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 valuations 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 “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 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 the 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 and AST documents etc). This allows for both the lender and 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 written by Ollie@advocatefinance.co.uk and
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Our expertise is in finding solutions, from simple buy to let mortgages to the more complex commercial, bridging and development finance products.
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