Valuation Definitions

There are many types of valuation, each with its own definition. The valuations we deal with most often are Market Value and Reinstatement Cost:

Market Value is an opinion of the best price at which the sale of an interest in the property would have been completed unconditionally for cash consideration at the date of valuation, assuming:

• (i) a willing seller;
• (ii) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of the price and the terms and for the completion of the sale;
• (iii) that the state of the market, level of values and other circumstances were, on an earlier assumed date of exchange of contracts, the same as on the due date of valuation;
• (iv) that no account is taken of any additional bid by a prospective purchaser with a special interest; and
• (v) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.

Reinstatement Cost is our opinion of the likely cost of reinstating all the buildings, normally for insurance purposes, on the basis that:

• (i) the accommodation provided will be similar in construction, design and area to the existing buildings;
• (ii) the works will be in compliance with conditions imposed by Local Authorities in connection with the construction of a building;
• (iii) unless reported separately, allowances are made to cover the cost of necessary demolition and site clearance prior to rebuilding, external works such as hard standings, private roadways and fences and professional fees which would normally be incurred.

Unless otherwise stated, the re-instatement cost does not include any allowance for:

• (i) any loss of rent incurred during re-building;
• (ii) planning restrictions which a planning authority might impose;
• (iii) special foundations required for plant and machinery or due to adverse ground conditions;
• (iv) any plant, machinery, equipment, tanks, loose tools, office furniture and equipment;
• (v) any effect of inflation on building costs occurring after the date of the valuation;
• (vi) VAT which will be payable in certain circumstances, both on building works and professional fees – you are advised to discuss this matter with your Insurance Broker.