Can I challenge a commercial property valuation?

Understanding commercial property valuations

A commercial property valuation is an expert assessment of a property's market value based on factors including its:

• Size

• Location

• Condition 

• Lease terms

• Rental income

• Market trends

• And comparable property transactions 

Best-practice valuations are performed by RICS-registered valuers who adhere to the RICS Red Book Standards. They are globally recognised professional guidelines set by the Royal Institution of Chartered Surveyors (RICS). 

These standards ensure that valuations are consistent and transparent while meeting strict ethical and professional requirements. That gives clients confidence that the assessment is reliable, objective and provides a true reflection of market value. 

Surveyors can use different methods to value a property. They will pick the most appropriate, or use a combination of valuation methods, depending on the property type, the purpose of the valuation and the availability of reliable market data.

However, there are times when you may disagree with a surveyor’s valuation or their method. And when a market value assessment carries significant financial implications, a disagreement can develop into a formal valuation dispute.

Why might you dispute a commercial property valuation?

Even if the surveyor carrying out the valuation has extensive experience in your sector and adheres to the RICS Red Book Standards, there is still an element of professional judgement involved. That can influence the choice of valuation method, the selection and interpretation of comparable evidence, and the assumptions applied throughout the assessment.

A valuation that’s too low can affect your ability to secure a fair sale price or secure affordable finance, while a price that’s too high could lead to inflated insurance premiums or tax bills. Some of the most common contexts for commercial property valuation disputes include:

• Property sales - Determining a fair market value for buying and selling

• Insurance valuations - Setting property values to calculate insurance premiums

• Compulsory purchase orders - Determining fair compensation when the government acquires a property for public use

• Lease renewals - Determining fair lease terms for ongoing tenancy agreements

• Rent reviews - Adjusting rent to reflect current market conditions

• Financial reporting - Reflecting property values accurately in company accounts

• Business rates assessments - Establishing rateable value for tax purposes 

What are the grounds for disputing a market value assessment?

If you want to pursue a valuation dispute, you will need to demonstrate why you believe the current valuation is inaccurate and unreliable. You can do that on various grounds, including:  

• Incorrect data - You may feel that the valuer has relied on inaccurate information, such as outdated rental income or overstated costs.

• Not like-for-like comparisons - If the valuer has used recent sales in the area as a guide, you might feel they aren’t a fair comparison because they differ in location, condition, lease terms or development potential.

• Market changes - The valuation may not reflect recent shifts in the property market, such as new developments in the area or changing demand.

• Inappropriate valuation method - The valuation method used may overlook key factors that affect value, such as income and tenant quality.

• Overlooked factors - You may feel the valuer has missed important elements that affect value, such as a recent lease renewal, unique property features or other distinguishing characteristics that set the property apart.

To dispute a valuation, it’s not enough to say the market assessment is too high or too low and that you do not agree with it. You must explain the reasons why and back them up with solid evidence to support your case.

How to challenge a commercial property valuation

Most valuation disputes, such as those involving leases, rent reviews or insurance policies, typically start with informal negotiation. There will then be a structured formal appeal process, such as arbitration or tribunal proceedings, if you cannot reach an agreement. These are the steps to take:

1. Review the valuation report

The first step is to read the valuation report carefully. Check for errors, like incorrect property size, rental income, layout or usage, take note of the valuation method and scrutinise any comparable properties used to support the figure. Once you understand how the figure was reached, you can start pinpointing the elements you disagree with.

2. Gather supporting evidence

You can then start gathering evidence to support your case. That includes records of maintenance issues affecting the property, market reports, recent sales data for similar properties, or documents, such as floor plans or updated leases, showing that the details used by the valuer were incorrect or outdated. 

3. Obtain an independent valuation

Commissioning your own valuation from a RICS-registered valuer is one of the most powerful ways to support your case. It can reveal differences in the valuation approach, provide an independent benchmark, and carry real weight, particularly if the resulting figure contrasts sharply with the original assessment.

4. Engage with the valuation authority

Once you have sufficient evidence, you can take your concerns to the party that commissioned the valuation, whether that’s a lender, an insurance provider or a landlord. If you present your evidence clearly and objectively, you will often be able to resolve the case through informal discussions and negotiations. 

5. Consider a formal appeal process  

If you present strong evidence but do not get the result you were hoping for, you can often escalate the dispute to a formal appeal process. That process will differ depending on the purpose of the valuation. For example:

• Lender or mortgage valuations - Most lenders have an internal complaints or appeals procedure for valuation disputes. If that doesn’t resolve the issue, you may be able to escalate it to the Financial Ombudsman Service or pursue arbitration or court action.

• Landlord/tenant disputes - If you have a valuation dispute with a landlord, the route available will usually depend on the terms of the lease. It could involve an independent expert deciding the outcome, arbitration or a tribunal.

• Insurance valuations - If you disagree with an insurer’s valuation, you can raise it through the internal complaints process. You may also be able to escalate the dispute to the Financial Ombudsman Service.

• Business rates or tax valuations - You can take rateable value disputes to a Valuation Tribunal, which will independently review the valuation and make a binding decision.    

Valuation disputes: risk vs. reward

If you have grounds for disputing a commercial market valuation, it’s worth pausing to consider the potential risks before you take action.  

The risk

Challenging a valuation can be costly. You’ll usually need to pay for your own market value assessment, and you may require legal advice or other expert support. There’s also no guarantee of success, and you could even receive a revised valuation that’s less favourable than the original. There’s also the time and energy you put into gathering the evidence and bringing the dispute that you could invest elsewhere. 

The reward

At the same time, the potential rewards can be significant. A successful challenge could help you reduce your insurance premiums, improve your access to funding or establish a lower rent baseline.

If you decide to challenge a commercial property valuation, act quickly, as deadlines for submitting disputes can be strict. Gather strong evidence from qualified professionals, such as chartered surveyors, and keep your communications clear, professional and focused throughout the process.       

Expert commercial property valuation support

Do you need help with a valuation dispute or expert guidance throughout the formal appeal process? At BTG Eddisons, our respected commercial property valuation teams adhere to RICS Red Book Standards and produce market value assessments that landlords, lenders and other parties rely on. We can act on your behalf to negotiate the best possible outcome.

Find out more about our commercial valuation services and get in touch to discuss your circumstances with our team.