Red Book Valuation

What is Red Book Valuation?

A professional Red Book valuation is an intricate system of parameters and processes for determining the value of a property under standards set by the Royal Institution of Chartered Surveyors (RICS). A Red Book valuation is undertaken by an individual who is at least a member of RICS and typically holds a professional qualification in surveying.

Due to its independent nature and the professional standards that underpin it, a Red Book valuation is often taken as a reliable valuation of a property in the marketplace at a given point in time.

The Red Book Valuation is comprehensive in that it covers all kinds of real estate, from residential to commercial to industrial. What might you expect to pay for a property in Notting Hill? With its wide variety of properties, the Red Book Valuation is an invaluable reference point.

Why do you need RICS Red Book Valuation?

If you require an appraisal for taxation or legal purposes, you should definitely obtain a Red Book valuation. Almost all property buyers have appraisals done as part of their building survey and this may be for the following reasons:

capital gains tax
situations pertaining to probate
shared ownership
SIPPs
rent reviews

How long does an RICS Red Book Valuation last for?

The issued valuation report stays valid for 3 months but can be extended by the surveyor for a maximum of 3 additional months. The valuation can be kept up to date for 6 months total. To keep it valid, one must select the surveying skills of an RICS member to do the valuation. The surveying team must be competent in the area where the valuation applies.

If you need a solid appraisal of a property or structure, go with an RICS-registered valuer. Our panel of Notting Hill-based valuation surveyors works under the auspices of the RICS. Valuation is a difficult and demanding task and valuers will produce a report that is suitable for mortgage, probate, divorce, and taxation purposes.

How is a Market Valuation done?

A standard RICS Red Book Valuation involves the following:

Inspection: the appraiser investigates the actual home being valued, takes necessary measurements and photos, considers relevant permits, zoning ordinances, deed restrictions, and easements, and looks into the building regulations and other factors that impinge on value. Inspecting the property is the first, and you might say the most obvious, step in making a valuation. After this step comes data collection, which happens mostly at the office.Data: the appraiser or surveyor collects vital information concerning the property being valued. This information includes where the property is, how big it is, how old it is, and what condition it is in. Most importantly, the appraiser looks to some recently sold, comparable properties in the area.
Analysis: the surveyor conducts an appropriate analysis of the collected data in order to ascertain the market value of the property. Surveyors use many different valuation methodologies—such as the sales comparison approach, the income approach, or the cost approach—depending on the type of property being valued and the purpose of the valuation.
Report: the valuer drafts a clear and cohesive valuation report in accordance with the Royal Institution of Chartered Surveyors’ Valuation Professional Standards (the “Red Book”). The report contains essential details about the property, all of the analyses and synthesis forming the basis of the value conclusion, and the valuer’s guidance as to the property’s fair market value. The report even specifies any assumptions and limitations utilized in the valuation process.
Review: the appraiser looks over the valuation report to see if it adheres to the guidelines found in the Red Book. Another appraiser might do this as well to ensure that the figure given in the report is correct and that the report can be relied upon.

Do I need Red Book Valuation in probate?

When a person dies, their entire estate must be appraised to give the executor of the will authority to fulfil the instructions left by the deceased. Whether it’s money or property, the sort of appraisal needed is often referred to as a probate property valuation.

You are not legally required to obtain a valuation from a professional like a chartered surveyor. However, HMRC encourages just such a step when conducting the economic test. A valuation from the RICS Red Book is respected and for good reason. Valuers who are registered with the RICS are skilled, as they must work within the guidelines of the RICS, which leads to a precise valuation upon which you can rely.

Valuation for Individuals Who Are Not Domiciled in the United Kingdom

The Non-Domicile Valuation applies to individuals who are living in the UK but are not domiciled here. It is an important form of assessment for individuals who own property in the UK, especially if they could be held liable for inheritance tax on their worldwide assets.

Valuation for a Divorce Settlement

A Divorce Settlement Valuation provides a means of ascertaining the true value of your property so that it can be divided accurately in your divorce settlement. This guarantees that you will not be short-changed and that any joint property will be fairly valued for division among the parties.

What’s included in a Full Building Survey?

The Full Building Survey report includes the following:

Inspection of accessible parts of the main building and any outbuildings.
Assessment of major and minor faults and implications.
Speculation on possible hidden defects.
Structural review of the property (including timber).
Checking all services (gas, electricity, hot water, heating, etc.).
Description of construction materials used (damp-proofing, drainage, and insulation).
Testing for dampness in the floors, ceilings, and perimeter walls.
Reported valuation of the property for insurance reinstatement or market purposes (optional).

Difference between Homebuyer Survey and Full Building Survey?

When it comes to the detail that the surveyor will go into concerning defects, repairs, and maintenance, the Homebuyer Survey is fairly standard. Full Building Surveys, however, are more refined and go into more detail about possible and likely defects. Repairs and maintenance are covered in more detail. The Survey cost depends on the age, size, and value of the property.

