My right honourable friend the Minister for Local Government (John Healey) has made the following Written Ministerial Statement.

I am today announcing the decapitalisation rates to be used in the “contractor’s method of valuation” in non-domestic rating valuations in England for the 2010 revaluation.

Rateable values are assessed independently by the Valuation Office Agency and are generally based on annual rental values. Most are assessed having regard to actual rents but such evidence is not always available. In about 11 per cent of cases, rateable value is based on capital values, established from the cost of construction and land values, which is then “decapitalised” to give an annual value representing the rateable value. This is called the “contractor’s method of valuation”. The decapitalisation rates used in the valuation are prescribed by the Government.

Following consultation in the summer, I have decided:

to continue to prescribe the decapitalisation rates for the 2010 revaluation;

to retain the existing groupings of properties subject to each of the two decapitalisation rates; and

to retain the existing rates at 3.33 per cent for education, healthcare and Ministry of Defence properties and 5 per cent for all other properties.

I have set the rates having regard to the relevant factors outlined in the consultation paper. Those factors suggest that the range of possible outcomes for the decapitalisation rates remains very wide and that the existing rates are broadly in the middle of that range.

The 2010 revaluation is being undertaken by the Valuation Office Agency. Rateable values will be published by 1 October 2009.