There are a number of situations where you might need to know an up-to-date market value for a property.
Paying off your Help to Buy Equity Loan
The Help to Buy Equity Loan is a government scheme, introduced in 2013, where the buyer saves up a 5% deposit and gets a loan for an additional 20% (40% in London), which is interest-free for the first five years. It was designed to support First Time Buyers struggling to get on the property ladder by making up the shortfall between the amount a buyer might get approved for a mortgage, and the property price itself.
If you used a Help to Buy Equity Loan to purchase your property you’ll need a property valuation once you decide to pay the loan back, which for most people is when they sell the property. Because the loan was worked out as a percentage of the property price when you were given it, the same will happen to find out how much you owe when you pay it off, and to do that you need an up-to-date market valuation.
Read more about the Help to Buy Equity loan.
Staircasing with your Shared Ownership property
Shared Ownership is another governmental scheme. It allows you to buy a proportion of a property with the other part owned by a housing association. You pay mortgage repayments on the proportion you own and a reduced rent on the proportion you don’t.
Some people buy Shared Ownership with the aim of ‘staircasing’ – gradually buying more and more of the property until they own it outright. Because it is purchased in percentage increments (e.g. 10% at a time), every time the owner staircases, they’ll need to get a valuation to work out how it impacts their payments and what that percentage costs to own.
Read more about Shared Ownership.
Probate
If you’re the executor of someone’s will you’ll need to value their estate as part of the probate process. If their assets include property then you’ll need to get a property valuation.
This is important because the value of their estate determines how much inheritance tax will need to be paid. As a result, whilst you are allowed to estimate the value of the property yourself, it’s a good idea to get it valued professionally just to be sure, especially if the estimated value of the house puts the estate over or close to the inheritance tax threshold of £325,000.
Read more about the probate process.
Divorce
When you get divorced all your assets will be taken into account in the divorce settlement, which includes property. As a result it’s essential to know the monetary value your property represents, which is why getting a professional valuation is vital.
What happens to property during the divorce process can be a substantial worry for some. More information about what happens to a property in a divorce.
Selling your property
If you’re selling a property, you can either try to set your asking price yourself or you can get a professional valuation. Getting an expert opinion is a good idea – you want to be able to get the best price possible for your property, but you don’t want to ask for too much and put off potential buyers.
If you decide to set the asking price yourself, a good starting point it to see what similar-sized houses nearby are selling for.
Buying a property
Although it’s relatively unusual to get a valuation on a property you’re buying, some people like to get one done just to check that they’re paying a fair price for the property. It could even be included in the survey, so you don’t need to organise a separate visit.
How to get a property valuation
You can get a property valuation from a Building Surveyor or, if you’re selling your property, from an estate agent. However we’ll always recommend going with a surveyor. They’re professionals in considering quality and structural integrity of a building, and, if you get it done as part of a survey, they can directly advise you on how improvements and repairs might affect the price. Also, there is always the risk that an estate agent has been optimistic in their estimate to encourage you to hire them to sell your house. So if you’re after an honest, unbiased estimate, a surveyor is the way to go.