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The Vital Role of a Valuer in a Commercial Property Bridging Loan Transaction

When it comes to securing financing for a commercial property, bridging loans have become an increasingly popular option in recent years. Bridging loans are a type of short-term finance that are designed to bridge the gap between the purchase of a property and the longer-term financing that will eventually be put in place. One of the key players in the bridging loan process is the valuer, who plays an essential role in determining the value of the property being used as collateral for the loan.



The role of the valuer is to provide an accurate and independent assessment of the value of the property that is being used as collateral for the loan. This involves a thorough inspection of the property, taking into account a range of factors such as the location, the condition of the property, and any recent sales of similar properties in the area. The valuer will then produce a detailed report that outlines their findings and provides an estimate of the current market value of the property.


The valuation report is a crucial piece of information for the lender, as it forms the basis of their decision to approve the loan and sets the maximum amount that they are willing to lend against the property. If the valuation is lower than expected, the lender may decide to offer a lower loan amount or to decline the loan altogether.


In addition to determining the value of the property, the valuer also plays an important role in assessing the level of risk associated with the loan. This involves looking at factors such as the borrower's credit history, the purpose of the loan, and the level of security that is being offered. The valuer will take all of these factors into account when producing their report, providing the lender with a clear picture of the risks involved in the transaction.


It is important to note that the role of the valuer is to provide an independent and unbiased assessment of the property, rather than to advocate for either the lender or the borrower. This ensures that the valuation is fair and accurate, providing both parties with the information they need to make an informed decision about the transaction.


The cost of valuation typically depends on the value of the property, with the average cost of a commercial property valuation in the UK ranging from £500 to £30,000 for properties ranging in value from below £1m to upwards of £30m in value for super prime central London properties. The cost of a valuation is always borne by the borrower.


Overall, the role of the valuer in a commercial property bridging loan transaction is a vital one. Their assessment of the value of the property and the associated risks provides the lender with the information they need to make an informed decision about whether to offer the loan, while also giving the borrower confidence that they are securing financing on fair and accurate terms. Whether you are a borrower or a lender, working with a reputable and experienced valuer is key to ensuring a successful and stress-free transaction.


Enquiries


For further information, please contact sr@bridgingfunding.com.


About the author


Sabbir Rahman is Managing Director of Langdon Capital and a Partner at Bridging Funding. He has held prior roles with Morgan Stanley, Lazard and Barclays Investment Bank. He has executed over £60 billion in notional value of transactions across financing, M&A and derivatives with global corporates, private equity funds and financial sponsor groups.


About Langdon Capital


Langdon Capital provides in-house transaction services to C-suites and Boards of publicly-listed and PE-backed businesses during the negotiation, execution and due diligence of corporate finance and capital markets transactions and senior interim resourcing solutions across finance, treasury, strategy and corporate development | contact info@langdoncap.com | visit www.langdoncap.com


About Bridging Funding


Bridging Funding is a private credit fund engaged in principal lending of commercial property bridging loans in the UK and select South-East Asian markets. We lend between £200k and £20m per transaction. As a private credit fund, our credit sanctioning process is leaner and more flexible than lenders funded by bank capital | contact sr@bridgingfunding.com | mention code “Langdon” for preferential rates | visit www.bridgingfunding.com



This is not financial advice or any offer, invitation or inducement to sell or provide financial products or services or to engage in any form of investment activity.

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