A RICS valuation is a professional opinion of a property’s market value on a specified date. It is prepared by a suitably qualified valuer and may be needed when selling a Shared Ownership home, buying more shares through staircasing or for another property transaction.
In short, a RICS valuation establishes the market value of the whole property. For Shared Ownership transactions, this value is used to help calculate the price of the share being bought or sold, subject to the lease and the housing provider’s requirements.
The valuer considers relevant information about the property and evidence from similar homes that have recently sold. These are known as comparable properties.
The valuation is a professional opinion, not a guaranteed selling price. Property values can rise or fall, and the final sale price may be affected by negotiations and changes in the property market.
Check the requirements before arranging a valuation
Read the guidance provided by your housing provider before appointing a valuer. If the valuer or report does not meet its requirements, or the valuation expires before your transaction completes, you may need to pay for a new or updated report.
A valuation is not the same as a property survey
A valuation and a property survey have different purposes.
A RICS valuation provides a professional opinion of a property’s market value. The valuer may consider its general condition where this affects its value, but the valuation is not a detailed inspection of defects, repair needs or future maintenance costs.
A property survey examines the condition of a home in more detail. Depending on the type of survey selected, it may identify visible defects, repairs and areas that require further investigation.
A mortgage lender may arrange its own valuation when deciding whether the property provides suitable security for a loan. This is primarily for the lender’s benefit and does not replace a property survey commissioned by the buyer.
Find out more about what a RICS surveyor does.
When is a RICS valuation needed?
You may need a RICS valuation when:
- buying more shares in a Shared Ownership home through standard staircasing
- selling a Shared Ownership home
- buying or selling a property
- arranging certain types of finance
- obtaining a professional opinion of a property’s value for another specified purpose
The type of valuation and report required will depend on why it is being commissioned and who will rely on it.
For Shared Ownership transactions, check your lease and speak to your housing provider before arranging the report. Shared Ownership leases and transaction processes can have different conditions.
Arranging and paying for the valuation
Your housing provider will tell you whether you or the provider must arrange the valuation for a Shared Ownership transaction.
If you are responsible for appointing the valuer, check the professional qualifications or registrations they must hold and what the completed report must include.
Ask for a written quotation before making an appointment. Check:
- what the fee includes
- whether VAT is included
- when payment is required
- how long the report is expected to take
- how long the valuation will be accepted
- what the valuer may charge if the report needs to be updated
Give the valuer the requirements for your transaction and ask them to confirm that the completed report will meet them.
Why is a valuation needed for staircasing?
Staircasing is the process of buying a larger share of a Shared Ownership home.
For standard staircasing, the price of the additional share is generally based on the property’s market value at the valuation date and the percentage being purchased. The lease and the staircasing model that applies to the home will determine the calculation.
The property’s value may have increased or decreased since it was bought. This will affect the price of the additional share.
Before starting, check the lease to find out:
- whether more shares can be purchased
- the minimum share that can be bought
- whether there is a limit on the percentage that can be owned
- whether any other restrictions apply
Some leases restrict the percentage that can be purchased. This can apply to certain properties, including some rural and age-designated homes.
Read the housing provider’s current staircasing guidance before arranging a valuation.
Gradual staircasing in 1% shares
Some Shared Ownership leases allow the owner to buy 1% shares through gradual staircasing. This process is different from standard staircasing.
Where this option applies, the price of a 1% share may be based on the property’s original value, adjusted in line with the House Price Index. The leaseholder or housing provider may be able to request a RICS valuation instead.
The person requesting a RICS valuation may be responsible for its cost. Check the lease and the housing provider’s current guidance to find out whether gradual staircasing is available and how the share price will be calculated.
Requirements for a staircasing valuation
The valuer and report must meet the requirements set by the housing provider.
These requirements may cover:
- Independence: The valuer may need to be independent of the leaseholder, housing provider, estate agent and mortgage lender.
- Professional status: The valuer may need to hold specified professional qualifications or registrations.
- Comparable evidence: The report may need to include evidence from similar properties used to support the valuation.
- Lease information: The valuer may need to consider the remaining length of the lease.
- Use of the report: The report may need to confirm that the housing provider can use or rely on its contents.
- Report format: The report may need to be signed and contain particular property, inspection and valuation details.
Requirements can change. Check the latest guidance before appointing a valuer.
