What are the different types of valuations for lending purposes?

There are a number of ways lenders will value a property for mortgage purposes. Here are some of the most common:

Market Value
Market value, Bricks and Mortar or Buildings Valuations are the most common type of property valuations. They are commonplace if the property is a normal single (C3) dwelling and are based on what price a property would fetch in the open market. They take into account various factors such as location, size, age, and condition of the property when compared to similar examples.

MV-1 Specifically for a commercial business, this valuation also takes into consideration the fixtures and fittings if the business is a going concern and what the annual yield of the property would be – typically it is used for HMO properties with 7 or more bedrooms, Multi-Unit Blocks and commercial property, which may be higher than a bricks and mortar market valuation.

Residual Value
Residual value is the value of a property or a piece of land after all of the costs associated with its development or refurbishment have been deducted.

Gross Development Value (GDV)
GDV is the estimated value of a property development project upon its completion. It is calculated by taking into account the total revenue generated by the project, including the sale of all or any units that have been developed.

90 Day Value – also 180 day value
The 90 Day Value is the estimated value of a property that has to sell within 90 days. Typically, this can significantly decrease the value of a property by up to 25% of the MV1 figure to ensure a quicker sale. Meanwhile, the 180 day value is more lenient and usually matches the MV1 valuation as most properties sell within 180 days (six months) of being listed. The exception to this are unique or large assets, which could be down valued on this basis as they can often take over a year to sell in some cases.

Open Market Value
Open Market Value is similar to market value, but it takes into account any conditions or restrictions that may affect the sale of the property, such as a long lease or a shared ownership arrangement.

Vacant Possession Value
Vacant Possession Value is the value of a property if it were vacant and available for immediate occupation. This type of value is often used in cases where a property is subject to a tenancy agreement, as it takes into account any restrictions on occupancy or use of the property.

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