Residential Property Valuation
Why do I need a home valuation?
Buying or selling a home is the biggest transaction most of us will make. So a valuation based on local knowledge of location, what similar houses are selling for, planning applications lurking in the shadows and local government plans for future development is an essential weapon in what can be a real battle to negotiate the right price. But first and foremost a valuation should be based on a detailed examination of the building’s age, size and general wear and tear. What about the room layout and number of bedrooms, the heating system, storage, built-in cupboards? Has the owner made structural or other improvements?
Why should I avoid estate agent estimates?
There is much to consider and yes, you can do your own valuation. But properties you’ll find on the land registry website can fluctuate so wildly in size, alterations and state of repair that you are strongly advised to get a second opinion.
If you go down the estate agent route to get some free estimated asking prices (estate agents are not qualified to give valuations), you can end up with as many different estimates as estate agents, and all can be way off the final price agreed.
If you go one step further and do without a proper survey, you could be among the 20% of new owners who later discover faults costing an average £5,750 to put right, according to a Royal Institution of Chartered Surveyors (RICS) report.
What sort of residential property valuation do I need?
You should also ask if you using the right kind of residential property valuation? Don’t rely on a mortgage valuation report – this is produced by a surveyor hired by a mortgage lender purely to ascertain if they will get their loan back on the house if it has to be sold suddenly for any reason. There is no full inspection, valuations are often based on drive-by surveys or even done remotely and derived from market trends and other statistics – fine for the lender, not for the borrower.
The safe, thorough and cost-effective route for buyers is through professional surveyors, such as Aston James Associates, specialists in south-east London property and a RICS member. Our membership shows we are properly qualified surveyors who will guarantee a high standard of service to all our clients.
What marks out a good surveyor?
But qualifications are just the first step. Before hiring, you need to ask if a surveyor is local to where you want to live and thus knows the market. Does s/he have experience of valuing similar houses?
For the wise buyer, the popular choice is often a RICS homebuyer survey and valuation. Besides a full survey, including maintenance needs, necessary repairs and legal issues before buying, it provides a professional opinion of “market value” and insurance for the client against any rare mistakes in valuation.
(A property valuation is a very limited inspection that merely advises on market value, does not include advice on maintenance or remedial needs, and is normally undertaken to support tax and legal arguments linked to matters such as probate and matrimonial.)
For more unusual buildings, such as those converted, with big extensions or listed, you can order a full structural survey but you need to specifically request a valuation at the same time.
Buying a home is a stressful exercise at the best of times and a personal touch can do a lot to reassure people that they are making the right, life-changing decisions. Aston James Associates is a small practice that offers a tailor-made service you don’t get when using a larger company. No waiting to get through to the right department here – at AJA you go straight through to the valuer/surveyor who can sort out your query in days rather than weeks. And if you put in a special request to pay attention to, say, the roof in a valuation, it won’t get lost in administration and forgotten about.
Should I update my building replacement insurance?
Once you have bought a home, most insurance schemes are index linked and valid for five years based on the initial valuation. After that the owner is responsible for updating their policy and so a building replacement insurance valuation can often be a wise move. Whatever you do, check your policy’s terms and conditions to avoid risking shortfall in claims.
A trend to beware
A trend has developed where lenders’ surveyors have been down-valuing properties after the sale price has been agreed. This leaves buyers vulnerable to over-borrowing at a time when a friendly surveyor can make all the difference. Please get in touch . . .
Is Local valuation knowledge necessary?
Local knowledge is imperative when implementing this type of valuation method and it a mandatory requirement of the Royal Institute of Chartered Surveyors (RICS). For each valuation case, you must demonstrate respective reasoning of each item of comparable evidence retrieved, by initial analysis and justification; where necessary allowing for differences between each comparable and the subject property to arrive at an opinion of value.
What is the valuation based on?
Valuation is based on comparable evidence: The buildings material elements should be similar to that of the subject property, within constraints of available market evidence and geographical location.
How does a surveyor from an opinion of property market value?
Valuation Analysis: Following retrieval of appropriate comparable evidence, analysis should be made. This involves making adjustments in sales figures achieved to capture the differences between comparable and the subject property; those differences are reflected on a percentage basis incomparison to the subject. Application of these valuation methods can become complex however the above process will help you to form an opinion of your property’s Estimated Value. Professional Residential Property Valuers Property Valuation has to take in to consideration a broad range of macro-economic and local-geographic factors to name but a few, to be deemed accurate and trustworthy. It is for these reasons that lending institutions and stakeholders only rely on professionals namely Chartered Surveyors for their opinions of residential market value..
Independent Commercial Property Valuation
What should I consider when picking new premises?
When you are buying a commercial property, think location, tenure, classification, rather than location, location, location. Businesses change, expand, contract. How long do you plan to trade? Do you aim to grow? What sort of planning classification do you need – is it, say, for a shop, a finance house, a restaurant? They all have different planning rules and a surveyor with intimate local knowledge can advise you on picking the right building for a valuation.
