Ask The Experts - Valuing Premises

Answer

Check first if there is a partnership agreement that outlines the procedure of agreeing a valuation on the property, and the actual form of valuation.

The most common format is for both partners to attempt to agree the value, and employing the services of a specialist valuer is the sensible route. There is likely to be a clause noting that if agreement is not achieved, either party may apply to the Royal Institution of Chartered Surveyors to appoint an independent expert.

The parties could both go to one independent expert, but this is not common, as the valuer would have to agreed by both parties, appointed properly by both and agreed that their decisions is final and binding.

The most common form of valuation is market value. The valuer assesses the premises with vacant possession, available as a surgery and alternate viable use- the higher value is market value.

But a partnership agreement may state that the value is based on the premises being used for surgery purposes only, and may disregard goodwill but consider any notional rent being received by the practice.

The latter valuations are more suitable for surgeries with long lifespans, rather than older converted surgeries which could easily become redundant in the next five or ten years and sold for alternate use.

The Norwich Union's GPEC surgery finance division states that for a specialist valuation surveyor's market valuation, you can expect to pay 0.175 per cent plus VAT on properties below £500,000, and 0.15 per cent and VAT on properties worth £500,000 to £1 million.