People need property valuations for all kinds of reasons. From secured lending appraisals to divorce settlements and tax planning, it is essential from time to time to arrange an accurate valuation. In these situations, you need a “Red Book” valuation from an experienced, qualified professional.
So, what is a Red Book valuation? Who can conduct them, and do you need one? Read on to find out more.
What is a ‘Red Book’ valuation and who can conduct them?
This specific type of property valuation is carried out by a RICS Registered Valuer.
This professional will have passed essential qualifications, is a member of the Royal Institution of Chartered Surveyors (RICS), is registered with the Valuation Registration Scheme and is likely to have years of experience in exactly this field.
RICS sets the ‘Red Book’ valuation standards known as the RICS valuation Global Standards, which define the mandatory practise guidance for how to survey and report. This ensures Red Book valuations are:
- Formal
- Accurate
- Legal and tax-compliant
- Internationally recognised
A Red Book valuation guarantees that your valuation adheres to these rules and principles. Simply put: a Red Book valuation will be accurate, trustworthy and respected.
When do I need a Red Book valuation?
In the following situations, a Red Book valuation is typically required:
- Property sales
- Divorce and other court proceedings
- Tax planning
- Calculating probate
- Calculating Capital Gains Tax
- Transferring assets into a SIPP pension fund
- Shared ownership transactions
- Help to buy loans
- Development appraisal for site valuation
- Charities selling properties, in accordance with the Charities Act
- Resolution of disputes through mediation or arbitration
- You may also choose a “Red Book” valuation for rent reviews and other negotiations
How do RICS Red Book Valuations help settle property disputes?
If there is any dispute in the value of a property, a Red Book Valuation can categorically clear this up. Red Book Valuations are:
- Highly accurate
- Standardised
- Legally defensible
- Unbiased
The value stated in a ‘Red Book’ Valuation is considered to be reliable due to the way it is structured and calculated, and therefore can be used to help fairly settle property disputes.
Red Book Valuation and tax
There are various situations involving tax where a ‘Red Book’ Valuation is invaluable. For example, calculating the correct inheritance tax due relies on an accurate, impartial property valuation; calculating capital gains tax or stamp duty due also requires unbiased, precise calculations.
Red Book Valuations are HMRC compliant and used in a range of tax calculations where accuracy is essential.
Red Book Valuations and mortgages
Whatever price you are willing to pay for a property, your mortgage lender will want an accurate Red Book Valuation to assess true property value. This is so they can be sure of recouping the value of their loan by selling the property should you default on payments.
Red Book Valuations are standardised and give an accurate market value, unlike a market appraisal. It is important to know that a mortgage lender may not be willing to offer you a mortgage on a property they believe is worth less than you are willing to pay.
How to prepare for a Red Book Valuation
If you instruct a Red Book Valuation, a RICS Chartered Surveyor will visit your property. To help the process run as smoothly as possible, you can prepare for a valuation by:
- Gathering relevant documents e.g. deeds, planning permissions, building regulations certificates, invoices for works carried out.
- Decluttering and cleaning. Although it should not impact the value itself, it will make the surveyor’s job easier if they can access and measure all parts of the property.
- Disclosing issues. It is worthwhile telling the surveyor about any known defects or problems at this stage.
Get in touch
So, a Red Book Valuation is an impartial, completely accurate and respected valuation, useful and necessary in a variety of situations. If you would like to arrange this type of valuation or have got any further questions, please get in touch. At Trinity Rose, our RICS Chartered Surveyors and Registered Valuers have years of experience carrying out these valuations and will be happy to help.