Unlike full residential valuations, normally called for when a property is bought and sold, commercial property valuations are needed for a range of reasons and often act as a security blanket in the face of the unexpected. Land and building values change so it pays to keep up to date.
What should I ask about the future of my business?
There is uncertainty in business and it’s best to be prepared. Will there be a change in directors? A change in share ownership? If you don’t have a valuation to hand, your business could miss out on potential investors. A local surveyor who has valued your property and is quickly available in a crisis can pay dividends.
Do you want to expand and need more funding? Your lender will want security so what better than to slip a valuation report on their desk and get fast access to additional finance. Similarly, if you wish to sell or transfer part ownership, a valuation in hand will keep Inland Revenue on side when working out stamp duty or capital gains tax payable. A friendly tax inspector is worth cultivating!
How can I keep my repair bills down?
Of course, property values can drop as well as rise, particularly if a building deteriorates. So if you rent and want to claim the cost of repairs from your landlord when your lease expires or comes up for renewal, a valuation will show if your claim is higher than any fall in property value. This can benefit either landlord or leaseholder – the landlord need only meet repair claims up to the loss in value. So it’s worth getting a valuation before you start costly repairs.
Valuations may seem just an added expense but they provide information essential to the smooth operation of what is generally a company’s prime asset – its premises.
Why do I need a Matrimonial Valuation?
Divorce rates have seen a four- fold increase between 1979 and 2009, that’s a rise from 2% to 8%. We appreciate that going through a divorce can be an emotional and traumatic experience. Generally, your assets have to be divided fairly and equally. In particular the marital home can become a bone of contention.
What is the surveyor’s role?
All assets have to be divided equally and fairly, including not only the matrimonial home or shared property but also investment or commercial property. Surveyors normally carry out matrimonial valuations for solicitors handling the divorce or county/high courts if there is a dispute – and they can also stand as expert witnesses.
Surveyors are generally jointly appointed by the solicitors of each party. Their job is to present an independent valuation for and to the court. They can also carry out valuations for single parties to use in negotiations.
What happens if I dispute a valuation?
Valuations may be hotly disputed, however. One party may see no reason for another valuation if they already have one to hand. Or you may be the party insisting on another because you suspect your spouse has given a particular asset an unfair or unrealistic value.
All matrimonial property valuations have to comply with rule 35 of the Court Procedure Rules (1998). By offering a tailored valuation service at Aston James Associates, we get to know our clients on a one-to-one basis and in some cases may well have worked with them before in happier circumstances when they have been buying and selling homes. We know them and their property and so can lend a sympathetic, knowledgeable ear to both parties.
Why pick us?
We are available 24/7 in such cases and will do our best to bring relief and certainty to divorcing couples at an often very tense period in their lives. Although we normally tend to liaise direct with each party’s solicitor, clients can get straight through to our surveyors and valuers and have no need to wade through the umpteen departments of bigger firms before finding out the surveyor dealing with their valuation is out for the day.
Inheritance & Capital Gains Tax
Who is responsible for paying property inheritance tax?
Inheritance Tax is payable by different people in different circumstances. Typically, the executor or personal representative pays it using funds from the deceased’s estate. The trustees are usually responsible for paying Inheritance Tax on assets in, or transferred into, a trust. Sometimes people who have received gifts, or who inherit from the deceased, have to pay Inheritance Tax – but this is not common.
Valuing an estate to see if inheritance tax is due
To find out if Inheritance Tax is due on an estate, you must first value the estate. This means adding up the value of all the assets in the estate – such as a house, possessions, money and investments – and deducting any debts the deceased may have owed, including household bills and funeral expenses.
Why do I need a surveyor?
For most people, sorting out inheritance tax and subsequent probate (the power to divide up a person’s possessions according to the will of the deceased) often comes at a very hard and emotional time. When people are grieving, mistakes can occur – genuine or otherwise.
There is also pressure to get an valuation in early, because you are only given grant of probate once inheritance tax has been sorted and the estate’s true value known, ie. the price “the property might reasonably be expected to fetch if sold in the open market at that time” (1984 Inheritance Tax Act).
And yet the cost of hiring a sympathetic yet professional surveyor, with sound local knowledge of property values, such as Aston James Associates, can be dwarfed by the extra tax and potential fines looming if HMRC considers your valuation too low.
How responsible am I for property inheritance tax?
The buck stops with you, the executor/s (ie. the person or people chosen by the deceased to carry out their wishes as laid down in their will). Inheritance tax law states you need to submit an accurate market value of a person’s property at the date of death for “inheritance tax purposes” – not probate. At Aston James Associates, we would calculate that by adding up all your relative’s or friend’s assets and then taking away any debts, bills and funeral expenses that have to be paid off first.
While inheritance tax is normally paid on an estate (which comprises the whole of a person’s possessions), it can also be paid out on gifts and trusts that have previously been given and set up by the individual.
The bottom line is that any single person’s estate worth over £325,000 is taxed at 40% (or 36% on charitable donations) with one big exception – the threshold can jump to a maximum £650,000 if all the assets of the deceased are passed on to their spouse or civil partner either during their lifetime or at time of death.
