The online resource for the historic environment

4.05 Property valuation

To assist your understanding of this Unit see BS 7913: 2013:
Section 3: "Terms and definitions"
Section 6: "Significance as part of operational care and other interventions"
Section 7: "Maintenance"
Section 8: "Heritage and project management"
Annex A (informative) Conservation accreditation schemes"

“The historic environment is an irreplaceable asset representing the investment of centuries of skills and resources. It gives places a unique competitive advantage. It generates jobs. It attracts people to live in an area, businesses to invest and tourists to visit.
Most of it is in everyday use; it is capable of an economic future; it is an asset we squander or degrade at our peril.”
English Heritage (2000) Power of Place

What exactly is the effect of listing on the economic ‘value’ of a building? Research suggests that, in respect of some commercial values the effect might be detrimental, when related purely to the economics of some commercial ownership, (Allison, G. et al (1996) The Value of Conservation). Conversely, The State of the Historic Environment Report 2002, suggests that rental values of listed commercial buildings achieved levels in excess of unlisted buildings in 2001. So, valuation might be less subject to hard and fast rules and more subject to situation, circumstance and possibly, location.

The opposite of Allison’s observation, by anecdotal evidence, seems to be the case in respect of residential property, where the value of historic buildings is much recognised with ownership and occupation sought.

From the wider society’s perspective the listing of structures, and thereby their protection, contributes enormously, creating social identity and sense of place through permanence: not necessarily to the ‘owners’ of the structure, but to the wider population who may neither live there or work there or, may not even yet have been born

“The problem is that the existence and preservation of a building or area are often most valued by people who are not the owners.”
Allison, G et al.The Value of Conservation?

“Above all, land and property speculation feeds upon all errors and omissions and brings to nought the most carefully laid plans.”
Article 6 of The Amsterdam Charter 1975.

This is the raison d’etre for conservation and protection of buildings for the benefit of the wider society when purely commercial interest might result in loss. Commercial valuation of a place, particularly in urban or city centre locations, might relate to the value of the site not the value of the building. Without protection of the historic environment purely commercial economics might result in wholesale loss of much of our historic built heritage.

“This is why buildings are listed and conservation areas designated: to ensure their continued existence to those who would benefit now and in the future.”
Allison, G et al.

“Most of us believe that the conservation of the historic built environment makes a major contribution to the economic and social well being of our towns and cities.”
The Value of Conservation? 1996.

So where does that leave the position of the conservation practitioner – you? It places on your shoulders a responsibility to act as advocate for the preservation and upkeep of the historic built heritage: sometimes in the face of strong opposition from commercial interests.

You must, therefore, be able to persuasively argue that the benefits of preservation and conservation should not relate solely to the economic value of the place but be more appropriately linked to less tangible benefits to be gained from being associated with a more altruistic role based on preservation, despite commercial loss: this for the benefit of the wider society.

“There is no present answer, in a numeric sense, to the question, ‘What are the dynamic benefits of urban conservation'? It is certain, however, that they can be large and positive (although this is not the case in all circumstances)."
Allison, G. et al.

The availability of grant aid and funding, to assist in the protection of our historic built environment, greatly assists in the argument for preservation and you should be well aware of the availability and sourcing of such support. This issue is addressed more fully in the section of this unit entitled, Identification and assessment of funding sources.

Protection and long-term economic use, and thereby security, of the historic environment has its foundation based on clear understanding of the mutual interests of commercial values and conservation ethics. The benefits to be gained from such understanding are fundamental and can be symbiotic; as a conservation practitioner you must understand and be able to synthesise the interests of commerce and conservation for the mutual interest/benefit of a third - the wider, past, present and future society.

See RICS/ISVA. Appraisal and Valuation Manual for guidance on valuation methodologies to be used when valuing properties within the historic environment.

