In the search for your dream home, you may have noticed the various ways property values are advertised. Two of the most common values advertised are the rateable value and the market value. It’s often assumed that these two values are equivalent, but that’s not always the case. Take a look at how they differ.
What is rateable value?
A rating valuation (RV) is sometimes called the government value or the capital value. It’s the government’s method of assigning a value to a property that will determine its rates.
Rateable values are generated automatically via electronic analysis every three years, either by local council or on behalf of them by a valuation service provider like Quotable Value (QV).
The rateable value is calculated based on three key factors:
- Capital Value (CV) – what your property is likely to have sold for at the date of your local council’s last general revaluation, excluding chattels.
- Land Value (LV) – the likely selling price of the bare land at the date of your local council’s last general revaluation.
- Improvement Value (IV) – the difference between the land value and the capital value.
Once each area has completed the revaluation process, the updated rating value is sent to property owners on an Owner’s Notice.
Worth noting is that rateable values can be much higher or lower than a property’s true worth so are not a good metric for assessing how much a home will sell for.
What is market value?
A far more accurate measure of a properties worth is the market value – how much a prospective buyer is willing to pay for the property.
The following factors are taken into consideration when a property is valued:
- Current economic climate
- Property sales statistics
- Interest rates
- Potential use of the land
What’s the difference?
The rateable value and the market value can differ quite significantly so it’s important you look at both values when buying or selling. RV’s don’t take into account things like buyer demand and property presentation. Simply factoring in the RV could mean you over- or even under-estimate your property’s value and influence the sales price you’re likely to achieve.
Get in touch with a mortgage adviser at Mortgage Express to find out more about the rateable value and the market value of any properties you may be considering either buying or selling so you can make an informed and well-thought out decision.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.
A Disclosure Statement is available on request and free of charge.