Getting a commercial property valuation is a core component that underpins every property ownership and transaction. Most businesses believe that having a valuation carried out is an unnecessary expense. However, this isn’t always the case. When timed correctly and used effectively, it can prove to be a great addition to a small business’s collection of information.
Valuations are often carried out for a range of different reasons, including:
Valuation For Company Accounts
Unlike most company assets, which are often stored for a number of years in a balance sheet, it is compulsory for buildings and land to be valued at their current market value. If there is an up-to-date valuation at hand, then this can save time and money should another professional require one from you as a business owner.
Should there be a change in directors or shareholders within your company, then you may need to get an updated valuation of the company’s assets. This should include the market value of any property. Again, this is something that can delay a negotiation or agreement and often lead to frustration if not readily available. If there is a requirement for an up-to-date valuation, a good relationship with an external valuer who knows you and your business and will remain impartial is a very useful contact to have. Should a director or shareholder retire, the business assets may need to be divided between any other remaining directors or shareholders. Having someone who knows the business and any property assets who will have all of this information to hand will be extremely useful.
Secured Loans
If your business needs bank funding, then it will almost certainly be secured against your business premises. In order to do this, the bank will ask an RCIS-registered valuer to do a lending valuation. Typically, the bank manager will ask you if you are aware of the current market value of your property. If you are unsure of its value or have unrealistic expectations of it, it can lead to major issues further down the line.
End-of-lease repairs
If you have a landlord, then you don’t own your premises on a freehold basis. When your lease ends, your landlord may attempt to make a claim for dilapidations, which is dependent on the repairing liabilities of your lease. Section 18(1) of the Landlord and Tenant’s Act of 1927 caps the amount a landlord may recover. As a result, any repairs cannot cost more than the amount by which the property value has decreased. If, for example, the cost of repairs is £15,000 but the property’s value has been reduced by £10,000, you will only be entitled to claim up to £10,000 and not the £15,000.
Stamp Duty
When the ownership of a share of a property or the whole property is to be transferred, a value needs to be given to assess the amount of stamp duty that will need to be paid to the Inland Revenue.
Capital Gains Tax
Should you sell your business premises and it is not a principal private residence, then the Inland Revenue will typically require a formal written valuation to be arranged in order to calculate the amount of Capital Gains Tax due. To avoid any disputes or delays, it is worth making sure that you have this to hand when the time comes.
For further advice on commercial property valuation, please contact our valuation team for further information at 0161 817 3399 or via our online contact form.