Legal Q&A:why is there such a big difference between our flat price and the reinstatement valuation?

Our home buyer survey has valued the flat we are buying at the asking price we have agreed but the lender’s “reinstatement valuation” is £110k less – should we be worried? 

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Question: My boyfriend and I are trying to buy a share of a freehold flat and our offer of the asking price, £390,000 has been accepted. Our home buyer survey has valued the flat at the price we offered but now the lender’s “reinstatement valuation” is £280,000. Why is there such a difference between the figures? Our mortgage has been approved — but should we be concerned?

Answer: There are two valuations for a property: the market value — which is the figure it should sell for on the open market —and a reinstatement value, which should cover the cost of demolishing a damaged property and rebuilding it using the same materials.

It is extremely important for the reinstatement value to be accurate because buildings insurance cover should always equal at least the reinstatement value of the property. 

If a property is underinsured and there is a claim, it is likely that any settlement figure will be reduced accordingly.  Clearly the surveyor who carried out your home buyer survey considers the price you are paying to be accurate.

Your lender’s valuer considers the reinstatement value to be £280,000 and so you should ensure that the level of cover under your landlord’s buildings insurance is sufficient to cover your flat and the various other flats in the building. 

If you think that the lender’s valuation is incorrect then ask the surveyor who carried out your home buyer survey to confirm the reinstatement value of £280,000.


I you have a question for Fiona McNulty, please email or write to Legal Solutions, Homes & Property, London Evening Standard, 2 Derry Street, W8 5EE.

We regret that questions cannot be answered individually but we will try to feature them here.

Fiona McNulty is a legal director in the private wealth group of Foot Anstey.


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