Unlike a marketing appraisal, which is an estate agent’s view of what a property is worth and involves no professional liability, a Valuation Report must be prepared by a chartered surveyor and conform to the professional standards laid out in the Royal Institution of Chartered Surveyors (RICS) ‘Red Book’. These include a prescribed structure for the report and internationally agreed definitions of ‘market value’ and ‘market rent’.
A detailed site inspection is followed by due diligence background checks on legal, planning and environmental matters to be included within the report. Market commentary is provided for the relevant sector, for example, residential and/or agricultural, together with a review of recent sales evidence in order to arrive at an assessment of market value. The work is charged at a fixed fee or hourly rate, by prior agreement, and carries full professional liability.
When do you need a Valuation Report? The most common occasion is when a mortgage lender requires loan security. Different banks have different requirements and valuers need to be familiar with these. Valuation Reports are also provided when values must be declared for taxation purposes, especially Inheritance Tax and Capital Gains Tax. The importance of a professional valuation in these cases is to identify not only the total value of the property concerned, but an apportionment of that value between different elements to ensure that appropriate reliefs can be claimed.