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Why Commercial Valuations Are Used For Residential Investment Property

Commercial Investment Mortgages

Have you ever wondered why your residential investment property has received a commercial valuation? We have reached out to Appraisers UK Ltd, a leading panel manager that manages valuation panels for a number of lenders, to find out the answers for you. 

What are commercial valuations and why are they used for residential properties?

Firstly, the reference to a “Commercial Valuation” is historic, due to the free-script valuation report template, mainly being used for reporting on true commercial properties such as offices, industrial and retail.  

Since these valuation reports can also be used for more complex residential investments, such as HMOs (House of Multiple Occupancy) and MUBF (Multi-Unit Block of Flats), they really should be referred to as “Free-Script RICS Red-Book Reports” or more commonly known as just “RICS red-book reports.” Due to the reports being mislabelled, this can cause confusion when you receive your valuation on your residential property 

A commercial valuation can benefit you

The benefits of using this style of report are the level of detail/content that can be reported within, compared to the shorter mortgage valuation reports which are used for single residential, single BTL, and small HMO valuations. 

The red-book reports are designed to provide a greater level of detail, allowing for unlimited commentary and the inclusion of required addendum pages (site plans, terms, full photo schedules, lease copies, AST documents, etc). This allows both the lender and the client to fully understand the features and the market value of the subject property.

Nothing to worry about

In summary, if you receive a commercial valuation for your residential property, then it is nothing to worry about. This will be because you may have a more complex residential investment property, and therefore you will receive a commercial valuation (RICS red book report) due to the greater level of detail required.

Article was written by

 Ollie@advocatefinance.co.uk and Emily@advocatefinance.co.uk with advice from Appraisers Uk Ltd 

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David Tonks

david@advocatefinance.co.uk | 01206 544 333
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Picture of David Tonks

David Tonks

david@advocatefinance.co.uk | 01206 544 333