But pick us as your surveyor and we’ll liaise with the district valuer and Revenue and Customs to ensure an accurate and efficient completion of what is a tough process. We’ll even help you fill in an inheritance tax form if you don’t owe any tax – and yes, it’s another form!
I have hired a surveyor, so what’s my role?
Remember as an executor you will be liable for any potential fines, so it pays to do the following:
- Ensure the surveyor you choose to do an asset valuation has signed up to the mandatory registration scheme run by the Royal Institute of Chartered Surveyors: Valuation – Professional standards.
- Collaborate closely with your surveyor to ensure a valuation as accurate as possible but question any of their judgments that are based on assumptions
- Don’t risk “quick fix" valuations based on the old system of entering the average of three market estimations by estate agents. It no longer cuts much ice with Inland Revenue, which strongly urges use of professionals
Follow these rules and the tax inspector will probably pass you by . . .
Increased Threshold for Married Couples and Civil Partners
Since October 2007, married couples and registered civil partners can effectively increase the threshold on their estate when the second partner dies – to as much as £650,000 in 2012-13. Their executors or personal representatives must transfer the first spouse or civil partner’s unused Inheritance Tax threshold or ‘nil rate band’ to the second spouse or civil partner when they die.
Inheritance Tax and probate forms
You have to fill out an Inheritance Tax form as part of the probate process (or confirmation in Scotland) even if no Property Inheritance Tax is due. Different forms are used depending on where the deceased lived, and whether there is any Inheritance Tax to pay. You must pay some or all of any Inheritance Tax due before you can get a grant of probate (or confirmation).
More detailed information can be obtained from the HM Revenue & Customs website or by contacting the The Law Society.
Why do I need to instruct a solicitor to issue the section 42 Notice?
It is possible for you to draft and issue the Section 42 Notice for yourself, just like you could handle the conveyancing of your home yourself. However, we strongly recommend that you instruct a professional as this is a complex process, which, if you get wrong, you would be prevented from resubmitting your Section 42 Notice for a period of 12 months. We work closely with solicitors and legal experts in this complex area of law. In addition, here at Aston James Associates we have a wealth of knowledge and experience of undertaking valuations of property in London, South East and Essex. It is always good to work with those who understand the legal technicalities which exist when handling lease extension conveyancing. We are able to recommend suitably qualified and experienced solicitor to act on your behalf.
What is the next step once the Section 42 Notice has been served on the Freeholder?
Following service of the Section 42 Notice the Freeholder has 2 months to respond by filing a Counter Notice setting out what is consider to be the premium payable. The Counter Notice will either accept or reject your claim to extend your lease as well as stating whether the freeholder accepts your offer for the lease extension premium and, if not accepted, the lease extension premium the freeholder requires. There is then a further period of 2 months during which your representation can negotiate with the Freeholder.
What if my Freeholder is absent or doesn’t respond to the Section 42 Notice?
It is possible to lodge an application to the County Court to issue an Order stating the terms of the proposed new lease. We can recommend a solicitor who can handle this aspect of your claim for a lease extension.
Roof Space Valuation
Assuming roof space floor area is 54.69m2 Gross Internal Area.
Valuation approach for appraisal purposes is to adopt 50% of marriage value to determine current roof space value:
Say Gross Development Value of flat is @ plus 25% of Market value £250,000
Current market value: is £200,000
Build costs equates to say: £35,000
Added uplift value: £50,000
Marriage value: £15,000
Roofspace value at 50% of the marriage value is: £7500
Aston James Associates is happy to undertake this type of valuation appraisal on your behalf, kindly contact us for a quote for our services.
Development of your roof space will be subject to obtaining statutory permissions and approvals; your Local Authority planning department will be able to advice you further.
What is a property Survey?
Property surveys cover a detailed inspection of buildings, grounds and outbuildings, and the issuing of a report that is designed to reflect the current condition of the property whilst addressing the specific needs and interests of the client.
What is the difference between a Home buyers Report and Building Services Report?
Home Buyer’s Report:
If you need more extensive information when buying or selling a conventional house, flat or bungalow in reasonable condition chose this type of report.
- All of the features of the conditional report
- A list of problems that we consider may affect the value of the property
- Legal issues that need to be addressed before completing you conveyancing
- Information on location, local environment and the recorded energy efficiency (where available)
- Our professional opinion on the market value of the property
- Advice on repairs and ongoing maintenance
- An insurance reinstatement figure for the property
- Issues that need to be investigated to prevent serious damage or dangerous conditions
Building Survey Report:
Formally called a structural survey, you can choose the building survey if you are dealing with a large, older or run down property, a building that is unusual or altered, or if you are planning major works. It costs more than the other reports because it gives detailed information about the structure and fabric of the property.
- A thorough inspection and detailed reports, and a wider range of issues.
- A description of visible defects and potential problems caused by hidden flaws.
- An outline of repair options and the likely consequences of inactivity.
- Advise your legal advisors and details serious risks and dangerous conditions.
A building survey does not include a valuation, but Aston James Associates will be able to provide this as a separate extra service.