What is the Reinstatement Value of a property?

Put simply, the Reinstatement Value is the cost of rebuilding a property*. It is used by insurance companies to ensure your Buildings Insurance is adequate to cover damage to, or destruction of, a property. It is important to have an accurate valuation for reinstatement purposes because if you are  nderinsured, you many not receive a full payout for claims.

*Full definition – the present day cost, plus one years inflation allowance, of rebuilding the entire property to precisely the same specification and size as existing except where this is precluded by law. It includes for demolition and professional fees but not for VAT, except on professional fees.

Why is Buildings Insurance important?

There are two main reasons it is important. One is to ensure that you will not be left out of pocket if the worst happens and your home needs rebuilding. Secondly, lenders insist on a mortgaged property having adequate Buildings Insurance. You may therefore be in breach of your mortgage conditions if you do not have Buildings Insurance.

Is the Reinstatement Value the same as the Market Value?

No. The Reinstatement Value is simply the cost of rebuilding a property. The Market Value is what a property should sell for on the open market and takes into account the size of the property along with other relevant factors such as location, condition and size of plot.

Have Reinstatement Values changed in recent years?

Yes. Due to various factors such as Brexit, Covid and inflation, Reinstatement Values have increased by a substantial amount in recent years. It is likely a lot of homeowners are currently underinsured.

How do I work out the Reinstatement Value for my property?

It is possible to get a rough Reinstatement Value for your property on websites such as the BCIS (Building Cost Information Service), however, these are rather rudimentary and may not take into account all relevant factors. For an accurate valuation it would be best to speak to a Chartered Surveyor at Allied Surveyors Scotland.

Simon Breeze, MA(hons) MSc MRICS

Requesting a Reinstatement Valuation

If you need a professional Reinstatement Valuation, Allied Surveyors Scotland can help. You can contact our Head Office at info@alliedsurveyorsscotland.com or reach out to any of our 30 offices across Scotland for expert advice and assistance.