What will be inspected by the Building Surveyor?

The analysis they undertake is a visual inspection. This means that, for the most part, the building components that can be seen will be looked at and assessed in accordance with the surveyor’s remit. The Home Survey Report will show you the visible defects and then go on to discuss the kinds of partially hidden or totally hidden defects that the surveyor thinks you should be aware of. It will also try to clarify what kinds of repair work need to be done and the nature of the repairs. The survey is effectively a way to consider “defects” and their potential impact on the building.

What is in a Building Survey Report?

A Building Survey Report contains the most important information for understanding the condition of a property. The surveyors that undertake the work follow a set procedure. The first part of the report contains a general overview of the property and its surroundings. The second part details the major and minor problems with the property’s components, inside and out. These problems range from serious structural defects to issues with doors or windows that don’t close properly, and everything in between. The report is written in clear English, complemented by diagrams and photographs. If any of the problems found are what a surveyor might consider important, that’s what the report indicates—using clear and unambiguous language.

Condition Ratings in a Building Survey Report

Surveyors usually use a tick box to indicate methods of repair when drafting a building survey report. They are also required to comment on the timescale of any repairs. A condition rating is typically included: what needs to be addressed immediately, what is in the process of deteriorating but is in reasonable condition, and what has not deteriorated at all.

What Checks are carried out by a Building Surveyor?

A building surveyor is responsible for a variety of checks and tests during a building inspection. These could be checks or tests for damp and woodworm, or they could be visual inspections of the building’s structure. In building surveying, there are visual inspections of roofs – checking for tiles and slates (if applicable) and also checking for leadwork (if applicable) and looking at the junctions between roof and wall. If the wall structure has brick in it, the surveyor will visually check for any “spalling” (brick breaking apart visibly) and any bulging (brick failing to hold its place visibly), for example.

Recommendations of Repair in Building Surveys

If defects need fixing immediately, then the options recommended for this survey specify what to repair and give some idea of how long the problem has existed. For the most part, this survey describes recommended repair approaches that are standard in the industry and that do not require excessive expenditure. Future maintenance is also discussed, including what to expect when the problem being surveyed is not repaired and what to expect with repairs that are made but with questionable methodology.

Legal Information in Building Surveys

Your surveyor will explain some of the legal aspects of purchasing the building, covering—in as much or as little detail as you desire, and their implications, but this is subject to your solicitor verifying.

Valuations & Reinstatement Cost

You might consider having a separate market valuation done to determine whether the property’s asking price is warranted. You’ll also need a reinstatement cost valuation for insurance reasons.

Who requires a Building Survey?

RICS’s industry guidelines suggest building surveys for properties that are large, very old, in some disrepair, or have unusual features. Building surveys are also recommended if you plan to do any significant renovations or extensions.

Do You need a Home Buyer Survey?

If you’re purchasing a relatively modern home that’s in decent shape and built to ordinary standards, then a Home Buyer Survey is an acceptable choice. If you want the assurance of an inspection and report that are pretty much guaranteed to turn up any issues that might be hidden or just hard to see, then you should go for a Full Building Survey instead.

Home Buyer Survey v Full Building Survey

The Full Building Survey is more detailed; it is more specifically tailored to the property your surveyor would be inspecting. It also comes with more advice on the visible defects found and on the potential hidden defects that they suspect may be present. Your surveyor will illustrate reports with photographs so that you can clearly see what has been discovered. Both the Home Buyer and Full Building Surveys describe the repairs needed, the order in which the repairs should be done, and the kind of “maintenance measures” that will be required to keep the property in good condition.

Is a Valuation included in a Home Survey?

A HomeBuyer Report does include a market valuation as well as reinstatement costs. However, a Full Building Survey does not. The main reason for the differences in what is and isn’t included in the two types of reports is how focused the reports are on the condition of the property. The Full Building Survey is the most in-depth and comprehensive survey of a property that you can have done.

What are the Benefits of an RICS Red Book Valuation?

Credible: the property industry regards the Red Book RICS Valuation as of the highest quality and as very credible. Customers can have complete confidence that valuers will not deviate from world standards and that the report will be prepared by a consummate professional.
Clarity: any firm that associates itself with the Red Book must adhere strictly to its rules and guidelines. The valuation can then be regarded as both clear and in good order, with the report itself being unambiguous and transparent and any potential doubt being covered in neat fashion.
Standardisation: the Red Book ensures that all valuation methods are applied uniformly and consistently. This ensures merit and comparability—two key necessities for anything that’s supposed to form the basis of reliable decision-making.
Legal Compliance: valuations prepared in accordance with the Red Book must comply with the law. The valuation must be defensible in a court of law — should it ever come to that. What does that mean in practice? In part, it means that the Red Book is consistent with legal best practice.
Risk Management: assessing value for properties with the RICS requires extensive analysis and thorough understanding of the risks involved in the process, and through doing so, valuing a property helps protect owners from said risks.