What’s the value of a professional valuation?
Sometimes it’s easy to think if you drive by a derelict house or piece of neglected land that the owners or local authority have forgotten all about it. But the chances are it’s the subject of a complicated ongoing property valuation process. Valuations aren’t as simple as they might seem, writes Clive Scrivener, Partner at Wimbledon based Chartered Surveyors Scrivener Tibbatts.
Valuations are required for a variety of reasons, most are required to be formal RICS Red Book Valuations, but there are some exceptions.
One common exception is a ‘Market Appraisal’ where an assessment of guide prices is provided with the view to a proposed sale. That’s the one most people are familiar with.
In relation to formal valuations these are required for a variety of reasons, one of the main ones being for Inheritance Tax (IHT) or Capital Gains Tax (CGT) Valuations for which a formal RICS Red Book Valuation is required, with the valuation date for IHT and valuations being the date of death.
As chartered surveyors Scrivener Tibbatts is bound by Global Valuation standards outlined in the Red Book which require care and due diligence to prepare.
Other valuations can include Title: are there any other encumbrances which could affect the value, such as covenants or rights?
Tenure: is the property subject to tenancy or vacant possession?
Planning: what is the planning policy for the property, is it green belt or is there scope within the local plan for allocation dependent upon the housing land supply. Has the property obtained the correct permissions for use?
Flood risks: is any of the property within a flood risk area, which could affect its current or future use?
Access: is this from adopted highways or via private access roads?
The inspection is also an important part of the process, determining the state of repair, any invasive weeds, any hazardous materials, conditions and activities on the ground.
There then goes an amount of work into determining the market value through various methods of applied in practice dependent upon property type, in case of agricultural land and residential property and comparable method is often utilised where comparisons are drawn between the property and others which have been marketed and sold locally of a similar type, location or situation.
Examples of how a chartered surveyor can help are numerous. We were recently instructed to provide an independent valuation on a property in Southfields for inheritance tax purposes, and to discuss the value with the District Valuer. After submitting probate, the District Valuer believe the house to be worth £1,650,000. Following our valuation, we agreed the property was worth £1,425,000, saving the client £90,000 in inheritance tax.
It’s easy to think you might save several hundred pounds by just getting a market appraisal when you buy your longed-for house. But as a surveyor knowing what I now know, I’d always seek a full Formal valuation, you never know what’s lurking under the bushes, or in the attic…
If you would like to discuss something related to a property valuation please contact Clive Scrivener direct via email at Clive@scrivenertibbatts.co.uk or call 020 8971 2983.