“…the purchaser relies on professional advisors to understand the type of property they are dealing with and to provide appropriate advice.”
Boniface, S (1998) Mortgage Valuations on Historic Buildings

The following guidance is offered by Boniface when valuing buildings within the historic environment:

"A valuation cannot be properly placed on any building unless a basic assessment of the building’s condition has been made. To make this assessment the valuer needs to understand the building’s construction, the defects that are likely to arise, and, their financial implications".
Boniface, S (1998) Mortgage Valuations on Historic Buildings

Sometimes surveyors and valuers will place a provisional value on the building, subject to further specialists’ reports. Without a detailed knowledge of the nature of the construction, its probable defects and appropriate solutions, the valuer is unlikely to request the most suitable report and may misunderstand its findings. A non-specialist valuer may even recommend a free survey by ‘specialists’ who have a vested interest in finding work.

"Condition surveys on historic buildings should be performed by competent persons with knowledge of traditional materials, construction techniques and decay processes.”
BS 7913: 2013 para 6.2 "Condition surveys and inspections"

If the valuer’s analysis is incorrect or if the lending institution incorrectly interprets recommendations, inappropriate or damaging conditions may be imposed on mortgage offer. There is also the possibility that a building owner will misinterpret the valuer’s comments.
Inappropriate advice may also lead to the employment of a contractor who does not have the appropriate experience and the work itself may therefore be executed poorly or inappropriately.
See Boniface, S (1998) Mortgage Valuations on Historic Buildings

Much, therefore, depends on the expertise of the valuation surveyor. Clarity of understanding of the complex and multi-faceted nature of the valuation process in respect of the historic environment places a heavy responsibility on the surveyor. There is, therefore, a need for you to fully understand the many, and sometimes contradictory, factors affecting valuation when dealing with the historic environment.

Draw up a list of the factors that might affect the valuation of an historic building.

A site of aesthetic and historic value will require a much more detailed analysis of condition and assessment of significance than those of more contemporary history. The surveyor of an historic site will be required to undertake a more detailed appraisal not only of the building and its patterns of deterioration but also what it is about the site that has significance to the wider society. The importance of establishing a clear understanding of significance in this process cannot be overstressed.

One of the key problems for buildings is that of functional obsolescence. A building designed or conceived for one use may have to adapt to a new or alternative use for which it was neither designed nor conceived. There may, therefore, develop a problem of limitation of available but appropriate alternative users. It will be necessary, on occasions, for you to advise a prospective purchaser against obtaining a property – this based on an understanding that the proposed new user’s use will have an adverse effect on the significance of the building. It may also be necessary for you to identify an alternative user that will be able to occupy the asset with minimum disruption and loss of significance.

Value in pure economic terms may, therefore, become adversely affected by a limited availability of potential alternative users. In efforts to ensure longevity through appropriate use it may be necessary for you to be able to seek suitable alternative users and convince potential owners that the building, or alternative use of it, may be adaptable. In such process the significance of the building must not be threatened by the alternative use. Potential users may need to be convinced that the building can satisfactorily respond to accommodate the new use or their use of it adapted to suit. Users will need to see that there may be alternative benefits to their use of the building other than those that are based on simple economics, and that they also may need to maintain a flexible attitude to its use.

Compatibility of building and re-use of it by a new user is dealt with in more detail in the section within this unit entitled Compatible re-users.

It is generally considered that the historic environment enriches the quality of our lives. In consequence, it might be thought as a major economic asset. Globally, it offers us a unique economic advantage, and is essential in delivering effective regeneration. Significantly, it is also an irreplaceable resource, of which we are temporary custodians. It therefore it should not wasted, and be used wisely, effectively and with a sustainable approach.

Various countries throughout the world prepare State of the Environment reports. These can be used for gaining an understanding of the current environmental circumstances in their respective regions.

”By bringing together evidence, historic environment professionals and those with an interest in heritage can better understand and demonstrate the value of the historic environment and its impact on factors including growth, the economy, our wellbeing and sense of place."
"Heritage Counts". National Report 2014, Historic England.

The historic environment has embodied energy, expended by its creation – in sustainability terms it must, therefore, be recognised, valued and used.Useful publications:
ICOMOS. (1998). Report on Economics of Conservation.
ICOMOS. (1993). Conservation Economics.