Understanding Property Valuations

How much is this property worth? It’s a common (and smart) question to ask. Recently I’ve noticed a lot of confusion when it comes to property valuations. It’s understandable because there are two different types of property value. I’ve explained the ins and outs of both below.

Capital Value

Capital value (also known as Rateable or Government Value) is set by local councils and determines how much your annual rates charge is. Capital value isn’t property specific, it’s a general guide to your property’s worth based on other properties in the same area and the most recent sale prices for the property. This means it won’t include any appliances, improvements and/or additions you’ve made since you purchased it.

A capital value is often used when buying and selling as an indicative price. Most local councils have free search engines on their websites that provide the latest property capital values. When enquiring through a council site keep in mind that they’re often only updated every three years.

Registered Value

A registered property valuation (also known as House Valuation or simply Valuation) is an assessment of a property’s market worth according to a registered valuer. It will be based upon a full inspection of your property as well as comparable sales in the area. You’re most likely to need a valuation when you’ve had an offer accepted on a property, and you need finance (a mortgage). Most banks will require a property valuation done by a registered valuer as part of a finance application and this is something I can organise for you.

A property valuation can also be done for other reasons including:

  • Calculating how much you should pay for a property
  • To find out how much a property is worth when selling
  • As part of a home loan refinancing application.

Your bank requests a valuation to get an impartial and expert opinion on the market value of the property. The Valuers Act 1948 ensures that a valuation done by a registered valuer is reliable so banks count on this. This is important to them when they consider the risk associated with lending you money. If your circumstances were to change for the worse they want to make sure they’ll get their money back.