The last three months has seen a significant uplift in valuation requirements as increasing transactions across the south see purchasers look to secure lending. Peter Dalby, associate director at surveyor Holloway Iliffe & Mitchell and a registered valuer reviews the changes in the market.
Throughout much of 2014 valuation work was predominantly undertaken on the back of requirements by SIPPs. Towards the end of the year the focus moved markedly towards occupiers looking to acquire commercial property and therefore the banks to look to specialist valuers to provide accurate valuations on which to secure lending agreements.
Banks typically have a number of valuers that they go to depending on the requirement. Having the right valuer will depend on both their sector and geographical knowledge which will have been demonstrated over time as the relationship builds. With the legislative changes in place following The Tomlinson Report of 2013, banks are required to use a RICS Registered Valuer for all valuation work regardless of property’s valuation.
Economic growth and stable interest rates have kept business failures down and commercial property risks contained. With the resultant confidence in the market, both high street banks and specialist lenders are ‘open for business’ when it comes to lending. Each property transaction will involve a host of considerations which relate to a specific deal and an accurate valuation that will play its part in determining the loan to value ratio is a crucial part of the acquisition process.
A valuation or revaluation of a commercial property asset needs to be undertaken on a regular basis to ensure its current worth is reflected on the company’s balance sheet thus providing owners with tangible evidence of security both for them and their bank.
Valuations are required by banks for a number of reasons including:
· secured lending,
· valuations for sale and purchase,
· development purposes,
· company accounts,
· lease re gearing or possible compulsory acquisition
· expanding to alternative facilities which require the value their existing property would generate if sold in the open market.
Using a Registered Valuer who understands the complexities of property valuations will benefit companies in the long term as strategies to identify and unlock possible latent value within a property asset could be identified to the benefit of the owner.
