Knowing the value of a property is essential in many situations.
Probate properties are no exception to this.
Keep reading for everything you need to know about official house valuations for probate properties.
What is an official house valuation?
An official house valuation is one carried out by a RICS-registered valuer.
(RICS stands for the Royal Institution of Chartered Surveyors).
This valuer will visit your house in-person and complete an accurate valuation. It involves following strict guidelines to calculate the number.
They are meant to be non-biased. The surveyor has zero ‘skin in the game’, unlike estate agents, who might want to alter the value to influence sellers to work with them.
What do official house valuations consider?
Official house valuations will consider details such as:
- Covenants that affect the land value
- Years remaining on the lease
- Condition of the property
- Terms of the lease (if the house is let).
How much do official valuations cost?
You expect to pay at least £250 for an official valuation a RICS expert completes. This figure can rise higher for larger properties.
Timeframe for official valuations
RICs-qualified surveyors should arrive within a week or two of being booked.
They may inspect the property for roughly one hour. Follow-up questions might be involved that you need to answer.
Get an official house valuation completed quickly
You should get your official house valuation completed as soon as possible. It is one of the first things you are supposed to do.
You cannot get a Grant of Probate until Inheritance Tax forms are completed. This requires you to know the value of the estate.
Probate valuation vs. market valuation
Probate valuations are both similar to and slightly different from market valuations.
Probate valuations are usually completed by a RICS registered valuer.
They provide an accurate and impartial view of your property’s value, which is useful for tax purposes, amongst other things.
A market valuation is usually completed by an estate agent.
It is used to estimate what the house will sell for on the open market and is subject to change based on economic factors and buyer activity.
The estimated value from probate values differs from its perceived value with an estate agent.
In other words, a market valuation is subjective and based on whatever a buyer is willing to pay for it. A desperate buyer may pay more for your house, for example.
Do I need an official house valuation for probate?
In most cases, yes. Inheritance tax payments are determined by a property’s ‘true’ value. This is often unrelated to market conditions.
If you get an unofficial valuation completed, it can be disputed by HMRC.
They might argue that you owe them more money than you have paid. This is why it is often a requirement to get an independent expert to do it.
If HMRC is unhappy with the way your valuation was determined, they can ask you to get another one completed. This might cost you extra in the long-run.
Official valuations for irregular properties
You should get an official valuation if your house is not a ‘regular’ residential property. Examples include:
- A farm
- Commercial buildings
- Land that could be used for development.
Speak to a legal expert for more guidance.
Do the contents of the house impact its valuation?
Your property’s value is not usually determined by the items inside it. Unless this is part of the sale, which can have an affect on the open market.
But when you complete inheritance tax returns, possessions you’ve inherited will make a big difference.
You do not need a formal valuation for contents if the value is expected to be less than a certain figure. In previous years, this was £1,500, although it could be subject to change.
HMRC do have the right to ask for further details on any items of significant value. Examples include:
- Jewellery
- Vehicles (and personalised number plates)
- Furniture
- Antiques
- Artwork.
And more.
How do I organise an official house valuation?
There are directories of RICS valuers that you can use to find a suitable person.
You could also ask HMRC to point you in the direction of someone. You then need to contact them and explain the situation.
Arrange a date for them to come round and provide an official valuation.
Can I sell the house for more or less than the official valuation?
The amount of inheritance tax due is based on the ‘true value’ of the house.
This is unrelated to its market value. So yes, you can sell the property for a different amount – but this will not affect the tax you must pay.
Does the house valuation affect inheritance tax?
Yes. A house is often the most valuable part of a deceased person’s estate.
The valuation of the house thus has an enormous impact on the amount of inheritance tax due. So, you must get it right.
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