Do you need commercial property valuation?

It is sometimes the case that having a commercial property valuation is not at the top of anyone’s priority list. They are occasionally considered to be an inconvenience or an unnecessary expense – but the truth is they can represent a very important part of a property transaction.

It may be the case that you are looking to sell and what a realistic impression of its value, or you might be getting ready to take on a commercial lease – there are many scenarios where a valuation is the most important practical step forward. Here are five occasions that you could benefit enormously from having commercial property valuation carried out.


1. Establishing the costs of end of lease repairs

If you are leasing a commercial property and come to the end of your tenancy, your landlord will inspect the condition of the property before you are due to depart. If they find that the condition of the building or land has changed – for example if it has been modified or damaged – they can make a claim against you and charge you for repairs (often referred to as dilapidations). You will have signed a contract at the beginning of your tenancy with your liability details.

However, it is important tot note that there is a limit on what a landlord can claim against you due to a clause in the Landlord and Tenant’s Act. This law states that a landlord cannot claim a value that is larger than the amount of value that the property has decreased by. So, if the repairs are quoted at £10,000 but the value has only decreased by £5,000 – the maximum the landlord can claim from you is £5,000.

The shows the importance of understanding the correct value of a property. When you start a tenancy, you may wish to have a valuation carried out, as well as one at the end, so you have an independent opinion on the value of the property. This is something that can be beneficial for both landlords and tenants – for more information see here.


2. To correctly calculate Stamp Duty

It might be the case that you are purchasing your commercial property. If you are doing so, and the property is worth £150,000 or more then you will need to pay something called Stamp Duty Land Tax (SDLT).

The point to note here is that the specific amount of SDLT that you pay depends on the how much the property costs. This means that if you are thinking of making an offer on a property, having a full valuation not only tells you its overall worth, but it also shows you how much the Stamp Duty would be, so you can make an informed decision.


3. When securing a loan

If you want to secure a loan for your business then it is often necessary to secure that loan against your business premises. The loan provider will establish the valuation of your property in order to ensure that it is suitable as collateral for the loan that you wish to take out.

However, it should be noted that when you initially apply you will be asked for a value of the property you wish to use – if you provide a figure that it is incorrect it can eventually skew the loan and make it more complicated to secure. So, it is best to have your own survey carried out first so that you already know the figure, and so that you can dispute the loan provider’s valuation if necessary.


4. For the purposes of your company accounts

If your business is required to provide the value of its assets (for example, if it is audited) then it is essential that you should have an up-to-date property valuation available. Some business owners make the mistake of assuming that it is fine to use the purchase price (even if it was purchased some time ago) – however, this is not the case.

Valuations could useful in many scenarios for example if your company is bought out or if there is a change in the shareholders.


5. When applying for insurance

If you are taking out any kind of business insurance then you will need to know an accurate value of your property so that it can quoted. Taking a guess at this figure might seem like a fast and easy option but it can lead to some very serious problems down the line.

For example, in the event of a disaster such as a fire the resulting investigation could reveal that the property had previously been worth a lot more than it had been suggested in the policy – this could invalidate the whole insurance.