Are RICS valuations accurate? As a Chartered Surveyor and RICS Registered Valuer, valuation forms a large part of my work. Valuation is very much an art and requires the correct approach for the particular circumstances to make sure that it is justified, robust, and can be presented to clients and third parties, such as HMRC, as being reliable.
This case study is an example of the valuation of a simple house in unusual circumstances for which the valuation process was key to getting the right result for the client and providing a valuation that would be accepted by HMRC. The client had inherited the house in 1994 but it had been occupied by members of their extended family for a long time before being sold in 2023. HMRC accepted the sale price in 2023 as being its current value but required our client to provide evidence of its value in 1994 for assessment of capital gains tax liability.
How do we approach a valuation of a property as it would have been almost 30 years ago? The key to this is taking a well thought through approach and being clear as to the limitations of the available information.
We started with Land Registry data. This is limited as it is available only from 1995 onwards which is after the date we needed to value at. The data gives the address and sale price but does not give size, condition, number of beds, etc. Suitable sales were identified and cross checked against google earth photos, including historic photos, to check that the houses had not been extended and could be safely assumed to be similar to the subject property at the relevant time.
The next step was a visit to the local library to check microfiche records of local newspapers for the relevant period in 1994. This gave us estate agents’ newspaper adverts of properties for sale. The limiting factors here were that the house numbers were not identified and there were few, or no photos. Also, these were asking prices and it could not be confirmed whether they had sold. What this information did give us was a general tone of values at the time.
The final step was to analyse the information in order to come to an opinion of value and to prepare a report for the client that explained how the information had been obtained, the limits of the information, and to provide a valuation that could be used by the client to provide to HMRC.