After Someone Dies

Chapter 14 — Valuing the Property

For many estates, the property is the largest asset and the most difficult one to value. A house may be the place where the family grew up, the security that someone expected to inherit, or the source of money needed to pay tax and debts. It is also a physical asset with a market that can change. That combination makes property valuation both practical and emotionally sensitive.

The valuation needed for the estate is normally the property's open-market value at the date of death. In simple terms, this is the price the property might reasonably have achieved in the open market at that date, between a willing buyer and a willing seller, neither being forced to act and both having proper knowledge of the relevant facts. It is not automatically the price that an agent hopes to achieve six months later, the amount a bank is prepared to lend, or the figure that would replace the building after a fire.

A sound valuation helps with several different decisions. It may be needed for the estate accounts and an Inheritance Tax return. It gives the personal representatives a fair starting point when deciding whether to keep, transfer, rent or sell the property. It gives beneficiaries a common piece of evidence when discussing a buy-out. It can also expose problems, such as an unregistered title, a short lease, a tenant's rights or a defect that needs specialist attention.

Start with the right kind of value

Ask the valuer to state clearly what is being valued and for what purpose. The following figures are not interchangeable:

<w:left w:space="0" w:sz="0" w:val="nil"/><w:bottom w:space="0" w:sz="0" w:val="nil"/><w:right w:space="0" w:sz="0" w:val="nil"/><w:between w:space="0" w:sz="0" w:val="nil"/></w:pBdr><w:shd w:fill="auto" w:val="clear"/><w:spacing w:after="0" w:before="0" w:line="271" w:lineRule="auto"/><w:ind w:left="340" w:right="0" w:hanging="227"/><w:jc w:val="left"/><w:rPr/></w:pPr><w:r w:rsidDel="00000000" w:rsidR="00000000" w:rsidRPr="00000000"><w:rPr><w:rFonts w:ascii="Georgia" w:cs="Georgia" w:eastAsia="Georgia" w:hAnsi="Georgia"/><w:b w:val="0"/><w:bCs w:val="0"/><w:i w:val="0"/><w:iCs w:val="0"/><w:smallCaps w:val="0"/><w:strike w:val="0"/><w:color w:val="000000"/><w:sz w:val="20"/><w:szCs w:val="20"/><w:u w:val="none"/><w:shd w:fill="auto" w:val="clear"/><w:vertAlign w:val="baseline"/><w:rtl w:val="0"/></w:rPr><w:t xml:space="preserve">a date-of-death probate or tax valuation;

<w:left w:space="0" w:sz="0" w:val="nil"/><w:bottom w:space="0" w:sz="0" w:val="nil"/><w:right w:space="0" w:sz="0" w:val="nil"/><w:between w:space="0" w:sz="0" w:val="nil"/></w:pBdr><w:shd w:fill="auto" w:val="clear"/><w:spacing w:after="60" w:before="0" w:line="271" w:lineRule="auto"/><w:ind w:left="340" w:right="0" w:hanging="227"/><w:jc w:val="left"/><w:rPr/></w:pPr><w:r w:rsidDel="00000000" w:rsidR="00000000" w:rsidRPr="00000000"><w:rPr><w:rFonts w:ascii="Georgia" w:cs="Georgia" w:eastAsia="Georgia" w:hAnsi="Georgia"/><w:b w:val="0"/><w:bCs w:val="0"/><w:i w:val="0"/><w:iCs w:val="0"/><w:smallCaps w:val="0"/><w:strike w:val="0"/><w:color w:val="000000"/><w:sz w:val="20"/><w:szCs w:val="20"/><w:u w:val="none"/><w:shd w:fill="auto" w:val="clear"/><w:vertAlign w:val="baseline"/><w:rtl w:val="0"/></w:rPr><w:t xml:space="preserve">a specialist development or residual valuation.

An insurance rebuild figure may be much higher than the market value because it includes demolition, professional fees and rebuilding to current standards. A mortgage valuation is prepared for the lender's risk and may not give the family the detail it needs. An estate agent's appraisal is useful when planning a sale, but it is often an optimistic marketing opinion rather than a formal report. Tell the valuer that the relevant date is the date of death and keep any later sale or appraisal separate.

Gather the property information first

The more complete the instructions, the less likely it is that an important feature will be missed. Gather what you can before the inspection:

<w:left w:space="0" w:sz="0" w:val="nil"/><w:bottom w:space="0" w:sz="0" w:val="nil"/><w:right w:space="0" w:sz="0" w:val="nil"/><w:between w:space="0" w:sz="0" w:val="nil"/></w:pBdr><w:shd w:fill="auto" w:val="clear"/><w:spacing w:after="60" w:before="0" w:line="271" w:lineRule="auto"/><w:ind w:left="340" w:right="0" w:hanging="227"/><w:jc w:val="left"/><w:rPr/></w:pPr><w:r w:rsidDel="00000000" w:rsidR="00000000" w:rsidRPr="00000000"><w:rPr><w:rFonts w:ascii="Georgia" w:cs="Georgia" w:eastAsia="Georgia" w:hAnsi="Georgia"/><w:b w:val="0"/><w:bCs w:val="0"/><w:i w:val="0"/><w:iCs w:val="0"/><w:smallCaps w:val="0"/><w:strike w:val="0"/><w:color w:val="000000"/><w:sz w:val="20"/><w:szCs w:val="20"/><w:u w:val="none"/><w:shd w:fill="auto" w:val="clear"/><w:vertAlign w:val="baseline"/><w:rtl w:val="0"/></w:rPr><w:t xml:space="preserve">any unusual feature that could affect value, including agricultural use, development potential or contamination.

