valuation costs
📖 What is valuation costs? Meaning and definition
Valuation costs typically refer to the professional fees charged by surveyors or valuers for assessing the market value of a property. In the context of UK tenancy law, particularly leasehold properties, these costs frequently arise when a tenant seeks to extend their lease or acquire the freehold. The landlord will often incur these costs to obtain their own valuation of the property, which is necessary for determining the premium payable by the tenant.
These costs are generally payable by the tenant to the landlord under specific sections of relevant legislation, such as the Leasehold Reform, Housing and Urban Development Act 1993. However, the amount claimed by the landlord must be 'reasonable'. If there is a dispute over the reasonableness of these costs, either party can apply to a Tribunal, such as the First-tier Tribunal, for a determination.
The Tribunal will assess the reasonableness of the claimed valuation costs, considering factors like the qualifications and experience of the valuer and their hourly rates. The Tribunal has the power to reduce the claimed amount if it finds them to be excessive, as seen in cases where a sum of £350.00 plus VAT was allowed instead of a higher claim, or where £1000 plus VAT was determined as reasonable for a lease extension valuation.
📋 Requirements
- The costs must be for obtaining a valuation of the property.
- The valuation is typically required in the context of a leasehold transaction, such as a lease extension or collective enfranchisement.
- The costs must be 'reasonable' for the services provided.
- The costs may include VAT where applicable.
📝 Procedure
- A tenant makes a claim, for example, to acquire a new lease.
- The landlord incurs costs to obtain a valuation of the property.
- The landlord claims these valuation costs from the tenant.
- If the tenant disputes the reasonableness of the costs, an application can be made to the First-tier Tribunal for a determination.
- The Tribunal reviews the evidence, including details of the valuer's experience and charging rates.
- The Tribunal determines the reasonable amount of valuation costs payable.
💡 Examples
- A tenant applying to extend their lease was required to pay the landlord's valuation costs, which the Tribunal determined to be £1000 plus VAT.
- A landlord's claim for valuation costs was reduced by the Tribunal to £350 plus VAT, as the original amount was deemed unreasonable.
- In a collective enfranchisement case, the nominee purchaser was responsible for paying the landlord's reasonable valuation costs, which were initially claimed at £3,150.00 plus VAT.
- A landlord's valuer, with 33 years of experience and a charging rate of £300.00 plus VAT per hour, provided a valuation for a property in London.
📚 Legal basis
- Leasehold Reform, Housing and Urban Development Act 1993
- Leasehold Reform Act 1967
❓ Frequently asked questions
What are valuation costs in a lease extension?
In a lease extension, valuation costs are the fees a landlord pays to a professional valuer to assess the property's value. This valuation helps determine the premium the tenant must pay for the lease extension, and these costs are typically recoverable from the tenant.
Who pays for the valuation costs?
Generally, the tenant is responsible for paying the landlord's reasonable valuation costs incurred during statutory leasehold transactions, such as extending a lease or buying the freehold.
What if I think the valuation costs are too high?
If you believe the valuation costs claimed by the landlord are unreasonable, you can apply to the First-tier Tribunal to have them determined. The Tribunal will assess whether the costs are fair based on the work involved and professional rates.
Are VAT charges included in valuation costs?
Yes, VAT (Value Added Tax) can be included in valuation costs where applicable, and the Tribunal will consider this when determining the reasonable amount payable.
What does 'reasonable costs' mean for valuation?
'Reasonable costs' means that the fees charged for the valuation must be proportionate and justifiable for the work carried out. The Tribunal will consider factors like the valuer's experience and their hourly rates when making this assessment.
Can the Tribunal reduce the amount of valuation costs?
Yes, the Tribunal has the power to reduce the amount of valuation costs claimed by the landlord if it determines that the original amount was not reasonable, as seen in cases where sums were adjusted downwards.