Every property owner in the UK will require a valuation of their assets from time to time for a variety of reasons, not just when they are thinking about selling. Property valuations are a huge part of the work we undertake and form a major part of our training and qualifications, therefore it is always a surprise when clients ask for a quick verbal valuation or an on the spot figure. Every professional in the office at Carver Knowles is a Registered Valuer under the Royal Institution of Chartered Surveyors (RICS) scheme and therefore there is a strict code of practice and amount of detail that is required when undertaken most valuations.
If you are looking to sell your property you will need a Market appraisal. This will provide a value which you could expect to achieve on sale and be used as a guide price. This is not a binding figure and does not need to be prepared by a professional valuer.
Generally any valuation that is going to be relied upon needs to be prepared by a professional member of RICS and it will need to meet its ‘Red Book’ standard. Valuations of this type include;
- Secured lending purposes i.e. mortgage (normally instructed by the mortgage company)
- Capital Gains Tax on the gift or sale of property
- Inheritance Tax purposes on the death of a property owner (whether or not tax is due)
What is involved in a valuation?
The first key step with a valuation is to make sure you are employing the right person to do the right job. If you require a formal valuation of any kind it is important that you appoint a RICS Registered Valuer and for farmland and property it is beneficial if they are Fellows of the Central Association of Agricultural Valuers (FAAV). Once you have the right person you must be clear why you would like the valuation, whether it is for tax purposes, family discussion, sale, business planning or dispute resolution. At this stage it is also worth providing the valuer with a plan and description of the asset that needs to be valued, this ensures the right property is valued for the right purpose.
Once the instruction has been agreed, the valuer will need to undertake a thorough inspection of the property. It is useful if you can have as much of the property available for inspection as possible i.e. getting keys for locked rooms, notifying tenants access will be taken etc. This allows a valuer chance to get a good feel for the property, its size and condition and also complete a photographic record.
Once the inspection is complete the valuer will compile their report. The report will include background research on the property such as its planning history, statutory designations, comparable property sales etc. This information will be combined to reach Market Value which is normally a single figure although you can request it to be broken down into house, buildings and land (a sensitivity analysis). The actual method of valuation depends on the property being valued, i.e. a building plot, agricultural land and a site with an income from, say, caravan storage, would all be valued differently, but all would use comparable transactions as an initial guide. The method of valuation and any weakness or ‘valuation uncertainty’ will be clearly defined in the report.
A valuation can only be issued to the person who has instructed the valuation, who is normally also the person paying for it, unless they request otherwise. For example, executors of an estate can request that the valuation be copied to the solicitor and accountant for Inheritance Tax purposes but if the solicitor rang directly for a copy we could not issue it without the express consent. The valuation must also only be used for the purpose it was written i.e. the value in a report for Inheritance tax purposes may not always be the same value as one would use as a guide price to put the property on the market.
It is also critical to know that a valuation that is instructed for a mortgage is not a survey of the property and the report is prepared for use by the mortgage provider not the lender.
Please view the short film prepared by the RICS. Click Here
Carver Knowles can undertake valuations of all rural property across Gloucestershire, Worcestershire and Herefordshire. We aim to provide a professional report, fit for purpose, in a timely fashion. We are panel valuers for Lloyds and the Agricultural Mortgage Corporation (AMC).