THOMSON ASSOCIATES
Rossetti Place
6 Lower Byrom Street
Manchester
M3 4AP

t: 0161 839 4809
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e: info@thomsoncharteredsurveyors.co.uk

Social Housing Valuations

Over the last twenty years or so most loans to housing associations and major transactions involving social housing stock have used Existing Use Value – Social Housing as the basis for valuation. It is essentially a Discounted Cash-Flow formulaic valuation which produces a valuation figure based on the notional surplus rental after reductions for management, maintenance and major repairs have been made.

As ever, with formulaic valuations, the outcome is very heavily influenced by the initial information. Rental figures are obviously very clear and need no analysis, but the deductions do and these can vary enormously depending upon the nature of the stock, the proposed Asset Management Programme over the next thirty years, the way in which this is introduced and, of course, whether the valuer has good detailed information or has to make assumptions. A deduction of, say, £10.00 per week on a rental of £80.00 per week will have a major impact on the Capital Valuation if it is based on a Discounted Cash-Flow formula over thirty years. Now that Local Authorities are becoming much more involved in a direct way through the new self-financing arrangements they, together with the Chartered Institute of Housing and The Royal Institution of Chartered Surveyors, are looking at ways to improve the valuation basis. The phrase used is to make the valuations more ‘stable’. The working party is currently looking at this, but the consensus seems to be that a movement towards a valuation based on gross rentals rather than the net position used for EUV-SH might produce some more uniform comparable basis. This might seem a simple technical change, but depending on the outcome it could have a very considerable impact on Local Authorities’ and housing associations’ capital investment programmes over the next thirty years.

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