What is a Mortgage Valuation? RICS Red Book & Lender Requirements
A mortgage valuation is one of the most critical stages of the formal mortgage process, because if the mortgage lender undervalues your property, you may not be able to buy the property at its current price. Unlike a structural survey, its primary purpose is to confirm to the bank that the property is worth the price you are paying and provides sufficient security for the loan.
Depending on the type of mortgage application, the mortgage lender will either instruct a RICS valuer to physically attend the property, or they'll use the Automated Valuation Model (AVM). If an RICS-registered valuer is required, then they will deliver a valuation in accordance with strict professional standards (known as the Red Book), ensuring the value is objective and legally defensible.
We explain below how the mortgage valuation is calculated under the Red Book Standard, when a site visit is required, and how and when to order the valuation.
When do you need a mortgage valuation?
A mortgage valuation is needed anytime you are looking to take out a new mortgage product, even if you are just transferring to a new product with the same lender.
- Purchasing
- Remortgaging
- Product Switch
- Bridging Loan
- Equity Release
The mortgage lender organises the valuation and will likely choose one of the following survey companies: e.surv Chartered Surveyors, Countrywide Surveying Services (CSS), or SDL Surveying. You cannot provide your own valuation.
What are the different methods for providing a mortgage valuation?
Mortgage lenders will choose between 3 different ways to provide the mortgage valuation.
- 1
Automated Valuation Model (AVM):
This is an electronic valuation used heavily for product transfers and remortgages.
- 2
Desktop valuations:
This is where an AVM is reviewed by a RICS surveyor, who provides a valuation report to the lender.
- 3
Physical site visit:
This is where a RICS surveyor attends the property and provides the mortgage valuation.
Regardless of method, all mortgage valuations must comply with the RICS Valuation Global Standards.
What is the RICS Red Book Standard?
The Red Book Standard ensures that all mortgage valuations are legally defensible, objective, and consistent across the UK property market.
The RICS valuer's primary goal is to determine the Market Value; the price at which an asset (the property) would exchange on the date of valuation between a willing buyer and a willing seller.
The RICS Hierarchy of Evidence Categories
In the RICS Red Book (VPGA 8), evidence is strictly ranked to ensure valuations are defensible. Including these categories helps readers understand exactly why a surveyor might reject certain "comparables" they’ve found on Rightmove or Zoopla.
Here is the breakdown you should include to finalise that section:
- A
Category A: Direct Evidence
This is the highest quality evidence. it consists of completed sales of near-identical properties in the same or an immediately competing location.
- B
Category B: General Market Data
This includes data from micro-markets with similar socioeconomic profiles or older sales data that has been adjusted for time using the House Price Index (HPI).
- B
Category C: Other Sources
This is the lowest tier and includes data from different property types where a weighted deduction must be applied, or general regional price-per-square-metre averages.
The Hierarchy of Evidence: What happens if there are no comparables?
A common reason for a down-valuation is a lack of recent sales on your immediate street. When this happens, RICS surveyors do not guess; they follow a Hierarchy of Evidence to determine the property's current market value.
- 1
Widening the search:
The surveyor will look at similar "micro-markets" in neighbouring postcodes that share the same socioeconomic profile.
- 2
Time adjustments (Indexation):
If the only local sales are 12 months old, surveyors use the House Price Index (HPI) to adjust those figures for inflation or market growth.
- 3
Asset comparison & weighted deductions:
If a semi-detached house hasn't sold recently but a detached one has, the surveyor applies a "weighted deduction" (often around 10-15%) to estimate the semi-detached value.
- 4
Price per Square Metre:
This acts as a final sanity check, comparing the internal floor area against broader regional averages to ensure the price is realistic.
Do mortgage valuers always visit the property?
No, not all mortgage valuations are completed by a surveyor going to the property. In some cases, they use an Automated Valuation Model (AVM), a digital tool that uses mathematical algorithms and extensive databases to provide property valuations instantly, without a physical inspection.
How an AVM works
Instead of a surveyor’s eyes, the AVM uses Big Data and Machine Learning. It pulls from several sources:
- Land Registry Data: Actual sold prices in the immediate postcode.
- Property Features: Number of bedrooms, square footage, and property type (from historic listings).
- House Price Index (HPI): Applying regional inflation or growth trends to the last known sale price.
- Confidence Scores: Each AVM result includes a Confidence Level.
