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Getting the Right Value

We sat down with Andrew Entwistle, partner at George F. White, to discuss the importance of getting a correct valuation on an asset.

I am firm believer that any business or individual cannot make a rational or informed decision without knowing the value of an asset, or the cost consequences of a particular action. In fact, understanding value is the under pinning basis on which professionals advise their clients on a particular course of action.

Value

We have seen, over the last six years, the introduction of Automated Valuation Models (AVMs), particularly into the residential sector. Will we ever see AVM’s being used to value agricultural assets and farmland? I doubt such models could ever achieve even a modest degree of accuracy for farmland. Simply put, rural assets are too diverse for a computer to handle, particularly in the market that we are in. With low supply, demand can be high yet market conditions are showing a distinct patchiness with hot spots where land prices greatly exceed expectations, contrasting with similar quality land in low demand areas struggling to sell at below average guide prices.

I have the perception that most people consider valuations are only needed for either selling or when a bank wishes to take some security for a mortgage. There are many other good reasons to get a written valuation which are often overlooked, or simply guessed at.

The frequent scenario I come across is the case when a farmer dies. In the course of obtaining probate estimates of value are submitted, particularly in the case when Agricultural Property Relief or Business Property Relief applies and there is no inheritance tax to pay. A death forms an important tax point on the value of a farm and subsequently used as a base for future events such as calculating capital gains tax. More often than not, agricultural value is underestimated or simply not recorded.

Dealing with capital gains tax cases, another important relief that is often overlooked in Principle Private Residence Relief, where a main dwelling house can be free of Capital Gains Tax including up to 0.5 Ha of gardens, grounds, and outbuildings. A formal valuation at this point should have some analysis which attaches value to the garden and grounds from the rest of the farm that can minimise a Capital Gains Tax bill.

Another misunderstood concept I come across is Hope Value, where clients attach large values to land on the basis it will developed in the future. Market Value is the standard definition that is used for bank security purposes and reflects the price that the market will pay for an asset at a specific point in time. Research carried out by George F. White shows that developers are unlikely to pay significant sums over existing use value if the land has not got planning consent. A client will view the value of their land with Hope Value differently, taking into the “worth” of the development opportunity in the future them. The “worth” and “Market Value” of land is often significantly different.

Different valuation purposes often have different bases of value, for example tax valuations are have subtlety different valuation base to security valuations that in certain circumstances can give rise to very different values. In the case of matrimonial valuations Market value may not be an appropriate as it would not reflect the existence of a special purchaser.

So will a professional Valuer ever be replaced by an Automated Valuation Model? Only if an AVM can talk to clients and understand their objectives, decide the correct valuation base to use, and work as a team with an accountant and solicitor. I can’t see that happening in my lifetime.

Development Opportunities in the Selby Area

This consultation includes plans and the initial assessments of all possible sites that could be included in the Site Allocations Local Plan next year in the Selby area; it is also a last opportunity to suggest new sites. The Site Allocations Local Plan will ultimately identify enough land for the homes and jobs and other development needs in the Selby district over the next ten years up to 2028.

Development in Selby

Helen Boston, a planning consultant at George F. White, said: “This is an ideal opportunity for landowners to seek professional and informed advice about their assets and potential development land. We are currently working with a number of landowners across the region providing specialist advice on planning policy and enforcement issues as well as site appraisals, planning applications and site valuations. ”

George F. White provides planning consultancy services for both rural and urban areas across a vast geography from North Lincolnshire and Yorkshire to County Durham, Northumberland and the Borders. The Yorkshire region is a particularly key focus for the business, the Bedale and Shiptonthorpe offices has seen a dramatic rise in planning advice requests from local landowners in the last 12 months.

Helen added: “The planning system in England can be very complicated but navigated successfully it can be a tool to significantly raise the value of land and property in a variety of ways. For example, from gaining planning permission for an extension on your home, to gaining planning permission for a housing site and selling to a developer. Whatever the situation, George F. White is able to investigate the options and provide advice on the best route to achieve our client’s aims and help them maximise value of their assets.”

Please be aware that the ‘Call for Sites’ closes on 27th November 2017 therefore any formal responses need to be submitted prior to this date.

If you have a site which you think may be suitable and would like an initial assessment please contact Helen Boston at George F. White on helenboston@georgefwhite.co.uk or 01677 458209 for further advice.

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