how does a property valuation work?
A property valuation is key to determine what level of mortgage you can obtain and how much you can borrow. Bridging loans are always secured and you are using the value of the property in order to borrow money for refurbishments, development or to purchase another property. Therefore, having an accurate valuation of the property is very important.
For mtf, a good valuation gives us peace of mind knowing that your property is in a reasonable state and will maintain its value if sold on the open market or rented out to tenants.
Before we proceed with a valuation, we must have offered you a decision in principle and you should have completed the necessary paperwork. We then instruct an RICS valuer to get in touch and make an appointment with you as soon as possible – with most valuations being arranged within 48 hours. For more information, you can read about our process here.
If you have recently had your property or flat valued by an RICS valuer, this will need to be validated within the last 3 and 6 months to decide whether another survey is warranted and whether this valuation firm can be accepted by mtf.
What does the surveyor do?
The surveyor will carry out a series of checks to determine the value of the property, checking every single room and taking photos where necessary. Whilst the valuer will be able to get an idea of the place’s value quite quickly, they will typically go back and review all their information and provide you with a report and an official valuation within 72 hours (or sometimes longer).
There are several factors that the surveyor will look at including:
- The age of the property
- The condition – wear and tear
- The size
- Room layout
- Fittings
- Electrics, boilers, heating parts and systems
- Storage space
- Double glazing
- Roads
- Positioning of the house
- Amenities like driveway and garden
The role of a proper valuation can also help you identify any issues with your building project that you may have overlooked. For instance, finding issues such as structural concerns, asbestos or dangerous substances can save you a lot of money down the line. However, your report from a surveyor will not tell you which repairs you need to carry out, but instead make you aware of these in terms of how it affects your property’s value.
Why do we use an RICS valuer?
We only appoint RICS surveyors so that your valuation is carried out by fully regulated professionals who:
- adhere to the ‘Red Book‘ valuation standards
- are committed to openness and transparency
- are experts in their field, delivering credible and high-quality reports.
How much does a property valuation cost?
A property valuation typically used for a bridging loan starts at around £400. The pricing varies because the more expensive and typically larger properties require more work and investigating in order to carry out the valuation.
You are required to pay for the valuation of your properties upfront.
What else affects the value of the property?
A key factor in the valuation of your property is what the other house prices are on the same road and in the area. This acts as a good benchmark for what people are prepared to pay in that location.
Other factors including the history of the area and whether it is located near good schools, low crime rates and a low risk of flooding can also contribute to a strong valuation. Some areas are up and coming, specifically places that are going through regenerations such as Tottenham and Shoreditch are likely to have properties that will maintain a good value or see significant growth.
Understanding the demand and desirability of the type of property is also important. For instance, the centre of London certainly has a high demand for affordable flats and a limited supply – and this will drive the property’s value higher.
Also, taking market forces into consideration, things like Brexit, interest rates, inflation and consumer confidence can also determine the value of a property.
However, based on the factors above, a property’s value can change within the space of a few months or years. A successful property developer will be able to identify growth and gaps in the market, being able to buy for cheap and sell for a higher price later on.