If the data is thin or contradictory, the score is low, and a lender will usually reject the AVM and call for a physical survey.
When is an AVM Used?
Lenders typically use AVMs in "low-risk" scenarios to save time and costs (a physical valuation can take a week, while an AVM takes seconds).
Scenario | Use of AVM | Risk Level |
Remortgages | Highly Common | Low |
Product Transfers | Standard | Low |
Low LTV (e.g., <60%) | Common | Moderate |
New Purchases | Rare (Usually requires physical inspection by a RICS surveyor) | High |
Equity Release | Never | High |
Expert Tip: AWM is faster, but it comes with risks
While efficient, the Automated Valuation Model for mortgage valuations has a major blind spot: it cannot see the property. This leads to two specific risks:
- The "Assumed Condition" Risk: The model assumes the property is in "average" condition for its age and location. If you have spent £50,000 on a high-spec extension, the AVM won't know unless the Land Registry data has been updated with a new sale or you provide a physical "Category A" evidence check.
- The "Unique Property" Risk: If your home is of non-standard construction (concrete, steel, etc.) or is a unique one-off build, the AVM will often fail because there are no direct "comparables" in its database to match against.
AVM still adheres to the Red Book
Even though there is no human intervention at the point of the AVM being run, the RICS Red Book still governs how lenders use them. RICS requires that:
- The AVM must be fit for purpose for the specific property type.
- The limitations of the AVM (i.e., the lack of physical inspection) must be clearly stated in the report.
- Lenders must have a process to "escalate" to a physical survey if the AVM confidence score is too low.
Andrew Boast FMAAT
CEO of SAM Conveyancing
What triggers a low confidence score?
Several factors can cause an AVM to "fail" or produce a low score:
- Unique or "Outlier" Properties: If your home is significantly larger, smaller, or more modern than the rest of the street, the model has no baseline to compare it against.
- Low-Transaction Areas: In rural locations or on very stable streets where no one has moved for years, there is no "live" market data.
- Non-Standard Construction: If the database flags the area as containing concrete or steel-framed homes, the AVM score will drop because it cannot assess the structural integrity or "repair status" without a physical inspection.
- New Builds: Because a new-build price includes a "premium" that hasn't been tested by a second-hand resale yet, AVMs often struggle to value them accurately.
Risk Levels & Lender Actions
Mortgage Lenders set cut-off thresholds for these scores. If the score falls below their limit, the valuation process escalates:
- Low Confidence Score (e.g., <60%): The AVM is rejected. The lender will usually require a Physical Valuation where a surveyor visits the property.
- Moderate Confidence Score (e.g., 60%–80%): The lender may opt for a Desktop Valuation, in which a human surveyor reviews AVM data and satellite imagery but does not visit the site.
- High Confidence Score (e.g., >80%): The lender accepts the AVM instantly and proceeds to finalise the mortgage offer.
When is a desktop valuation required?
A desktop mortgage valuation will be used when an AVM has a moderate score of 60%–80%. This means the risk to the lender is too high for them to accept the data alone, and they want a RICS surveyor to review it and provide their own desktop valuation.
This doesn't mean the surveyor will attend the property; it is merely a "belt and braces" approach because of the risk profile of the data in the AWM.
Is a mortgage valuation the same as an RICS Home survey?
No. While a RICS qualified surveyor completes the survey, the mortgage valuer acts for the mortgage lender, and a Home Survey (Level 2 or 3) acts for the buyer. The goals and roles of each are different:
- Mortgage Valuer: Instructed by the bank to confirm the property's value and confirm if it is adequate security for the mortgage.
- Home Surveyor: Instructed by the buyer to confirm the condition of the property and, if a Level 2 Home Survey, confirm the current market value and reinstatement cost.
Book a RICS Home Survey Today
- We offer RICS Level 2 or 3 Home Surveys.
- National Coverage
- Inspections by one of our panel of local RICS surveyors.
- Reports delivered within 5 working days.
- Competitive Fees from £375 EXC VAT for a Level 2 Home Survey.
