© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
BUILDING REINSTATEMENT VALUATIONS (BRV’s) are often overlooked by property owners, who may wrongly assume that building costs rise or fall in line with inflation. This is not so and a more accurate method of establishing the true cost of rebuilding is to have the property reassessed periodically.
The Royal Institute of Chartered Surveyors (RICS) states that building reinstatement value is an ‘Assessment of Building Reinstatement Cost for Insurance purposes’. The assessment is typically carried out by a qualified surveyor who calculates the rebuild cost of the property. The Property Owner or Managing Agents where appointed, are responsible for ensuring an appropriate level of insurance cover is maintained on the property. Failure to act could mean a negligence claim or action for breach of covenant.
The building must be insured to cover the full cost of demolition and rebuilding together with any other allowances required by the lease terms. The insurance policy may cover ground rent and alternative accommodation for the lessees, but this should be clarified with the insurance company. The BRV makes no allowance for anything other than the rebuilding cost; therefore it is the Managing Agents responsibility to obtain all other cost information.
Should the property be under insured, the insurers are not obliged to pay the full costs required to reinstate the building. The Property Owner may lose their asset and the residents their homes. As the Property Owner or Managing Agents where appointed, you could be liable for any shortfall in the insurance payout.
If the property is over insured this may expose the managing agents to a determination from the Leasehold Valuation Tribunal, requiring them to re-pay the residents any premiums over paid by them.
To show an appropriate level of due diligence by the Property Owner or Managing Agents, a full BRV should be carried out on a 3 year basis with desktop valuations on a yearly basis. A BRV should also be carried out when there is a change in the building such as an extension or an improvement.
In order to assess the calculation of BRV, the age, construction, number of storeys, area of building, location, services, demolition costs, site clearance, storey height, Party Walls, Planning, Statutory Requirements and Professional Fees must be considered. VAT may be applicable to the scheme; however usually it is excluded.
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CASE STUDY: ALBERT COURT, LONDON
The need for the correct level of reinstatement cover. was dramatically highlighted a couple of years ago when a prominent managed block, Albert Court, just behind the Royal Albert Hall in London, caught fire and suffered significant damage. The level of cover was considered by the insurers and accepted because the owner had reassessed this on a regular basis. The repairs and rebuilding works involved significant works to more than 13 out of a total of 100 apartments, some worth many millions of pounds.