Diminution in Value

Diminution in value

Overview

Section 18 (Diminution in Value) valuations are specialist reports conducted by RICS Registered Valuers following a Schedule of Dilapidations. These reports are crucial for landlords seeking to assess the impact of a tenant’s failure to maintain a property as per their lease obligations.

Situation

We recently undertook a valuation on behalf of a Landlord of a property formerly occupied by a High Street lender in a Devon coastal town which was in poor condition after the tenant vacated several years prior without renewing the lease.

Solution

A building surveyor prepared a schedule of dilapidations, detailing the necessary repairs and associated costs to put the property back into repair.

We then provided a Valuation ‘In Repair’: We performed a detailed analysis of the local market to ascertain the property’s Market Value assuming it was fully repaired and the tenant had met all their obligations.

This involved a detailed analysis of the current local market in sourcing and verifying comparable evidence of similar commercial properties in the subject properties town and immediate locality. The subject property was in a Devon coastal town which has a very localised market, this is why it is vital to use a local valuer in providing a Diminution in Value to have this local expertise and market knowledge.

Outcome

This report was then used to enable negotiations to progress and ultimately an agreement made, which in this case resulted in the landlords claim being successful. The role played by our Valuersam was fundamental in reaching a settlement by negotiation.

Key Contact

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