODS

Tree valuation is big newsBig figures are touted to end the chain saw massacre

1. CAVATCapital Asset Value for Amenity Trees

Chris Neilan

CAVAT

Capital Asset Value for Amenity Trees

• Basic value: unit value x size

• Community Tree Index Value: population, use, accessibility

• Functional value

• Adjusted value/amenity factors (+/-)

• Full value/safe life expectancy

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How CAVAT (probably) worked:

Tree Diameter of 184 cm x Unit Value Factor of £13.18 £350,285

Community Tree Index Factor based on pop density of 84.4/ha and relative accessibility of 200% x 100%

2

Functionality based on crown size and condition of 100%

1

Amenity and appropriateness based onTownscape and visual importance + 10%Local Designation + 10%Veteran status + 30% (but total limit of +40%)

1.4

Safe useful life expectancy of 20 to 40 years: 80% .8

Total Tree Value £750,000

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2. Amenity Valuation of Trees & Woodlands

DR Helliwell

Helliwell

Unit value per individual tree, 1.6.08 £25

Size of crown, 200 sq m: score 8 (max) 8

Safe useful life expectancy, 40 – 100 yrs, (max score 4) 3

Importance in landscape: score 4 (max) 4

Presence of other trees: some (max score 2) 2

Suitability to setting: score 4 (max) 4

Form (thick stem): score 2 (max) 2

Total tree value (compared to a maximum Helliwell value of £57,600)

£38,400

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3. Guide for Plant Appraisal

CTLA

CTLA is not a method, but a bodyPublishing guidance on both Replacement Cost Methods…

…and Cost of Cure methodsValue may be optimised without full replacement (cf Macklin)

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Establishing unit costs for UKComparison of extrapolated and actual costs.

21

SpeciesX

ConditionX Location

CTLA

Installed cost for 184 cm diameter tree @ £12.55/sq cm (unit rate)

£333,541

Environmental adaptability: v suitable @ 100% 1.0

Growth characteristics: an average of scores for size, longevity and maintenance: 100, 50 and 70% respectively

1.0

Pest and disease susceptibility 0.9 0.96

Condition (90%) and Age / Asset Life (70%) 0.6

Location, based on site rating (100%) x frequency (65%) x dominance (65%) x placement (100%)

0.4

Value £75,000

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One Tree

• 3 Values?

• £38,400

• £75,000

• £750,000

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• Helliwell: Visual Amenity Valuation

• CAVAT: Management of trees as public assets rather than liabilities, value directly related to public benefits

• CTLA: Depreciated Replacement Cost: asset valuation – amenity value

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COMPARISON• A standard unit is weighted (multiplied) for various factors

• Nil value is possible

• Negative value is impossible without further deductions

• All are intrinsically capped

• Scope for substantially different figures

• No, or little, explicit recognition of land value itself

– See Lindsay and Lindsay

• No Basis of Valuation in terms easily reconciled with Red Book

• DRC approaches

– Do the assumptions really work with trees?

APPLICATION?

• Assessment of Worth (investment value)

• Compensation claims

– Damages

– Compensation on compulsory purchase

FORMING A VIEW

• The need to ‘stand back’ and judge ‘reasonableness’• Bryant and Macklin (2005)

– Cost of replacement (DRC): £190,000– Diminution of freehold value: £25,000– Cost of replacement with young whips: £44,500

• With regard to:– Likely behaviour of property owner– Overall context of property market value

WIDER VALUATION ISSUES .....

• Sustainability ….

• Valuation of heritage assets …..

• Worth and Value in Use v Market Value and Value in Exchange v Fair Value

• Valuation and other appraisal methods

The National Tree Safety Group (NTSG) was formed in August 2007.

The purpose of this group was to develop a nationally recognised approach to tree safety management and to provide guidance that is proportionate to the actual risks from trees.

Its membership is open to all interested stakeholder organisations and groups.

Royal Institution of Chartered Surveyors

Institute of Chartered Foresters

Country Land and Business Association

London Tree Officers Association

National Trust

Woodland Trust

Arboricultural Association

Ancient Tree Forum

The Tree Council

ConFor

Forestry Commission

English Heritage

NTSG Management Committee

National Tree Safety Group www.ntsg.org.uk

“The NTSG believes that one fundamental concept should underlie the management of risks from trees. ‘The evaluation of what is reasonable should be based upon a balance between benefit and risk. This calculation can only be undertaken in local context, since trees provide may different types of benefit in a range of different circumstances’.”

National Tree Safety Group www.ntsg.org.uk

Position Statement

National Tree Safety Group www.ntsg.org.uk

The Guidance document is based on a set of five basic principles developed by the NTSG for considering and managing tree safety in the public interest. The overall approach is that a balance should be struck between risks and benefits.

www.ntsg.org.uk

National Tree Safety Group www.ntsg.org.uk

The Guidance Document consultation period closed in June 2010.

Publication of the Guidance is expected in early 2011

Principles:

•Trees provide a wide variety of benefits to society

•Trees are living organisms and naturally lose branches or fall

•The risk to human safety is extremely low

•Tree owners have a legal duty of care

•Tree owners should take a balanced and proportionate approach to tree safety management

www.ntsg.org.uk “Safety is but one of many goals to which we aspire and so the mistake that is often made is to focus on safety as if it is the only goal.” Professor David Ball

Centre for Decision Analysis and Risk Management, Middlesex University

Streamlining TPO’s: DCLG Consultation Proposals – a potted view

• Simplify all existing TPOs: alignment with a New Model Order• New simpler Model Order

– List of trees– Map

• New TPOs to have immediate provisional effect– Scraps requirement for separate direction to provide urgent

protection• Reduced publicity requirements

– Owners, occupiers– Others with right to cut or fell

• One system for work consents and revocations• Consents for regular work to protected trees

– Save need for repeated consent applications• Conditions to cover replacement woodland planting

– Instead of Directions• Align all compensation provisions with 1991 Regulations

– Removes anomaly that allowed LPAs to avoid claims for compensation

Find out more …..www.rics.orgDownload for members:http://www.rics.org/site/scripts/

press_article.aspx?pressreleaseID=193

www.ntsg.org.uk

Charles Cowap: cdcowap@harper-adams.ac.ukTree Safety:

John LockhartJohn.lockhart@lockhart-garratt.co.uk

TPO Consultation:http://www.communities.gov.uk/

publications/planningandbuilding/treestreamliningconsult

These slides:http://www.slideshare.net/cdcowap