Owners of SPV companies in the United Kingdom very often ask whether investment properties held by the company require annual revaluation and who is actually authorised to carry out such a valuation. This topic arises regularly because it relates to financial statements prepared under the FRS 102 standard.
Does property revaluation have to be carried out every year?
The short answer is: no, the regulations do not require annual revaluation. The FRS 102 standard only requires that the property value shown on the balance sheet does not materially differ from current market value.
This means that:
- if property prices in your area change slowly, you may keep the same balance sheet value for several years,
- if the market has experienced a significant rise or fall in prices, the value in the financial statements should be updated to maintain reliability of the data.
In practice, most companies carry out revaluation every 3–5 years rather than annually.
Who can carry out a property valuation?
This is one of the most frequently asked questions. There is a common belief that every revaluation must be performed by a licensed RICS surveyor — but this is not entirely true.
The regulations allow two approaches:
Valuation carried out by an independent surveyor (e.g. RICS)
This is particularly recommended when:
- the property value is difficult to determine,
- there is insufficient comparable market data,
- the property is unusual or has a non-standard use.
Valuation carried out by the company itself (e.g. by the director)
This is permitted provided that the valuation:
- is based on reliable market data, such as:
– estate agency reports,
– Land Registry data,
– sale prices of comparable properties,
– bank analyses or market reports,
- and is properly documented.
The key point is that the valuation method must be reasonable and defensible in the event of review by an auditor or HMRC. It cannot be an approximate or subjective estimate.
When is it worth carrying out a revaluation?
Revaluation is particularly important when:
- the property value has increased significantly and you want to improve the company’s equity ratios,
- you are planning refinancing or sale of the property,
- you want to present the true value of assets to potential investors or lenders.
Important principle: consistency of the valuation model
If you decide to apply the revaluation model, you must:
- apply it consistently,
- apply it to all properties within the same category, not only selected assets.
This is an FRS 102 requirement designed to prevent selective enhancement of financial results.
Summary
Annual revaluation is not required — it is only important that the carrying value does not materially differ from market value.
A RICS surveyor is not always necessary — in many cases a rational, well-documented valuation prepared by the company director is sufficient.
Documentation is key — every valuation must be based on real, reliable market data.