There are many instances where you need to find out the accurate value of your property. From court proceedings to probate, the reasons vary from person to person. But how exactly do you find it out?
In the UK, if you wish to find out your property’s true value, you can organise a red book valuation. But are they? And how much do they cost?
In this blog post, we will answer all these questions and more, as we take a deep dive into the world of red book valuations.
Looking for a quick answer? Check out our interactive menu below!
- What is a red book valuation?
- When do you need a red book valuation?
- When do you not need a formal valuation?
- What is the red book valuation process?
- How do you arrange a red book property valuation?
- What is the difference between Red Book valuation and Market Valuation?”
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What is a red book valuation?
A red book valuation is a property valuation that is undertaken in accordance with the Royal Institution of Chartered Surveyors Valuation – Global standards.
The valuation is designed to outline the best practice guidelines for property valuations and is based on providing a consistent, transparent framework for valuers to follow when assessing properties.
The valuation services are performed by qualified chartered valuers who have received the correct training and are members of RICS.
The formal red book valuation involves your RICS valuer assessing the property in depth and providing an accurate valuation.
The name comes from the red binders in which RICS valuers would present their results. They are updated every 2-3 years and the manner in which it is undertaken must conform to the RICS high standards.
What are the RICS red book valuation criteria?
The RICS red book valuation criteria covers all areas of the valuation. It structures the five valuation methods your surveyor should adhere to. these will vary according to the type of property that you own. It also details duty of care, ethics, qualifications, and the minimum content of a valuation report.
How much does a red book valuation cost UK?
In the UK, a red book valuation can cost as little as £150, however, this price can fluctuate depending on a variety of factors, such as your property location, value, and size. At most, you could be facing a bill of £1,200 or more for your valuation report.
You should also keep in mind that your red book valuation will only be valid for three months. You must then have it renewed for a further three once lapsed if up-to-date figures are still required (within the first two weeks of the initial expiry date).
When do you need a red book valuation?
There are various different situations where a red book valuation may be necessary for your property. As a rule of thumb, it is anytime you need a formal valuation for tax purposes or legal proceedings, then that valuation must be performed by a RICS Registered Valuer and they must be acting in line with Red Book standards.
Included in this are valuations for:
- Calculating Capital Gains Tax or inheritance tax
- Landlord rent reviews
- Pension related properties
- Calculating probate
- Tax planning purposes
- Transferring assets into a SIPP pension fund
- Compulsory Purchase Orders (CPOs)
- Divorce proceedings
- Disputes settled through mediation or arbitration
- Properties being sold to charities
- Court proceedings
- Shared ownership and social housing (Registered Prover) purchases
When do you not need a formal valuation?
A professional valuation is only necessary when the law requires formal valuation figures. However, not every part of the valuation is mandatory. When you are buying or selling a property, an estate agent’s valuation is more than satisfactory, you do not need a professional valuation.
What is the red book valuation process?
When a RICS surveyor follows the red book valuation standards they will do the following:
1. Confirm Engagement
The first step is to confirm the terms of engagement through an official letter where they will check for any conflict of interest that may arise regarding the valuation, as well as through the sale or purchase of the property.
2. Check title deeds
The next step will be to check title deeds and lease deeds and inspect the property condition as well as confirming the size and property valuation.
3. Comparable property inspection
Next, your RICS valuation surveyor will inspect three comparable properties from your area, which will have been sold in the last 6 months.
4. Planning permission
They will then undertake a check on current and historic planning consents and permissions as well as restrictive covenants, checking the rights of way, flood risks, and other relevant information and marriageability factors.
5. Efficiency
Your surveyor will then check the efficiency of utility services.
6. Calculate valuation
Once your chartered surveyors taken into account the previous steps, they will calculate a valuation and present their findings in an official report.
How do you arrange a red book property valuation?
The first step involved in arranging a red book valuation is deciding the purpose of the valuation. Do you need it for a property transaction, taxation, or legal proceedings?
After you have decided on the purpose of your valuation, you will need to find a qualified and experienced chartered surveyor who is a member of the Royal Institution of Chartered Surveyors (RICS). You will be able to find one on the RICS website, but make sure they have experience with red book.
It is a good idea to request a quote in order to get an idea of the cost. Once you have agreed to the terms of your surveyor, you will be able to schedule an appointment. They will then visit the property and conduct an inspection.
What is the difference between Red Book valuation and Market Valuation?”
When it comes to a red book valuation, the surveyor will not take market factors such as supply and demand into account. However, they will still affect the RICS surveyor’s findings to a certain degree, most notably when looking into the sale prices of comparable properties.
However, market value is heavily based on current trends and behaviours within the property market, so therefore does not comply with RICS standards.
As professional valuations are exceptionally accurate, the surveyor is expected to be thorough in their inspection, investigation, and analysis in order to have their valuation be considered “red book compliant”. Their valuation must be clearly justified and effectively presented.
As current market value valuations given by estate agents are often largely based in winning business and speculation, so can leave huge discrepancies between the two valuation types.
This covers everything you need to know about red book valuations. If you have any questions, queries, or insight into the matter, feel free to get in touch!
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Alexandra is a junior content producer who enjoys writing articles and finding out more about the property market. Read more about Alexandra here.
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