With property construction costs on the increase, in some scenarios going up by more than 10% per year, keeping on top of reinstatement valuations is becoming of greater importance for commercial property owners and tenants.
The reinstatement costs of a property are not what a property is valued at, but rather the amount that it would cost to rebuild a property using the exact same materials, to the same design, including all professional fees.
Unfortunately, when it comes to insuring a property, many people simply go with a ‘best guess’, or else rely on a reinstatement cost that is out of date.
Where a company is based in an older building or a listed building, the cost of reinstatement is even more likely to exceed that of market valuation. Restoring a period property to an exact likeness were it to be destroyed would involve seeking specialist materials and contractors, adding further to the cost of construction compared to a normal construction job.
In order to be sure you have an accurate reinstatement cost and that this is reflected in your insurance cover, you should seek to obtain a reinstatement valuation from a Chartered Surveyor at least every 5 years. As well as taking into account more up to date costs for construction materials, cost of labour and professional fees.
Where instructed to provide a commercial property reinstatement valuation, Lea Hough’s team of Chartered Valuation Surveyors will inspect, assess and undertake calculations to provide an accurate rebuild cost. This is typically achieved by taking detailed measurements and an inspection of the property and using rebuilding cost information provided by BCIS and RICS to calculate a figure for rebuilding.
It is the tenant’s responsibility to insure the property and it would therefore fall upon their insurance policy to cover the cost of repairs in the event of an insurance claim. If your insurance doesn’t cover the cost of reinstatement and the worst case scenario happens, you may find yourself being under-insured and therefore facing a gap in costs that you are liable to cover.
For more information or to obtain a quote for a reinstatement valuation for either a residential or a commercial property, please get in touch with us.