Property Valuation for Inheritance Tax

lincroft1710

The DV has been valuing properties for IHT purposes  (and prior to that ED and CTT) for over 100 years. It has never been the case that every property will be visited and in any case that would be logistically impossible. Also properties have been valued by both very experienced and less experienced members of staff, not all having RICS qualifications. One of my former colleagues had a 30 year plus career valuing properties for IHT, CGT, local councils etc and had not gained RICS qualifications.


So I don't think you are going to get very far with the suggestion in your final paragraph.


Two things you have not stated, the DV's figure and the average of the EA's figures and also if the estate is over the IHT limit.


Oh and finally, DV staff aren't "faceless bureaucrats", they are property valuers, many of whom meet taxpayers or their representatives

PaulO99

Lincroft1710, thank you for the gentle rebuke 😉. I’m just so tee’d off when you do what is asked of you ie 3 valuations from established local estate agents, and the dv who gained his qualification in June (about the same time as probate was sought, by the way) states they are all undervaluing the property. 

The estate is over IHT limit but I have not included EA figures as I am paying for an MRICS chartered surveyor to survey the property and I don’t want them influenced by any existing figures. 

Keep_pedalling

PaulO99 said:

Lincroft1710, thank you for the gentle rebuke 😉. I’m just so tee’d off when you do what is asked of you ie 3 valuations from established local estate agents, and the dv who gained his qualification in June (about the same time as probate was sought, by the way) states they are all undervaluing the property. 

The estate is over IHT limit but I have not included EA figures as I am paying for an MRICS chartered surveyor to survey the property and I don’t want them influenced by any existing figures. 

In general estate agent valuations are fine for estates below the IHT exemptions (best to use the highest valuation if you are selling and want to avoid a CGT liability) but anywhere near or over you should always go with a RICS survey. The alternative is to go with the EA estimated value and opt for the final payment to be based on the actual sale price.

lincroft1710

PaulO99 said:

Lincroft1710, thank you for the gentle rebuke 😉. I’m just so tee’d off when you do what is asked of you ie 3 valuations from established local estate agents, and the dv who gained his qualification in June (about the same time as probate was sought, by the way) states they are all undervaluing the property. 

The estate is over IHT limit but I have not included EA figures as I am paying for an MRICS chartered surveyor to survey the property and I don’t want them influenced by any existing figures. 

You keep harping on about the valuer only getting his RICS qualification in June, but he would probably have done a 3 year BSc (Estate Management) course followed by a least 1 years practical experience before even applying to be an Associate or Member of the RICS. So they will have had at least 4 years learning the job, and  have covered far more aspects of estate management and valuation than the average high street EA (who could have literally walked off the street into their job). 


I doubt your MRICS surveyor would be "influenced" by existing figures, you are employing them to give their own valuation not review the EAs' valuations.

PaulO99

Lincroft1710 I would still like to know how it is possible to to value an asset without seeing it up close and personal. I’m sure you wouldn’t buy a car having just see a photo, compared its age and spec against a similar vehicle. Likewise, would you want to pay the same price for a property that has a single skin timber extension built in 1970 against one that is double skin brick built in, say, 2000?

lincroft1710

PaulO99 said:

Lincroft1710 I would still like to know how it is possible to to value an asset without seeing it up close and personal. I’m sure you wouldn’t buy a car having just see a photo, compared its age and spec against a similar vehicle. Likewise, would you want to pay the same price for a property that has a single skin timber extension built in 1970 against one that is double skin brick built in, say, 2000?

Me buying a car and the DV valuing a property for IHT purposes are completely different and unconnected. People do buy cars on eBay from just seeing a photo. 


Has the property in question got a single skin timber extension built in 1970? If so there is a 99% chance that it was inspected by the VO in connection with its rating assessment at that time and the DV will have access to those records. As I said in a previous post, many properties are not inspected for IHT purposes. With the closure of local offices I would imagine fewer properties will be inspected.


You still have not stated the difference between the EAs' valuations and the DV's

PaulO99

Lincroft1710 details taken from plans approved by local council. 

For extension
”All external stud walls
Brickbond tiles or ‘Impalco’ weatherbdg on
sarking paper on
2” fibreglass quilt on 
4” x 2” studs @ 16” ctrs on
2 layers 3/8” plasterboard (joints staggered)
(one layer foil-backed)”

“Flat roof construction
3 layer bituminous felt with 1/2” chippings on
2” Stramit on  
1” Fibreglass quilt on
4” x 2” joists at 16” ctrs (with firrings) on
3/8” foil backed plasterboard”

The felt has been replaced in the early 1990’s

The DV is talking of an uplift of anywhere up to £100,000 !!!

lincroft1710

PaulO99 said:

Lincroft1710 details taken from plans approved by local council. 

For extension
”All external stud walls
Brickbond tiles or ‘Impalco’ weatherbdg on
sarking paper on
2” fibreglass quilt on 
4” x 2” studs @ 16” ctrs on
2 layers 3/8” plasterboard (joints staggered)
(one layer foil-backed)”

“Flat roof construction
3 layer bituminous felt with 1/2” chippings on
2” Stramit on  
1” Fibreglass quilt on
4” x 2” joists at 16” ctrs (with firrings) on
3/8” foil backed plasterboard”

The felt has been replaced in the early 1990’s

The DV is talking of an uplift of anywhere up to £100,000 !!!

I have had to check on both "brick bond tiling" and "impalco" as I had never come across these before, One very important aspect of this is the size of the extension compared to the rest of the property. Length of life of felt roofs is very hit or miss, the felt roof on one of the dormers of my house was there when we bought the house 25 yrs ago but I have had to refelt the roof on the 15 yr old extension this year. Although presumably this extension is now 50 yrs old or so, is it showing signs of deterioration?


I have also spent some time reading parts of the Inheritance Tax Manual and it would appear (if I have read aright) the DV should initially value a property without inspection. Only if their initial valuation differs with that of the taxpayer should they subsequently do an inspection and valuation. 


With regard to the £100K valuation, this would be very significant if we are talking (say) £500K versus £600K, but less so if £1.5M v £1.6M, where it would not be so difficult to agree a. valuation. 


Employing an RICS qualified surveyor is I agree, the way forward, Obviously there will be a cost to the estate, more so if you ask them to negotiate with the DV. Not very MSE, but it could be that you save more in IHT than their fees.  

PaulO99

Just to update on values placed on prpoerty
3 x local estate agents between £725,000 and £750,000
DV wanted an uplift of up to £100,000
Chartered Surveyor (MRICS) as of 31st October £550,000 to £575,000
Take into account fall in property values over last 12 months of 10% - 15%
Final valuation £605,000/£632,500  and £632,500/£661,250

Keep_pedalling

PaulO99 said:

Just to update on values placed on prpoerty
3 x local estate agents between £725,000 and £750,000
DV wanted an uplift of up to £100,000
Chartered Surveyor (MRICS) as of 31st October £550,000 to £575,000
Take into account fall in property values over last 12 months of 10% - 15%
Final valuation £605,000/£632,500  and £632,500/£661,250

Have you made a typo with RICS valuation, £200k lower than the EA valuations is somewhat unbelievable?

If you are not selling the property then it is the value at the time of death that counts you cant reduce the valuation to the current value.

If you are selling however you can opt to pay IHT on the actual sale value.