Why property valuations are so much more than a snapshot in time

When a charity is left a property in a Will, the Charities Act decrees that in many cases there must be a valuation report before any disposal of the asset takes place; and often one is obtained to protect and inform Trustees even when not required by statute. While that may sound straightforward, Andrew Tompson, Partner and Head of Valuation at property consultants Berrys, an ILM Corporate Partner, says taking advice from independent experts is essential to identify issues and opportunities in order to maximise the value and smooth the disposal process.

---

“For me, the Charities Act format sets the gold standard of what a valuation report should be. It doesn’t just give a figure, it gives advice. And if in place at the very start of the process, is where the greatest benefit will be achieved.

“Generally, a valuation is a snapshot in time – you walk into a property, you say what you see and you walk away. Part of that process means valuers have to make a lot of assumptions…’I assume this can’t happen’, ‘I assume there is no potential for xxx’.

“Sending in a surveyor who isn’t the selling agent will give you an objective view. We try and identify any issues right from the outset and, by doing so, hopefully this leads to fewer problems with less false starts, fall throughs and a faster sale.

“It’s about making a valuation report more useful and more accurate. One of the benefits I have is the team around me of planners and engineers; rather than assuming we can get 10 houses on a piece of land, we can bring in other expertise, meaning that if the information comes back and says you can only build one property, it makes a big difference to the valuation and how we advise a charity to approach the disposal.”

Working across four offices, Berrys’s Charity Property Valuation team of RICS Registered Valuers, Chartered Town Planning Consultants and Development Consultants is supported by a network of partner firms, ensuring it provides a nationwide service.

“It is unusual to have our breadth of expertise in a business and I leverage that knowledge whenever I need to,” continues Andrew. “Typically, I review new cases and will decide if it is straightforward or if there are issues we need to try and resolve prior to getting the valuation report done.

“When it’s a deceased estate, there is no-one to ask about the house, so you don’t always have all the information you need until you start digging for it. Typically, this may be unadopted access roads, problems with private drainage systems or spray foam in the roof.”

He cites one recent case where a house had four acres of land and, while consideration was given to if the land could be sold separately, Berrys’s consultants advised that in the short term there would not be a planning opportunity, thereby reducing the uncertainty on the way forward.

“We can also advise when an overage clause has been triggered or a developer is trying to renegotiate the terms – it’s a very niche area of expertise and something that day-to-day residential valuers are unlikely to touch because they won’t have the necessary knowledge,” Andrew continues.

“I also have colleagues who deal with strategic land – long term development opportunities that can sometimes take 20 or 30 years to deliver on the potential – these cases need somebody who understands the market dynamics and that’s what our specialists do.

“As a valuer, I think the quality of the advice our clients receive and the fact we can integrate that information into the valuation report, helps them to get to the point of making a decision and moving ahead faster with the disposal.”

While Andrew says there are one or two ‘showstoppers’ every year where Berrys has helped charities save huge sums of money (up to £100,000), he estimates that most charities make more realistic savings of between £5,000-£10,000 per property disposal by taking the specialist advice that helps speed up the necessary disposal processes.

Berrys’s relationship with legacy sector began over 15 years ago and became more involved with the ILM about 10 years ago, with the firm first attending the annual ILM Conference, before going on to become a Corporate Partner and frequent main stage speaker.

At this year’s Conference, Andrew and his team will be talking on the topic Making Sense of the Buzzwords: What do the words mean and how do they affect value?

The presentation aims to demystify and explain the meaning and relevance of the terms that are encountered in the management and valuation of legacy land and assets such as Biodiversity Net Gain (BNG), the National Planning Policy Framework (NPFF) and Section 106.

“If a buyer says costs will rise because of BNG or there are other issues, we want to help charities understand what these things mean, explain why they need to consider them, when they can let it go and when they need to pause and ask more questions.”

Andrew concludes: “Berrys is here to support our clients at every stage of the process and that’s the message we want to get across. We aim to help charities make the most of any asset and save time and costs; taking advice at the start of the process is most likely to provide the greatest benefit.“