During the valuation
The valuer will decide which inspections and investigations are needed to prepare the valuation.
Ask what the appointment will involve, whether the valuer needs access to the property and which information you should provide. They may ask for details about the home, its lease and any improvements.
The inspection is carried out to assess the property’s value. It should not be treated as a detailed property survey.
How can home improvements affect the valuation?
Home improvements may affect a staircasing valuation.
Their treatment will depend on:
- the terms of the lease
- the nature of the work
- any permission received
- whether the work affected the property’s value
- the housing provider’s requirements
Tell the housing provider and the valuer about relevant improvements before the report is completed. Keep any written permission and records relating to the work.
Read the government guidance on buying more shares in a Shared Ownership home for further information.
Valuations when selling a Shared Ownership home
A RICS valuation is generally required when selling a Shared Ownership home.
It establishes the market value of the whole property on the valuation date. That figure is then used as part of the process for determining the price of the share being sold, subject to the lease and the housing provider’s requirements.
The seller or housing provider may need to arrange the valuation. Ask the housing provider what its policy requires before appointing a valuer.
The lease may give the housing provider an opportunity to find a suitable buyer before the property can be marketed through another route. The lease and the current resale process will determine the price and other conditions that apply.
Some properties have different resale arrangements, including certain fixed-equity, rural or mandatory buyback leases. Check the lease and speak to the housing provider before putting the home on the market.
How long is a RICS valuation accepted?
A valuation provides an opinion of market value on a specified date. Property values and market conditions can change, so the report will only be accepted for a limited period.
For standard staircasing, additional shares must usually be purchased within three months of the valuation date. If the transaction does not complete in time, the property may need to be revalued.
The period that applies to another type of transaction may differ. Check the valuation date, any stated expiry date and the housing provider’s requirements.
If completion may take place after the valuation expires, contact the housing provider before arranging an update. The valuer may charge a further fee to update or replace the report.
How much does a RICS valuation cost?
There is no single fixed price for a RICS valuation. The fee can depend on:
- the type and size of the property
- its location
- the purpose of the valuation
- the complexity of the property and lease
- the information the valuer must review
- whether improvements need to be considered
- whether the report later needs to be updated
Ask for a written quotation and confirm that the valuer can meet the relevant requirements before accepting it.
The valuation fee may not be the only cost involved. Depending on the transaction, other costs may include:
- housing provider administration charges
- mortgage or broker costs
- legal fees
- lender charges
- the cost of updating an expired valuation
Other taxes or charges may apply depending on individual circumstances. A solicitor, financial adviser or qualified tax adviser can explain what may apply to a particular transaction.
What if you disagree with the valuation?
A valuation is a professional opinion based on the valuer’s investigations, instructions and available market evidence.
If the report contains incorrect information about the property or lease, raise this with the valuer and housing provider.
If you disagree with the opinion of value, contact the housing provider before commissioning another report. The housing provider can confirm the next step under the process that applies to the transaction.
A second valuation will not automatically replace the original report.
Property asking prices may not provide reliable evidence of market value because they do not confirm the price for which a property eventually sold.
After receiving the report
Check that your name and property details are correct and that the report has been signed.
Send the report to the housing provider if this is required. The provider can then check whether it meets the requirements for the transaction.
For staircasing, the remaining steps may include:
- checking affordability
- arranging any required funding
- appointing a solicitor
- submitting the staircasing application
- paying administration and legal costs
Follow the process set out by the housing provider and seek independent professional advice where needed.
Before arranging your valuation
- Read the guidance for your transaction.
- Check what your lease allows.
- Confirm who must appoint and pay the valuer.
- Check that the valuer and report will meet the requirements.
- Give the valuer any requested lease and improvement information.
- Ask for a written quotation, including the possible cost of an update.
- Check when the report will expire.
- Allow for administration, mortgage, legal and other transaction costs.
Summary
A RICS valuation provides a professional opinion of a property’s market value on a specified date. Shared Ownership customers may need one when selling their home or buying more shares through standard staircasing.
The valuation is not a property survey, mortgage offer or guaranteed selling price. Its purpose, scope and period of acceptance will depend on the transaction.
Check the lease and the housing provider’s current guidance before appointing a valuer. This will help ensure that the valuer and report meet the relevant requirements.
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