More on - Which Chartered Surveyor Best Applies this Statutory Cap?
• Which of the breaches (repair, redecoration and/or reinstatement) which the chartered building surveyor has had to put a price/cost to, would not be likely to affect the freehold value of the property?
• In spite of what the landlord might say, is the Valuer’s view of the local market that the property is more likely to only sell for significant alteration, or total redevelopment, hence wiping out some or all of the claim?
• If the landlord is also claiming for “Loss of Rent”, does the Valuer’s analysis of the local market for similar properties inform that even if in perfect shape, the property would take at least as long to sell/let as the time required to do the works?
Example scenarios in which costed items accepted by your chartered building surveyor might not in turn affect freehold value in the opinion of the chartered valuation surveyor so as to result in a lower “cap” due to section 18 (1) include:-
• No costed items relevant to value – If market knowledge/evidence shows that the property is likely to be redeveloped/substantially altered.
• Fewer costed items relevant to value – As a general rule, if the property is older, the market expectation as to the standard and presentation is notably less than for the newer/modern equivalent of the same property.
• Fewer costed items relevant to value – If the claim includes works that are simply not relevant to value in the real world. Examples include:-
> Older industrial units – Whilst your building surveyor has to accept items with significant costs such as repairing dented cladding and painting both steel-work & concrete floors, none is likely to transfer through to more rental/value if done. They might for newer properties, but not older where the value is limited in any event by more significant factors such as low eaves height, having an asbestos roof, poor thermal qualities and/or occupying nearly all of the site.
> High street shops – With several vacant and superfluous upper floors, whether or not simply in tidy order, or rendered immaculate at considerably greater expense, will have no material impact upon rental/freehold value.
> Offices – Being only one “tatty” floor in a multi-storey/unit block will not – especially if subject to other vacant parts – have any discernible impact upon the freehold value of the whole thing. Also, because the specification is old/dated, even if in perfect condition, much of the works are likely to be overridden (superseded) by essential upgrade and modernisation works required in order to achieve any re-lettings, or a sale.
There are limitless other possibilities and scenarios where specialist Diminution Valuation (DV) advice of the Valuer can successfully demonstrate that costed items which the building surveyor has to accept because they are breaches, nonetheless have no impact on freehold value and as such, are legitimately removed by virtue of the statutory cap.