Do not assume that the estate's address tells the whole story. A large garden may be subject to a restrictive covenant. A garage may belong to a different title. A converted room may not have the approvals that a buyer expects. A flat may carry substantial service-charge liabilities. Tell the valuer about facts that may reduce value as well as facts that may increase it.

Establish who owns what

Legal title and beneficial ownership are not always the same. The deceased may have owned a property alone, as a joint tenant, as a tenant in common, through a trust, or subject to a declaration of trust. A Land Registry restriction, trust deed or separate agreement may be important. Do not assume that a surviving spouse or co-owner automatically owns the whole value, and do not assume that the will alone determines what happens to a jointly owned property.

Obtain the register and read the proprietorship and restrictions carefully. If the title is unclear, ask a conveyancer to explain it before promising a beneficiary a share or agreeing a sale. The valuation can still be obtained, but the report should identify any assumption about ownership or the interest being valued. A one-half interest in a jointly owned property may not be worth exactly one-half of the whole property's value, particularly if it cannot be sold freely. That is a legal and valuation question, not something to decide by guesswork.

Freehold, leasehold and special homes

Freehold houses are often comparatively straightforward, but the title still needs checking. Leasehold properties require more information. The remaining term of the lease, ground rent, service charge, reserve fund, major works, restrictions on subletting and the building's management history can all affect value. A short lease can substantially reduce the market and may require a specialist valuation.

Shared-ownership homes, retirement flats, park homes, mobile homes, tied accommodation and properties affected by a housing association agreement each have their own rules. There may be a staircasing procedure, a resale nomination period, age restrictions or a requirement to use a particular valuer. Obtain the agreement and ask the provider what valuation basis it requires. If a property is outside England and Wales, obtain local advice and a valuation in the relevant country. An English probate valuation does not automatically settle the legal or tax treatment of foreign land.

Obtain the title and plan

For registered land in England and Wales, obtain an up-to-date official copy of the register and title plan. The title may reveal the registered owner, mortgages, restrictions, covenants and rights. The plan may show that the garden, parking space, access road or outbuilding is not included. If the land is unregistered, locate the original deeds and have them reviewed. Missing or inconsistent documents should be reported to the conveyancer and the valuer.

The title is not a substitute for a survey. It may not show physical defects, an informal access arrangement or a use that has grown up over many years. Conversely, a valuer should not be expected to give a legal opinion on title. Keep the legal and physical investigations connected but distinct.

Choosing a valuer

For a significant estate, use an appropriately qualified and experienced valuer, often a RICS-registered valuer or chartered surveyor whose work includes probate and tax valuations. The right person depends on the property. A rural holding, development site, block of flats, listed building or property affected by a tenancy may need a specialist.

Before instructing anyone, ask:

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Give written instructions. State the deceased's date of death, the interest to be valued, the purpose of the report and any known occupation or title issue. Ask the valuer to explain the comparable evidence and to identify matters that could change the figure. A verbal estimate may help you decide whom to instruct, but it is not a reliable substitute for a written report.

Estate-agent appraisals and formal reports

If the family is considering a sale, it can be sensible to ask two or three local agents for market appraisals. Their views may help with the choice between a private treaty sale, auction or a period of repair. They can also identify what buyers in that area are currently seeking. Keep those appraisals in a separate section of the estate papers and do not present them as the formal date-of-death valuation.

Where the value is material to tax, a dispute, a family buy-out or a complicated sale, obtain a formal valuation. The report should describe the property, its condition and tenure, the basis and date of value, the assumptions made, the comparable evidence and any qualifications. If a formal valuer and the selling agent reach different figures, ask why. The difference may reflect a different date, purpose or assumption rather than an error.

How property is valued

For an ordinary residential property, the comparable-sales approach is usually the starting point. The valuer compares recent sales of similar properties and adjusts for location, size, condition, plot, parking, tenure and other differences. Asking prices are not completed sales and should be treated cautiously.

For an investment property, the income approach may be relevant. Rent, lease terms, operating costs, void periods and the quality of the covenant can affect the calculation. A development site, agricultural holding or property with significant planning potential may require a residual or specialist approach. Do not apply a percentage uplift for a possible extension or conversion without evidence that the planning, access, cost and market assumptions support it.

Defects and unusual features

Property value is affected by more than decoration. Tell the valuer about damp, Japanese knotweed, asbestos, subsidence, non-standard construction, flood risk, contamination, defective drains, unsafe access, boundary disputes and nearby infrastructure. A surveyor may recommend an engineer, environmental consultant, arboriculturalist, drainage specialist or other expert. Do not conceal a known problem because the family hopes to sell quickly. A later discovery can reduce the price, delay the transaction and damage trust.

