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Valuation Types

If you had a single property that building could have several different types of valuation with varying prices depending on it's usage. For example there would be a basic valuation for residential mortgage purposes or a home buyer's report or a full structural survey.

 If the property was going to be let out to tenants there would still be a mortgage valuation however if it was to be used for more than four tenants then it may warrant a HMO valuation which is more expensive. Then if that same building was a commercial premises say a shop then another types would be required. Either a basic commercial valuation or a full Pinder's report which states more details about the business.

Business property valuations

Recently valuations on building and development used as a commercial premises so for example a pub, shop, industrial unit or even simply land have been coming in very much lower than expected. This has generally had a bad effect on the borrowing allowed as the loan to value or the percentage the lender is prepared to lend against the value of the building so say for example 70% of the value they will lend on is less.

If the client needs £350,000 on a estimated value of £500.000. But then after the new valuation the figure comes in at only £400,00 then the borrower will only be able to have a commercial mortgage of £280,000 which is a £ 70,000 short fall. This often leads to the potential business owner with drawing from the deal as there is not enough money involved. For example if it was required on a remortgage for capital raising there is not enough equity in the valuation to free up the money required.

There are worries that commercial property prices could fall much futher in 2009 for example a leading a leading UK economist has stated that prices may fall between 15%-25%. This can not be proven though but certainly the outlook is looking very grime. As fall out from the problems in the US take time to take their effect within the UK.
When predictions and business confidence is low this places a bad enviroment for industry and trade that needs to be bullish in order to make growth decisions and take positive action.

Many lenders are setting a loan to value of 70% LTV which will mean it is necessary to place a 30% deposit down against a potential commercial mortgage. This will give the lenders' extra security however many business owners will be unable to raise the large deposit now required to cover the expected fall in property prices.

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