Mortgage Valuation vs Home Survey
Feature | Mortgage Valuation | Home Survey |
|---|---|---|
Purpose | Lender's risk assessment, focusing on the property's market value. | Buyer's assessment of the property's overall condition. |
Defect Identification | May flag major defects that affect property value, but is not designed for detailed defect identification. | Full visual inspection of all accessible elements of the property, with a detailed report of findings. |
Report | It belongs to the mortgage lender and isn't always provided to the mortgage applicant. | It belongs to the buyer, and the buyer isn't obliged to provide the report to the mortgage lender. |
Speed | Quick: if AWM, it is days; if via desktop valuation, a few days; and if via physical inspection, it'll be a week or so. | Depends on availability. At SAM Conveyancing, we book surveys within 5 working days, and reports are issued within a further 5 working days. |
Expert Tip: A mortgage valuation isn't for you
The lender obtains the valuation for their purposes only, and if they use the Automated Valuation Model or the desktop mortgage valuation process, it means no RICS surveyor has even set foot in your property. It is critical that a professional RICS surveyor complete a Home Survey of your property and report to you about its current condition, and provide guidance on future maintenance, and potentially, risks as to why you shouldn't be buying the property.
Andrew Boast FMAAT
CEO of SAM Conveyancing
Zero Valuation vs. Down Valuation
There is a difference between the surveyor thinking the property's value is lower than the offer price and not being able to value it at all.
- Down Valuation: The surveyor agrees the property is suitable security but believes the market value is lower than the purchase price.
- Zero Valuation: The surveyor believes the property is unmortgageable in its current state (common with unrepaired concrete frames or active subsidence).
What is included in a mortgage valuation?
- Property Fundamentals: Basic details including address, property type, age, and accommodation (number of rooms).
- Construction Assessment: Identification of building materials to flag non-standard construction (concrete, steel, or timber frames).
- Tenure Verification: Confirmation of Freehold or Leasehold status, including the remaining term of the lease.
- Market Value Figure: The valuer's professional opinion of the property's worth based on RICS Red Book standards.
- Hierarchy of Evidence: A list of Category A comparables (at least three recent local sales) used to justify the valuation.
- Essential Repairs & Defects: Notification of high-risk issues like subsidence, dry rot, or damp that affect loan security.
- Reinstatement Cost: The estimated cost to completely rebuild the property for building insurance purposes.
- Saleability & Environmental Factors: External factors such as proximity to commercial risks, flood zones, or invasive species like Japanese Knotweed.
Summary: How to get a mortgage valuation
We've completed the above guide to support you with your mortgage application. Here is the concise summary of how to get a mortgage survey.
- Mortgage Application: You need to kick-start the mortgage application process before you can get a mortgage survey.
- How to order the valuation: Your mortgage lender/broker will normally automatically order your mortgage valuation once you pass the affordability and ID checks.
- When do you pay? Most residential surveys are free; if you have to pay, you'll need to pay it through your mortgage lender.
- Which type of survey will they choose? Don't worry about this. The lender will decide what they need to prove the property's value.
- Non-Standard Construction: Be aware that your mortgage valuation will take longer and that there is a risk of a down valuation.
- Down Valuation: If the bank undervalues your property, it doesn't mean you can't proceed; there are solutions.
- Instruct a RICS Home Survey: Once you have your mortgage offer, you must instruct a RICS surveyor to review the property for visual defects.
Frequently Asked Questions About a Mortgage Valuation
Caragh Bailey is a Lead Property Content Specialist at SAM Conveyancing, having joined the firm in 2020. With a portfolio of over 150 technical conveyancing, house survey and mortgage guides, she has become a primary authority on the end-to-end sale and purchase process.
Caragh specialises in complex legal workflows, including Help to Buy redemptions, equity transfers, shared ownership structures, trust deeds for tax planning, and joint ownership disputes. Her expertise extends to leasehold reform and RICS home surveys, where she provides clear, factual guidance on independent legal advice for specialist mortgage products and intricate ownership structures.
Andrew Boast FMAAT is a qualified accountant, conveyancing specialist and author with over 25 years of experience in the UK property sector. Since beginning his career in 2000 within established SRA and CLC-regulated conveyancing solicitor firms, Andrew has overseen the legal journeys of more than 75,000 clients.
He is the author of the property guide 'How to Buy a House Without Killing Anyone' and a frequent contributor to mainstream UK media on legislative updates, property law, first-time buyer guides, conveyancing best practices, and stamp duty changes. Andrew specialises in resolving complex title issues, property conflict disputes, and property tax options, streamlining the enquiry process to reduce transaction times and maintaining a client-friendly focus.
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