Surveyor Insurance Valuation same as Market Value?

Lbuk

Offer accepted on house and paid for level 3 survey and valuation for insurance purposes (ie. Cost to rebuild the house if it falls down) due to subsidence issues.

Zoopla said market value £1M and we paid £1.1M

Online insurance quotes recommend to insure the house for about £500k but our surveyor is insisting to insure for £1M which will obviously push up the premium which we already expect to be high.

I want to trust him but the house is in a great location and has 2 acre gardens and 2 acre paddock which is surely more than £100k worth as a building plot…?

Confused.

Any one have a clue what might be going on?

Sandtree

Insurers will want to know the cost to knock the house down, clear the site and rebuild it from the foundations up... they wont care what you paid for the house.

In most cases the rebuild is notably lower than the market value but in some places its the other way around.

user1977

Have you checked how much of a difference it actually makes to quotes? Obviously very few claims are for complete rebuilding anyway, so I suspect it's not actually going to be e.g. double the cost.

canaldumidi

The RICS has a calculator for insurance rebuild value. As it generalises rather than being based on an inspection of the specific property, it's not 100% accurate, but gives a good indication:

https://calculator.bcis.co.uk/

badger09

I may be completely off the mark here, but surely 'rebuilding costs' relate solely to the buildings?

You've paid £1.1m for a house PLUS 4 acres of land. Those 4 acres are not going to need rebuilding.

I'm sure one of the experts will correct me.

user1977

badger09 said:

I may be completely off the mark here, but surely 'rebuilding costs' relate solely to the buildings?

You've paid £1.1m for a house PLUS 4 acres of land. Those 4 acres are not going to need rebuilding.

I'm sure one of the experts will correct me.

That's correct. But the cost of clearing the site and rebuilding isn't necessarily related to the cost of the land - reinstatement value can easily be more than the market value of the property as it is.

canaldumidi

badger09 said:

I may be completely off the mark here, but surely 'rebuilding costs' relate solely to the buildings?

You've paid £1.1m for a house PLUS 4 acres of land. Those 4 acres are not going to need rebuilding.

I'm sure one of the experts will correct me.

Yes but even if the property has no garden/land, there is no direct link between market value and re-build cost.

A building (with no garden) in central London will have a very high market value, compared to a similar one in, say, Stafford. But the cost to clear the site, get architect drawings, and rebuid will be much closer in the 2 places (OK, London contractors cost more, but not that much more!).

Conversely there are some areas (eg Middlesborough) where market prices are very low, and it might cost more to rebuild than the property is actually worth.

Slithery

badger09 said:

I may be completely off the mark here, but surely 'rebuilding costs' relate solely to the buildings?

You've paid £1.1m for a house PLUS 4 acres of land. Those 4 acres are not going to need rebuilding.

I'm sure one of the experts will correct me.

Correct, but that's not the entire picture.

Imagine a mid-terrace in a deprived area that can be bought for £30k. If there's a problem then the costs of demolition whilst supporting the surrounding buildings safely is going to come to far more than that by itself, let alone the rebuild costs with todays material prices.

It could cost 10 times what the property was purchased for to rebuild.