Reinstatement insurance valuation every 2 years?

by Readers Question

8:54 AM, 10th August 2018
About 2 months ago

Reinstatement insurance valuation every 2 years?

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Reinstatement insurance valuation every 2 years?

Please can anyone tell me the min time period that the freeholder can legitimately carry out insurance reinstatement valuations for the building?

We have been hit with a £1600 bill in 2016 for this and then again in 2018 for £1800!

It seems very excessive to require a full reinstatement valuation every two years.

Why would this be needed ? Surely you can use some form of price index and is it not based on cost to rebuild the property not market value?

Many thanks

Derek

 



Comments

Tom Chapman

9:10 AM, 10th August 2018
About 2 months ago

Derek, Who is requesting that you carry out the reinstatement valuation?
Usually if the insurers requires to carry out a survey to get a reinstatement cost it is that their cost.
Surveys are only usually requested for high rebuild costs and then are not required again for 5 years and the reinstatement cost will just be index linked for that period.

Nick Pope

9:44 AM, 11th August 2018
About 2 months ago

You make no mention of the size of the block but if you are concerned about the cost I assume that there are no more than, say, 50 flats and also that it is a standard, purpose built block. Conversions of large country houses , listed buildings, warehouses etc. are much more complex.
I do re-instatement valuations 20+ times a week for mortgage valuations and they are part of report and are not charged at extra cost. At the rates quoted I would be a millionaire by this time next year! It take me less. 5 minutes to calculate the re-build cost for a single flat and that includes the measuring. A block entails more work as there are communal areas, bin stores, bicycle sheds and all manner of other bits and pieces which have to be included. Unusual features such as communal heating systems etc. can complicate matters.
IMHO it is unnecessary to carry out such valuations (unless there have been significant alterations to the building) at anything less than 5 year intervals and even then it would be a matter of checking the old figure to confirm it remains in line with re-build costs in the area concerned. In some cases, it would be appropriate to carry out the exercise if building regulation changes might add to costs such as high rise blocks with external claddings following the Grenfell Tower fire. Similarly upgrades in fire precautions etc. would warrant a review.
It is possible that there is some clause in the lease requiring a biennial review but I've never seen one before. If the same firm of chartered surveyors has done the job both times I can't see any justification for this type of cost for the second valuation. I may be an old cynic but is there any obvious connection between the managing agents and the surveyors?
If asked to do this type of job on a standard post-war block of 50 flats it would be about a day's work at around £500 - £750 and a couple of hours every other year to update and confirm cover is sufficient.

Derek t

11:45 AM, 11th August 2018
About 2 months ago

Reply to the comment left by Tom Chapman at 10/08/2018 - 09:10
The freeholders managing agent has said we had to have it done we hold a head lease for the upper three floors 18 flats which we own 16 of and the ground floor is two shop units one is sold on a long lease the other lease has expired but still occupied the bill was the share for our portion only on both occasions and the units also had to pay their share ours is 65 percent of the cost

Derek t

11:54 AM, 11th August 2018
About 2 months ago

Reply to the comment left by Nick Pope at 11/08/2018 - 09:44
It is an old office block converted about 20 years ago
18 flats of which we own the head lease of the upper three floors and 16 of the flats
The prices quoted were 65% of the overall cost of the surveys
Property valuation around 5.6million overall sum insured
Lease says reasonable intervals for insurance valuation


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