KWD Chartered surveyors provides all your residential valuation needs. We are RICS Registered Valuers. We provide valuations such as RICS Red Book, Help to Buy, Probate (Inheritance Tax Purposes), Capital Gains Tax Purposes, Staircasing Purposes, Shared Ownership Purposes and Lease Extension Premium Purposes.
RICS Red Book Valuation
The Red Book is issued by RICS as part of our commitment to promote and support high standards in valuation delivery worldwide. The publication details mandatory practices for RICS members undertaking valuation services. It also offers a useful reference resource for valuation users and other stakeholders.
‘Red Book’ Valuations are those that meet the criteria set out by the Royal Institution of Chartered Surveyors (RICS).
In reality, nearly all of the valuations we undertake are ‘Red Book valuations’ – all in line with the latest edition of the RICS Red Book.
Whilst it the Red Book does not dictate what valuation methods should be used, the Red Book sets out the standards that should be followed. These include ethical standards, duty of care, the qualifications of the valuer and the minimum content of a valuation report.
The main reasons for the ‘Red Book’ is to ensure that clients instructing a RICS Registered Valuer can be sure that they will receive a properly researched valuation prepared by a qualified and independent Valuer working to a set of established and consistent standards.
‘Red Book’ valuations are specified by institutional lenders, such as banks and mortgage providers. Similarly, where formal legal proceedings, government or housing association redemption schemes or a tax calculation is involved, such as in a property dispute, shared ownership, Help to Buy, older government schemes such as “Homebuy” or an inheritance tax calculation, a Red Book valuation is usually called for by the governing body, solicitor or accountant dealing with the case as they know that all the correct procedures will have been followed and the Valuation received will withstand any scrutiny it should face.
Market Value
“The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”
Market Rent
“the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”
Market Value For Inheritance Tax & Capital Gains Tax Purpose
These definitions are written in similar terms and broadly define market value as:
‘the price which the property might reasonably be expected to fetch if sold in the open market at that time, but that price must not be assumed to be reduced on the grounds that the whole property is to be placed on the market at one and the same time.’
The definitions are similar to those used in earlier tax acts and their practical application has been examined in considerable detail by the courts over the years. Thus, case law has established that, in arriving at market value, the following assumptions must be made:
- The sale is a hypothetical sale
- The vendor is a hypothetical, prudent and willing party to the transaction
- The purchaser is a hypothetical, prudent and willing party to the transaction (unless considered a special purchaser)
- For the purposes of the hypothetical sale, the vendor would divide the property, i.e. asset to be valued into whatever natural lots would achieve the best overall price
- All preliminary arrangements necessary for the sale to take place have been carried out prior to the valuation date
- The property is offered for sale on the open market by whichever method of sale will achieve the best price
- There is adequate publicity or advertisement before the sale takes place so that it is brought to the attention of all likely purchasers and
- The valuation should reflect the bid of any special purchaser in the market (provided that purchaser is willing and able to purchase).
Lease Extension Premium Valuation
Lease extension premium valuations are complex and establish the premium to reimburse the landlord for the reversion of the lease back to the leaseholder. There are many variables within a lease extension premium valuation which usually have to be negotiated to form an amicable resolution. In some instances, application to the first tier tribunal is required for resolution. If you have owned the property for over 2 years you have a right to extend the lease.
We provide you with a valuation setting out what we feel is the best reasonable outcome, the potential worst outcome and then provide a figure of the likely extension premium outcome. The report will provide you with sufficient information to instruct your solicitor to submit the section 42 Tenants Notice to start proceedings. Once this is accepted the valuation date is confirmed.
Once this section 42 notice is accepted the freehold will retort via a Landlords Counter Notice. Usually you will then have an option of extending the lease formally under the Leasehold Reform Housing and Urban Development Act 1993 (the 1993 act) or informally outside of this act. We can advise you upon which decision may suit your requirements best and the associated course of action to take thereon.
Help To Buy Valuations
The Target Government Help to Buy scheme has helped thousands of people to buy their home by offering a contribution towards the initial purchase. This means that the Government continue to own a percentage of your home.
You may decide that you wish to buy back some, or all of the Help to Buy share of your home from the Government. In addition, if you choose to sell your house you will have to assess the value of the property so that the Help to Buy loan can be assessed for redemption upon sale. If you are looking to undertake any of these proposals, you will need to gain advice and a compliant valuation report from an RICS Registered Valuer knowledgeable of the Help to Buy scheme.
We can provide compliant Help to Buy valuations suitable for Target HCA requirements. Our valuers frequently undertake such Help to Buy compliant valuations.
Reinstatement costs
Getting an accurate cost for rebuilding your home in case it is seriously damaged means allows you to check that your insurance cover is appropriate. We utilise the Building Cost Index Services (BCIS) software to provide you with the industry leading reinstatement valuation figures required.
The rebuilding cost includes the cost of demolishing and clearing away the existing structure and rebuilding it to its original design in modern materials, using modern techniques, to a standard equal to the damaged property and in accordance with current Building Regulations and other statutory requirements.
Houses in Multiple Occupation
Over the past 25 years there has been a major shift in the housing market in the UK that has led to an increased bias to private renting, both out of choice and out of need. These changes have their roots in the more tenure-neutral housing policies that have been adopted since the 1980s, the impact of which has been amplified by the general undersupply of homes and the affordability challenge faced by would-be homebuyers. Today’s Private Rented Sector (PRS) is the second largest housing tenure, accounting for one in five homes in England alone (5.2 million households in the UK as a whole), overtaking the social rented sector for the first time since the 1960s. This represents a significant rise in the number of households in private rented homes. Demand from tenants continues to be high and is expected to increase.
Legislation affecting the PRS has increased the amount of regulation that residential landlords have to comply with, resulting in increasing costs. The level of control and enforcement exercised by local authorities in their management of Houses in Multiple Occupation (HMO stock) in their areas continues to increase and the powers they have are now more widely applied in terms of HMO licensing, management regulations and planning control. It is essential that valuers acting in this specialist market have a good understanding of all relevant factors that influence both capital and rental value.
