To provide you with the best experience on this website, cookies are used. By using the site it's assumed that you're happy with our use of cookies. However, you can change your cookie settings at any time. More info on cookies.
Allow cookies

Latest News

Building Reinstatement Valuation

30th November 2016

Categories: Latest News

As a property professional first and foremost I was saddened to hear about the recent fire and subsequent complete loss of one of the oldest hotels in the country, the Royal Clarence Hotel in Exeter.   As the TDA Estates Manager, my ears naturally prick up when a fire is reported in the news.  I like to establish as quickly as possible what property is being discussed and whether this is a property that I am responsible for managing.   As an estates manager, I need to protect our assets and one way to do this is through property insurance. I am responsible for ensuring two separate valuations are undertaken for each of our properties. One to ascertain the market value for accounting purposes, and the other its reinstatement value, and it is essential the difference in these two values is understood.

The market value refers to the amount you would receive if you sell your property, whereas, the reinstatement value relates to the demolition and rebuilding costs of your property. If you rely only on the property’s market value and a reinstatement valuation is not carried out, there is a real risk of being under insured.

When calculating the reinstatement value a surveyor will generally categorise buildings and arrive at a reinstatement value on a price per square metre basis. However, in many cases a building can be quite unique and may not fit into a generalised category.

To create a more accurate reinstatement value numerous factors should be considered and assessed. Some of the factors to be considered can include:

  • Age of the Property / Listed Buildings/ Conservation Areas: this is a crucial consideration that can add significant cost and techniques to any subsequent rebuild.
  • Physical Location: This is often overlooked, where access is in particularly difficult. The demolition of a property in a tight or built up area would need to be adjusted considerably, adding cost.
  • Regional differences: again costs can differ regionally and in some cases even in different towns and cities where the availability of materials and labour will be different.
  • Keep valuations up to date: While it may appear to be cost effective to have your property valued once and then adjust it according to national rates of inflation, this is not recommended.  It is likely inflation rates could become inaccurate particularly at a local level overtime.  Build cost indices give an estimation of how all costs change over time. But there are so many factors to consider, one average rate cannot be accurate.

Having an accurate reinstatement value is crucial so your property is neither under nor over insured. If your property is under insured, in the event of a claim you may be faced with an funding gap in what the insurer pays out and what you actually need to reinstate your property. On the other hand, if your property is over insured you will end up paying higher premiums than necessary.


TDA is able to provide a building reinstatement valuation service and it would be my advice to have valuations updated, particularly where an asset has not been assessed for some time to ensure your building insurance is as accurate as possible, to the true reinstatement value of your property.


Paul Palmer, TDA Estates Manager, can be contacted at

RSS feeds