Market Valuations of residential property are required for a wide variety of purposes, these include:
All these and most other valuations must be compiled in full accordance with RICS Valuation – Global Standards 2022 commonly known as the RICS Red Book.
The main reason for issuing the 2022 update to Red Book Global Standards was to take account of the changes to the IVS, which Red Book Global Standards adopts and applies.
The RICS Valuation – Global Standards: UK national supplement (UK Red Book) – effective from May 2024 – provides additional requirement for valutions undertaken in the UK.
The UK Red Book sets out a range of matters that the valuation report must address, what assumptions might be made, and it defines Market Value and other valuation bases that might be utilised depending upon circumstance.
These valuations are undertaken by RICS Registered Valuers
Valuation reports are not surveys and should not be regarded as such. They are usually undertaken for a specific purpose – such as a legal dispute or taxation.
In relation to the purchase of residential property, the RICS Home Survey Standard Level 2 (Survey and Valuation) report includes a Market Valuation;
The Level 3 Building Survey does not – but a Market Valuation Appendix can be added if required.
Market Valuation reports start at around £250 plus VAT – but costs increase with value amd complexity, etc..
Valuations for Tax Purposes
Inheritance Tax (IHT) valuations (often called Probate Valuations) these are formal valuations and should be prepared by a qualified Valuer. An estate agent’s market appraisal is not suitable. These valuations are prepared in accordance with UKGN 3 RICS Valuation – Global Standards: UK national supplement (UK Red Book). The ‘normal’ definition of Market Value is not used and the basis of valuation is found in S.160 Inheritance Act 1984, and a bespoke suite of assumptions is applied. There is an important differentiation from ‘normal’ market value concerning the issue of ‘special purchaser’. The valuation is made as at the date of death.
Inheritance Tax valuations start at around £300 plus VAT.
Capital gains Tax. These are again formal valuations. They are frequently retrospective and date back to the point of acquisition or transfer. UKGN 3 again applies but the valuation basis is found in S.272 Taxation of Chargeable Gains Act 1992. These are often complex instructions with several valuation dates with changing physical conditions and occupancy circumstances at those dates..
Capital Gains Tax valuations start at around £350 plus VAT
Valuations for reinstatement purposes are required for insurance. They provide advice on the amount for which a dwelling should be insured for Buildings Insurance purposes. It is very common for the reinstatement valuation to be greater than the Market Value. It follows that a dwelling simply insured for the amount that was paid for it can be significantly under-insured – and that could have very serious implications if an insurance claim needed to be made.
The RICS Home Survey Standard Level 2 report (survey and valuation) includes a reinstatement valuation as standard.
Home owners concerned over the amount for which their dwelling is insured might wish to commission a stand-alone reinstatement valuation.
A reinstatement valuation is a calculation based upon a wide range of inputs including age, type, floor area, ceiling height, constructional materials, roof pitch, areas of driveway, boundary walls, drainage runs, professional fees and so on. We use The Building Cost Information Service (BCIS) build cost indices and input rates to calculate the re-instatement amount.
Standalone re-instatement valuations start at around £250 plus VAT.
