valuation/RICS surveyors

[anonymous-user]

Anyone an RICS surveyor on here? Just helping to sort some stuff out for family member and had a quick question about a red book valuation for a commercial property. Property in question has a business in situ (no contract/lease in place, no rent being paid - long story), valuation to be done but have solicitors claiming the valuer needs lease terms in order to give a valuation - surely they don't need any lease terms to come up with an appropriate market rent? Also, fixed fee cost of £2750, does this seem steep? It's a 6000 sq ft specialist unit with office/retail/storage space, rural location, single business.
Thanks in advance

Emma

[mr.man]

I have just had a rent valuation on an industrial workshop which had to be done by a RICS surveyor.
£350 + vat . Paying tenant in situ. Open market review required.

[anonymous-user]

I think the money is pretty steep. Who did you use, Mr Man, if you don't mind. We're same area (well, cambs)
Thanks in advance

Emma

[kiethton]

That is a lot of cash, half that is more like it (assuming a big boy co.)

[anonymous-user]

I thought it was pretty expensive, I'll shop around. Does anyone have any idea of costs be it % of valuation, etc? Also, recommendations would be useful. I appreciate that if it's red book, there are guidelines to follow and it's admissible in court so no shenanigans allowed. I just want an honest valuation for a commercial premises, without any game playing. Alternatively, direct me to a kick ass lawyer and I'll advise family member to kick out business and build 30 plus houses No issues with paying, whatsoever, but struggle to see the value at that sort of money!!

Thanks all

Emma (still skint, but less so!)

[Lotobear]

...what are you trying to establish - a market rent or a capital value for the premises with a tenant in place and rent passing?

[JQ]

skintemma said:

Anyone an RICS surveyor on here? Just helping to sort some stuff out for family member and had a quick question about a red book valuation for a commercial property. Property in question has a business in situ (no contract/lease in place, no rent being paid - long story), valuation to be done but have solicitors claiming the valuer needs lease terms in order to give a valuation - surely they don't need any lease terms to come up with an appropriate market rent? Also, fixed fee cost of £2750, does this seem steep? It's a 6000 sq ft specialist unit with office/retail/storage space, rural location, single business.
Thanks in advance

Emma

£2,000 to £3,000 + vat is not unreasonable for a Red Book report that is going to be used in court proceedings.

If there is no lease, there is no lease, and the valuer will have to value accordingly. I would expect the valuer to require the solicitor to confirm what ability your family member has to remove the occupier of the building, as this will likely have an impact on value.

If needs be, the valuer can provide more than one Market Value :

Market Value based on current circumstances - this is the Market Value of the property
Market Value on the Special Assumption that the occupier is legally in occupation on a lease of x years and paying a Market rent
Market Value on Special Assumption of Vacant Possession

Unless there are very special circumstances, they should always provide a valuation based on the current circumstances (no lease or rent), as to only provide special assumption valuations can be deceiving.

[anonymous-user]

Thanks all. It's to establish a market rent for the current occupier, if that helps. If that's what it costs then so be it, I thought it seemed a little pricey and didn't know if anyone on here had some insight.

Thanks!

[JQ]

skintemma said:

Thanks all. It's to establish a market rent for the current occupier, if that helps. If that's what it costs then so be it, I thought it seemed a little pricey and didn't know if anyone on here had some insight.

Thanks!

If it's just for Market Rent, then it should be cheaper and quite frankly easier to do. It's worth shopping around in that case. You mentioned court, is it a report required for court proceedings?

Yes the valuer does need to be told what the lease terms are to be if they are to give an accurate reflection of Market Rent - it is normally defined within the lease and reflects the terms of that particular lease. Or you can ask the Valuer to assume lease terms that he considers would be appropriate for this type of property, in this location, let to this type of tenant. They are more likely to know what lease terms are acceptable than the solicitor. A good valuer should be able to guide you through the process.

[Vocal Minority]

£2,750 is steep for a simple market rent - especially if it isn't for any secured, legal or accounting purpose.

I would go and get more quotes, try local firms - to be honest that sounds like an 'I don't want the work' quote...

[Lotobear]

..in that case the valuer will need to see the lease as the actual rent, though based on market comparables, will be influenced by factors such as length of the term, any incentives, fit out/rent free periods and whether it's FRI, IRI or other.

[anonymous-user]

Thanks all, as ever, some good advice and all taken on board. No court actions, just trying to establish a reasonable rent for current occupier.

Thanks again

Emma

[surveyor]

Lotobear said:

..in that case the valuer will need to see the lease as the actual rent, though based on market comparables, will be influenced by factors such as length of the term, any incentives, fit out/rent free periods and whether it's FRI, IRI or other.

If they don't exist they can't see them!

OP - quoted price seem's very top heavy. £350 seem's too cheap to me - although in some areas fee's are driven down by lunatics undercutting each other.

If you are getting this sorted can I suggest that you pay attention to some other area's also.

Length of term
Rent
Rent Review
Repairing Liability
etc.

These can affect the capital value (especially rent!), and while it may be in the family now you need to set-up the agreement so that either you can sell the property, or the tenant can sell the business etc.

If you need more flexibility you can always 'smooth' the way with a personal side letter..

[anonymous-user]

Thanks for that. Although there's no tenancy agreement/lease in place, the basics - such as length of term, basis of term, rent reviews and break clauses, etc are largely known and agreed in principle. It's the actual rent that's the sticking point. I just wanted to make sure that a red book valuation could be carried out without a tangible lease agreement.
I agree the price is too much. I don't mind paying for stuff, but there's paying and then there's having your arm torn off. As it's red book, surely all surveyors keep within the guidelines, therefore they should come in at 'about' a similar price. If anyone's had one done recently, would you mind sharing costs?

Emma

[surveyor]

Roughly where are you? Will recommend someone if I can

[anonymous-user]

That would be great, I'll send you a message! Thank you

[Lotobear]

Surveyor said:

"If you are getting this sorted can I suggest that you pay attention to some other area's also.

Length of term
Rent
Rent Review
Repairing Liability
etc."

..which is exactly what I said in my post - the valuer will need to know at least hypothetical lease terms in order to arrive at a rent

(Chartered Surveyor with 35 years experience and a degree in Estate Management, but not wishing to 'willy wave')

[surveyor]

Lotobear said:

Surveyor said:

"If you are getting this sorted can I suggest that you pay attention to some other area's also.

Length of term
Rent
Rent Review
Repairing Liability
etc."

..which is exactly what I said in my post - the valuer will need to know at least hypothetical lease terms in order to arrive at a rent

(Chartered Surveyor with 35 years experience and a degree in Estate Management, but not wishing to 'willy wave')

Also a chartered surveyor with a degree in Valuation and Estate Management. Not quite 35 years experience, about ten behind you.

misunderstood your post and thought you were asking to see actual agreements...

[Vocal Minority]

I think there's a small clan of us on here.

I only have 7 years PQE though, so i shall respectively remove my cap and hie me to my corner....


ETA: OP - you keep asking for a red book valuation - just to be 100% crystal - this is JUST to decide the rent yes?

[anonymous-user]

Yes, just the rent. I know, I know, but it's a bit contentious so it needs to be valued according to guidelines. There is an alternative, which I'll probably implement today and will go down like a sh*t sandwich!