In a paper presented to the "Cutting Edge 95" Research Conference, the problems associated with the valuation of contaminated land were described, earlier research was reviewed and a method of valuation was proposed. The valuation method was developed from the work of Peter Patchin in the United States and comprised three steps.

The first step was to value the property as if no contamination existed, using whatever method the valuer considered appropriate, next the "unimpaired value" was adjusted to take account of any quantifiable costs of remediation, deferred as appropriate to the end of the economic life of any buildings on the site. Finally, the value of the property was adjusted to reflect any "unquantifiable" diminution in value, or stigma, using a sales comparison approach in which comparable contamination scenarios are used as the comparators.

During the course of the subsequent twelve months the sales comparison method has been criticised, on the basis that suitable comparables would be difficult, if not impossible, to find and alternative methods of valuation have been proposed. One alternative method suggested requires an adjustment to the All Risks Yield to allow for stigma. This may be appropriate for use with investment properties affected by contamination, or properties for which comparables are readily available.

However the premises used for the types of industrial activities listed in Guidance Note 2 of the RICS Appraisal and Valuation Manual are rarely found in investment portfolios and infrequently change hands in the open market. It is suggested that any method which involves adjustment of the All Risks Yield is inappropriate for use in respect of such properties and is unlikely to reflect the differing nature of industrial activities. Instead, a Risk Assessment approach is suggested for the valuation of contaminated properties.

The 3-step method is retained, with the first two steps remaining unaltered, but with the final step replaced by a Risk Assessment model which is less reliant on comparable evidence. The basis for the model is a study of perceived risks which has involved almost 200 people, from surveying and other property related professions, over a period of two years. The model attempts to reflect the impact of risk on value both before and after treatment, as well as variations attributable to different industries and soil treatment methods.