The surveyor gives an opinion on both the Market Value of the property and the reinstatement cost at the time of the inspection (see the ‘Reinstatement cost’ section).
‘Market Value’ is the estimated amount for which a property should exchange on the date of the valuation between a willing buyer and a willing seller, in an arm’s length transaction after the property was properly marketed wherein the parties had each acted knowledgeably, prudently and without compulsion.
When deciding on the Market Value, the surveyor also makes the following assumptions.
THE MATERIALS, CONSTRUCTION, SERVICES, FIXTURES AND FITTINGS, AND SO ON
The surveyor assumes that:
- an inspection of those parts that have not yet been inspected would not identify significant defects or cause the surveyor to alter the valuation;
- no dangerous or damaging materials or building techniques have been used in the property;
- there is no contamination in or from the ground, and the ground has not been used as landfill;
- the property is connected to, and has the right to use, the mains services mentioned in the report; and
- the valuation does not take account of any furnishings, removable fittings and sales incentives of any description.
The surveyor assumes that:
- the property is sold with ‘vacant possession’ (your legal advisers can give you more information on this term);
- the condition of the property, or the purpose that the property is or will be used for, does not break any laws;
- no particularly troublesome or unusual restrictions apply to the property, that the property is not affected by problems which would be revealed by the usual legal enquiries and that all necessary planning and Building Regulations permissions (including permission to make alterations) have been obtained and any works undertaken comply with such permissions; and
- the property has the right to use the mains services on normal terms, and that the sewers, mains services and roads giving access to the property have been ‘adopted’ (that is, they are under local-authority, not private, control).The surveyor reports any more assumptions that have been made or found not to apply.
If the property is leasehold, the general advice referred to earlier explains what other assumptions the surveyor has made.
Reinstatement cost is the cost of rebuilding an average home of the type and style inspected to its existing standard using modern materials and techniques and in line with current Building Regulations and other legal requirements.
This includes the cost of rebuilding any garage, boundary or retaining walls and permanent outbuildings, and clearing the site. It also includes professional fees, but does not include VAT (except on fees).
The reinstatement cost helps you decide on the amount of buildings insurance cover you will need for the property.