How to Value a Property for Probate in North London 

There’s enough to consider when a loved one passes away, but knowing what to do next can help. One of the first steps is valuing property for probate. 

North London’s typically high property values mean that many estates will exceed the inheritance threshold to pay tax. For instance, flats in Kilburn sold for around £719,000 on average last year, according to Rightmove, rising to £1,345,000 for terraced properties. Willesden Green homes reached an average selling price of £801,000, while the average Kensal Rise terraced home sold for around £1,250,000 over the same period.   

This means that you will have to act promptly, but there are experts who can help you. Our step-by-step guide to valuing property for probate explains the process and what you need to do.  

What is probate & how does property fit in?   

When someone dies, probate is the process of distributing their assets as the deceased would have wished. An executor will determine who owns a property during the probate process, along with the deceased person’s other assets.  

Property is often the most significant asset in an estate. Whether or not the beneficiaries intend to sell the property, they will need an accurate valuation. 

When & why do you need a probate valuation?   

You need to submit an estate valuation when you apply for probate, and the executor must pay inheritance tax to HM Revenue and Customs before the grant of probate will be given. IHT is normally due at 40% on estates over the £325,000 threshold. But there are exceptions – if a spouse or civil partner inherits the house, they won’t have to pay inheritance tax on it, while an increased threshold of £500,000 applies if the deceased’s children or grandchildren inherit. It’s also worth noting that you won’t pay stamp duty or council tax (if the property is empty).  

The valuation can serve other purposes too. You can’t buy or sell a property before probate is granted, though you can put it on the market. You may also need an accurate value to determine how the estate is shared.  

It is important that the value submitted to HMRC complies with Section 160 of the Inheritance Tax Act 1984. The valuation must reflect the property’s open market value at the date of death – not the current market value. 

Can an estate agent value a property for probate? 

Yes, estate agents can carry out a market appraisal for probate purposes, and indeed, this is a common option for straightforward estates. In many cases, the valuation will be free and gives you an open market value (OMV) estimate.  

However, estate agents cannot produce a formal RICS Red Book valuation. If the property is of a larger value, above the inheritance tax threshold or is an unusual property, then HMRC may be more likely to accept a RICS valuation.  

When approaching an estate agent, executors should specifically ask for an open market valuation at the date of death. An asking price of marketing appraisal may offer a less accurate or inflated figure. It’s recommended that you get two or three agent valuations then take the average, to strengthen your submission. Accuracy matters, as HMRC can challenge any valuation through the District Valuer Service. 

If you need a valuation for a North London property, speak to Portland about our valuation service. 

How to value a property for probate: a step-by-step guide 

1. Identify the executor of the will 

Check the will to find the named executor, or appoint an administrator if the person died without leaving a will. The executor or administrator has to submit the estate’s estimated value when they apply for grant of probate.  

2. Start the valuation process 

Seek a property valuation as soon as possible, as inheritance tax (IHT) carries strict time limits and property valuation can be slow. If IHT is due, you have 6 months from the person’s death to start paying tax and 12 months to submit inheritance tax forms. Ensure that the valuation reflects the open market value on the deceased’s date of death, not the date of the application. 

3. Collate probate property details 

Gather essential information on the probate property including its type and square footage, the condition it’s in, unique features and the recent sale prices of similar properties nearby. 

4. Have the property valued 

When you’re valuing property for probate, you can choose a Red Book valuation by a chartered surveyor or use a market appraisal. For estates likely to attract IHT, a RICS Red Book valuation is strongly recommended. Technically you can do it yourself, but submitting inaccurate figures can be a costly mistake – that’s why an accurate, professionally supported valuation is crucial.   

If HMRC believes the valuation figure submitted is inaccurate in any way, they can refer the case to the District Valuer Services (DVS). If the District Valuer disagrees with the valuation, you could receive a penalty of up to 100% of additional tax. 

A property valuation for probate is called a market appraisal: 

• Estate agent – it can be carried out by local estate agents 
• Smaller estates – they’re commonly used for lower value estates that fall under the tax threshold 
• Lower cost – market appraisals are typically free or up to 1% of the property’s value 
• Open market value (OMV) – this will give you an estimate of the property’s asking price if it was listed for sale 

Red Book valuation has several differences: 

• Chartered property surveyor – only a member of the Royal Institute of Chartered Surveyors (RICS) can carry it out 
• Lower risks – recommended if the estate is going to attract inheritance tax; the surveyor can answer any tricky questions HMRC ask about the valuation on the tax forms 
• Unusual properties – it’s often used if the property is unusual, a period property or listed building, best suited for development or no comparable homes have been sold recently 
• Higher cost – the average valuation costs between 2% and 5%, typically working out at between £200 and £800 

5. Evaluate any debts 

Find out if there are any debts attached to the property, as these will need to be deducted from its value. 

6. Submit the valuation & await response 

Send in your valuation, then wait for HMRC to inform you how much the inheritance tax payments will be.  

7. Re-evaluate pricing if necessary 

If the probate process is extensive and house prices change significantly, you have may have to re-evaluate the property valuation to reflect the market. 

8. Keep clear records 

The probate process is complex, and you may need to refer back to your records during it, or at a later date. For instance, if the property achieves a selling price above the probate property value, you may have to pay capital gains tax on the probate property. Be warned, should the property sell for significantly more than the probate value (particularly within 6 months of the grant of probate) then HMRC may treat this as evidence of undervaluation and seek to claim additional IHT. 

What is the district valuer – and when does HMRC get involved? 

HMRC can refer any probate valuation to its District Valuer Services (DVS) for independent review, though it’s more common among estates liable for inheritance tax. District Valuer Services DVS are ultimately responsible in deciding if relief is applied appropriately and whether enough tax has been paid. As the VOA is being absorbed into HMRC, scrutiny of probate valuations is expected to increase.  

If the District Valuer thinks the figure submitted is too low, they will negotiate with the estate agent or surveyor who originally valued the property. Where an agreement can’t be reached, the dispute may escalate. HMRC can impose financial penalties of as much as 100% of any underpaid tax if it rules that the executors were negligent in obtaining the valuation. This is why professional input can be invaluable. A professionally supported valuation, particularly a Red Book Valuation, is generally the strongest defence if a District Valuer queries the figure. 

Get an accurate valuation today  

Probate valuations call for the utmost care and accuracy. An inaccurate figure which could cause penalties or delays to an already complex process – all at a time when you have enough on your mind.  

We are here to help on probate and property matters, including providing a probate valuation for North London properties. If you need to discuss valuing property for probate in Dollis Hill, Cricklewood, Kensal Rise or West Hampstead, contact us.