Development potential can increase value, but it can also be illusory. Check planning history, local policy, access, services, rights, covenants, ecology, highways requirements and likely build costs. Agricultural and woodland land may have special restrictions and markets. Multiple dwellings, holiday lets and commercial uses may need separate analysis. If a tenant is in occupation, the valuer must know the tenancy terms and whether vacant possession is assumed.

The valuation date matters

The relevant figure is normally the value at the date of death. The market may rise or fall before the valuation is commissioned, and the property may be repaired, cleared or occupied during the administration. Tell the valuer what happened after death and ask them to distinguish the date-of-death opinion from any current-market comment.

A later sale is useful evidence but it does not prove that the sale price was exactly the date-of-death value. The property may have changed, the market may have moved, and the sale may have involved a different marketing period or a different condition. Keep later valuations, offers and sale documents as later events in the estate record rather than rewriting the original figure.

The personal representatives should retain the report, comparable evidence, photographs, inspection notes and correspondence showing how the figure was reached. HMRC or another interested party may ask questions. A transparent, well-supported valuation is easier to defend than a low or high number chosen because it suits a particular outcome.

Mortgages, equity and negative value

The property's gross value and the estate's net equity are different figures. Obtain a redemption statement for each mortgage or secured loan and record the liability separately. Do not deduct the mortgage from the property's market value and then describe the reduced figure as the property's value.

If the debt is greater than the value, the property may have negative equity. It still needs to be identified and valued. The lender, conveyancer and personal representatives will need to agree how a sale or transfer can proceed. Do not promise that a beneficiary will receive the property without checking the secured debt and any requirement for personal guarantees.

Protect the property before and after inspection

The property remains part of the estate until it is transferred or sold. Keep it secure, insured on the correct basis and adequately heated or monitored where necessary. Redirect post, check for leaks and arrange urgent repairs. Chapter 10 deals with the practical protection of the home and its contents.

Do not clear rooms, demolish outbuildings or remove fixtures before the inspection if doing so could affect the evidence of condition or value. Preserve fitted items, period features, flooring, sanitaryware and other fixtures unless a safety issue requires immediate action. If the property needs clearing for access, photograph it first and keep a record of what was removed. Unnecessary improvements before the valuation may cost the estate money without increasing the eventual sale price.

A family member wants to buy

A family purchase can be efficient, but it must be open and fair. Obtain an independent valuation, disclose the proposed purchase to all beneficiaries and record any conflict of interest. Do not let a person who is both a beneficiary and a proposed buyer select the only valuer or arrange a private price without evidence. Give everyone enough information and time to take independent advice.

The estate may accept a properly supported offer below an initial marketing figure if it saves selling costs, avoids a long delay or reflects a genuine market risk. The decision should be recorded with the reasons, the valuation evidence and the consent required under the will or trust. Personal representatives should not trade away value simply to end an uncomfortable family discussion.

Choosing a sale strategy

Once the valuation is available, compare the realistic options:

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Compare expected price, cost, time, tax, insurance, risk and the effect on the beneficiaries. A higher asking price is not automatically the best result if the property needs months of expensive work. Conversely, a quick auction may not be sensible if a planning issue or title defect has not been investigated. Put the decision in writing and revisit it if the market or the property's condition changes.

The cost of a properly instructed valuation is normally an estate administration expense where it is reasonably incurred for the administration of the estate. Record the invoice, who approved it and which property it relates to. If there is disagreement about whether a proposed report is necessary, explain the purpose before committing estate money.

Property valuation checklist

1. Confirm the date of death and the purpose of the valuation.

2. Obtain the Land Registry register and title plan, or locate the original deeds.

3. Confirm the legal owner, beneficial interests, restrictions and any trust document.

4. Identify the tenure, lease length, ground rent, service charge and major works.

5. Record the address, size, layout, land, garages, outbuildings and access.

6. Gather tenancy, occupation, mortgage and insurance information.

7. Check planning history, building approvals, covenants and development potential.

8. List known defects, environmental risks, unusual construction and boundary issues.

9. Choose an independent valuer with relevant probate and property experience.

10. Give written instructions and ask for a written report with comparable evidence.

11. Keep estate-agent appraisals separate from the formal valuation.

12. Record the gross property value and secured debts as separate figures.

13. Photograph and protect the property before clearance, repairs or marketing.

14. Do not remove fixtures or alter the property before inspection without a reason.

15. Obtain independent evidence for a sale or transfer to a connected person.

16. File the report, supporting evidence, later valuations, invoices and decisions with the estate accounts.

A careful property valuation gives the family a reliable foundation for the next decisions. It does not settle every tax question, and it cannot remove the emotion from a much-loved home, but it makes the choices visible and defensible. The next chapter explains how the property value and the rest of the estate feed into Inheritance Tax.

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About Harry Georgiou

Harry Georgiou is the owner of Swifty Clearances, a waste clearance business. He writes about responsible waste disposal, fly-tipping prevention, and the practical steps households and businesses can take to avoid inadvertently funding illegal waste operations.

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Chapter 14 — Valuing the Property

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