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What is Red Book Valuation?

A Red Book Valuation is a complicated system of parameters and processes in valuing a property under standards set by Royal Institution of Chartered Surveyors (RICS).

At its core, the Red Book Valuation is a professional appraisal of the value of a property, grounded in robust criteria and an in-depth understanding of the market. It becomes a compass for investors, developers, and homeowners in the vast real estate market. Its role is to offer an independent and trustworthy projection of what a property is worth in the marketplace, helping to inform major decisions and strategies in the property industry.

It is comprehensive in that it covers all types of real estate, from residential to commercial to industrial. A characteristic of the London market is the large variety of properties. As such, the Red Book Valuation is an invaluable single point of reference amidst the numerous facets of London’s real estate.

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Do I need Red Book Valuation in probate?

When someone dies their whole estate must be valued so that the executor of the will has the authority to carry out the deceased wishes. From their money and property to their possessions, this valuation is typically called a probate property valuation.

While you are not legally compelled to request a Red Book valuation from a valuation professional like a chartered surveyor, HMRC encourages this. These are respected and skilled RICS registered surveyors who must follow the guidelines of the Royal Institution for a precise valuation you can rely on.

What are the Benefits of an RICS Red Book Valuation?

By obtaining a valuation from the Red Book, you can be confident that you will receive an accurate valuation which has been prepared to a high professional standard by the RICS Registered Valuer. The report could then be relied upon by your solicitor, accountant and other professionals in relation to your specific requirements.

  1. Credible: in the property industry, a Red Book RICS Valuation is famous for its quality and credibility. It provides the customer confidence that the valuation is done according to valuation standards that are fully recognized worldwide and the surveyor preparing the report is well-versed professional in this field.

  2. Clarity: valuation standards mandate the provision of clear and transparent information, which, in turn, includes the assumptions, methodology, and data sources used in the valuation. This helps guarantee an equitable and exact assessment, as well as the identification and resolution of any potential biases or self-interest by the incorporation of a duty of care.

  3. Standardised: The Red Book homogenizes valuation methodologies, guaranteeing that all appraisal procedures are applied orderly and consistently. This standardization of procedures serves to establish reliability and commensurability of valuations, which are essential features for effective decision-making.

  4. Legal Compliance: concurrence with applicable legislation and administration expects a Red Book Valuation to comply with relevant legal and regulatory requirements; for instance, in the field of accounting standards, taxation, and litigation; to guarantee the valuation is lawfully legitimate and will hold if challenged legally.

  5. Risk Management: RICS Valuation involves a deep analysis on the risks that come with valuing the property with market risks, legal risks, environmental risks analysed thoroughly for clients’ making an informed decision about the property and managing the risks effectively.

Why do you need RICS Red Book Valuation?

If you need a valuation for tax purposes or legal proceedings, you should be sure to have a Red Book valuation. The majority of home buyers also get property valuations done when they are doing a building survey as it allows them to get the exact market value of a property they are looking to buy.

There are other occasions where you may find you need a Red Book valuation. Examples include, but are not limited to:

  • capital gains tax
  • probate
  • shared ownership
  • divorce proceedings (matrimonial valuation)
  • SIPPs
  • rent review

How long does an RICS Red Book Valuation last for?

The valuation report issued remains valid for a period of 3 months but can be extended by the surveyor for a further 3 months if required. This should be done within the first 2 weeks of the expiry date.

When you require a trusted valuation of a property or a building choose an RICS registered Valuer. Our panel of valuation surveyors in London aim to provide total peace of mind and have to adhere to strict standards outlined by the RICS, providing you with a valuation report ideally suited for mortgages, probate, divorce, taxation purposes and accounting.

How is a Market Valuation done?

A standard RICS Red Book Valuation involves the following:

  1. Inspection: the appraiser investigates the home being valued and takes necessary measurements and photos. The appraiser also considers any relevant permits; the zoning ordinances; deed restrictions and easements; building regulations; and other factors that may affect the property’s value.

  2. Desktop: the surveyor will collect important data on the property. Data will include information about where the property is, how big it is, how old it is, what condition it is in, and most importantly, what recently sold, comparable properties in the area. The surveyor will also take into account any environmental or legal factors which may influence the property’s value.

  3. Analysis: the surveyor use appropriate methods to conduct analysis on the collected data in order to define market value for the property. Surveyor in many different valuation methods such as sales comparison approach, income approach or cost approach based on the type and purpose of the valuation.

  4. Report: a cohesive valuation report is drafted by the valuer in accordance with the RICS (Royal Institute of Chartered Surveyors) Valuation – Professional Standards (the ‘Red Book’). The report includes particulars about the property, the valuation techniques used as well as the valuer’s professional guidance on its value. The report also specifies any assumptions and limitations used in the valuation.

  5. Review: the surveyor examines the document of the valuation report to check it fits with the guidance of the recovery book. It may be that another surveyor checks the report to make sure the figure of the valuation is right and it is trustworthy.
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