This is because its real purpose is to ensure that there is sufficient equity in the residential investment property to guarantee the lenders capital should the borrower have to repossess. In practice this figure does not need to be that precise. The aim of the surveyor is simply to ensure that the value placed on the residential investment property by the potential borrower is accurate. ‘The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.’Ī mortgage valuation is carried out by a chartered surveyor acting for the mortgage company prior to the buy-to-let mortgage being approved. Market value is defined in the Chartered Surveyors hand book as: The basis for the valuation of a residential investment property is normally its’ market value. The guidance from the Royal Institute for Chartered Surveyors on how a surveyor should value residential property was contained in Appendix 5.1 of the Royal Institute for Chartered Surveyors Red Book Appraisal and Valuation Standards (Red Book). How accurate is the property valuation?įor a start, landlords need to be cautious about placing too much emphasis on mortgage valuations. However, before getting carried away with the apparent ease of the process, landlords need to be wary of these generalist ‘back of the fag packet’ estimations.
INCOME PROPERTY EVALUATOR PROFESSIONAL
Where do professional landlords go for their landlord insurance? Therefore, a landlord not wishing to overvalue could reasonably assume that the value of their buy-to-let property would have risen by 5% or another £12,500 giving an up to date valuation of £262,500. Since then a landlord knows that the Governments own figures produced by the DCLG (Department for Communities & Local Government) show that the average house price is up by 9.1% in the year to December. Let’s say the surveyor valued the residential investment at £250,000 just over 12 months ago. They may have needed it valued for a remortgage. On the face of it this seems a pretty straight forward question to answer and one in my professional capacity of surveyor I was asked many times.įor instance a landlord may have had their residential investment property valued recently.
INCOME PROPERTY EVALUATOR HOW TO
Valuing a landlord’s property How to value a landlord’s property?
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