What is a Valuation?
A valuation, also known as a Red Book Valuation or formal valuation, is a detailed report conducted by a chartered surveyor. This professional must be qualified and registered with the Royal Institution of Chartered Surveyors (RICS). The valuation is based on the surveyor’s professional judgment, extensive local market knowledge and thorough research, adhering to the best practices outlined in the RICS ‘Red Book’. Factors considered include the property’s condition, recent sale prices of similar properties and current market conditions. It’s important to note that a formal valuation is not the same as a full structural survey or a home buyer’s report.
Why would I need a formal Valuation?
Formal valuations are typically required for legal and financial reasons. They are necessary for matrimonial matters, probate and mortgage approvals to ensure the property is worth the purchase price. While not legally required for calculating inheritance tax, a formal valuation can help ensure accurate tax payment. They are also useful for determining capital gains tax on a second property and may be needed in property disputes that could end up in court.
What is a Market Appraisal?
A market appraisal assesses a property’s potential value. In the context of land and development a market appraisal can also evaluate if there are any alternative uses which may generate a value, such as a residential. Unlike formal valuations, market appraisals provide an estimated value rather than a legally robust market value, making them crucial for developers, investors, and stakeholders to understand the market dynamics and financial feasibility of a proposed development.
When should I choose a Market Appraisal?
If you are planning to sell a market appraisal can provide a helpful guide as well as advice around how you could enhance the value of your property, such as by obtaining planning permission for some form of alternative use.
For expert advice on Red Book Valuations or Market Appraisals, consult with our development consultancy team at Vickery Holman.
