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What is a property valuation?

There are many reasons you might need a property valuation, especially when selling or buying property. Here we explain what a property valuation is, who carries it out, and why you might need one.

What is a property valuation?

What is a property valuation?

A property valuation is an assessment of your property’s value, based on the location, condition and multiple other factors. Your valuation will be carried out in person by a professional surveyor who will take notes and photographs, and then send you a valuation report.

You could use this when you price your property to put it on the market, if you are separating from a partner who owns part of your property, or when dealing with probate.

Who carries out a property valuation? 

A surveyor will carry out your valuation, as they’ll consider elements like the storage, age, size, wear and tear, and room layout in approximating an appropriate figure. They’ll also look at similar properties in the area and consider what the market is like.

Is this different from my mortgage lender’s valuation?

A mortgage lender's valuation is not the same as a property valuation. Whilst the purpose of a valuation is to determine the market value of a property based on size, location, condtition and a variety of other factors, a mortgage lender's valuation is a much less in-depth assessment of the worth of the property (it will usually be 2-3 pages) and is solely for the use of the mortgage lender.

A mortgage lender's valuation is primarily to check that the property is worth what you say it is. For example, if you're buying a house priced at £300,000 but the mortgage valuation puts the value of the house of £250,000, they'll only lend you £250,000. You'll either have to go back to the seller and renegotiate the price, go with a different mortgage lender, or source the rest of the money from elsewhere.

A mortgage lender's valuation will also ensure that it's in the lender's best interest to give you a mortgage on that property. There are certain properties lenders are less likely to approve a mortgage on, like those in a state of structural disrepair, flats that are above stops or restaurants, or sometimes properties that are made out of certain materials.

The mortgage lender's valuation will be carried out by someone with surveying experience who works for the bank, building society or lender. You'll usually pay for it as part of your mortgage fees.

What’s the difference between a surveyor’s valuation and an estate agent’s?

If you’re looking for a property valuation in order to know how to price your own property to sell, you might think of asking for an estate agent’s valuation. These are free when an estate agent comes around to view your home in the hope you might use their services to sell the property. 

Estate agent's valuations are an option, but it’s important to remember that a surveyor’s valuation will not only come from someone with professional training in considering structure, quality and the cost of improving properties, but it will also be unbiased. An estate agent’s suggested valuation can be inflated in the hope of you choosing them to sell your property, whilst a surveyor’s valuation is based on the facts of the property and the location without any external influences.

What’s the difference between a property valuation and a Red Book valuation?

A Red Book valuation is a type of property valuation that is RICS-approved. Just as Chartered Surveyors who are accredited by the Royal Institute of Chartered Surveyors (RICS) follow particular code when it comes to what is included in HomeBuyer Reports and Building Surveys, the same is true of valuations.

This means you can trust that the person carrying out the valuation is RICS regulated, and following best practice and procedures in accordance with International Valuations Standards.

When might I need a valuation? 

Whilst most people will want a valuation on a property they're either buying or selling, there are plenty of other situations in which you'd need a property valuation.

Probate valuations

If you are the executor of an estate that includes property, you may need it valued. This will affect reporting the estate to the HMRC, and has an impact on inheritance tax. If you are an inheritor of a property, valuing it by probate allows you to make an informed choice about selling it on, and how you would organise splitting the estate to multiple inheritors.

Read more about what to do when you inherit a property.

Shared ownership valuations

If you have a shared ownership property, you will own a portion of it and pay rent on the remaining portion. Some people try to buy a little more of the property whenever they can, which increases their equity and reduces their bill. This is called ‘staircasing.’

Every time you try to increase your portion of your property, you’ll need a valuation on the current value. This is so you are paying the most current market rate when you buy the next portion.

Matrimonial valuations

If you are divorcing, you’ll be organising your settlement, or working out how you separate your assets. Your property is likely to be the most expensive item you own, so getting it valued by an unbiased surveyor means you can come to a fair agreement based on what the property is actually worth, rather than it being approximated by either side.

Read more about what happens to a house in a divorce.

Help to Buy valuations

If you bought a Help to Buy property, when the time comes to sell it, you’ll need a valuation. The Help to Buy Equity Loan requires you to repay the 20% equity loan they provided when you bought the property. When you sell the property, you will pay back 20% of the current value.

Similarly, if you aren’t selling your home, but want to pay off your help to buy equity loan, you can either pay the whole 20% or half of it. Whenever repaying, you will need a valuation to determine just how much the equity loan value will be.

Updated September 2022 by Jeremy Greer

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