This is by Lorna Harrington, Managing Director, Fixed Asset Advisory Services at Kroll
In the last decade a selection of Desk Based Services have entered the marketplace for tackling underinsurance in property valuation. While such services remain uncompliant as far as the RICS is concerned, they do add value, offering a quicker, more cost-effective and even ‘greener’ solution compared to a traditional site-based survey.
The question is when and where are they an appropriate solution and when would you be literally pouring ‘money down the drain’ as the result would likely be so unreliable to render the report completely worthless.
Despite the age-old notion of ‘caveat emptor’ (buyer beware) it is surely the role of the key stakeholders – insurers, brokers and client advisors to ensure that clients make the purchase that is most suitable to their needs.
Client advisors that work on desk assessments should ensure that ‘red flags’ are integrated into the desk process as it leads to better advice and decision making. For example – if a client presents a property that sits within a larger building, questions should be asked as to the ownership of the building
Additional caution should be exercised regarding the building’s occupancy, as it directly influences the valuation of the interior fit-out. While out-of-town retail parks often follow standard construction models, typically leaving fit-out responsibilities to the retailer, an owner-occupied hotel presents a more complex scenario. Given its diverse range of spaces such as public areas, function rooms, wellness suites, and leisure facilities, a detailed on-site inspection is more appropriate to accurately assess its value.
Some services may rely on automated floor areas and, although floor area data is available, in certain territories it is not as robust or reliable as in others. For example, where dealing with ‘attached’ structures, the data currently available is not robust enough to provide a floor area that is usable. In urban areas especially, care and attention should be paid to the number of storeys, and where there are half storeys, attic space in use, and the presence of basements and floors beneath ground level.
In the case of light industrial and industrial buildings, the presence of mezzanines also needs to be considered, and this kind of information may not be available in the public domain or require enhanced research. During a recent project, we encountered that the ground floor measurement for a building was less than 8m²,prompting some amusement among our team, as it’s hard to imagine a building footprint smaller than a typical family car. However, when we extended our analysis to a property with a ground floor area of approximately 20m²,still remarkably compact, we discovered that the former building was the smallest building of its kind in the UK.
At Kroll we pride ourselves in being ‘building led’ as opposed to being ‘value led’. We therefore offer a desk-based service to many clients where appropriate but would not advise spending money on such a service where the results could be questionable. We will continue to champion bespoke, expert site-based solutions where a building has rarer or specialist materials or is more complex in its location and setting. This approach will enable us to deliver the best advice and enable all stakeholders to really understand the true cost of reinstatement.
Case Study
Recently, we came across a town centre location that could easily have been accepted as desk assessment. However, the client owned a series of listed buildings and therefore had chosen to spot check various insured values by way of site assessments. As a site surveyor you never quite know what you will find behind the front door.
Behind this unassuming commercial premises, we found:
· Very limited access due to its location being on a pedestrianised street; the side road was incredibly narrow. It is important to account for factors such as the need to deliver materials using smaller vehicles and the logistics of their arrival and departure. Time-of-day restrictions on deliveries of materials and equipment may also apply, and any limitations on flexibility can lead to increased project duration and associated costs.
· Limited appropriate areas to set up any potential site office, materials store, storage of equipment etc. In such situations, it may be necessary to lease a nearby property to establish a site office. For material storage, one option could involve temporarily cordoning off part of a pedestrianized street to create a secure area. Alternatively, frequent small-scale deliveries and removals may be employed. However, each of these approaches introduces additional costs when compared to working on a standalone property with its own dedicated land.
· An apartment building wrapping around and above our client’s property. Operating near neighboring properties can lead to project delays and elevated costs. In residential areas, work may be restricted to specific hours, and noise levels must be carefully managed, factors that can significantly impact scheduling and efficiency
· Five party walls. Why does this matter? Whenever a party wall is involved -that is, a wall shared between two adjoining buildings – the procedures outlined in the Party Wall etc. Act 1996 must be followed. This entails a formal process and the appointment of Party Wall Surveyors to represent each property owner, often resulting in increased professional fees. Conducting a site visit is crucial to identifying and fully understanding such potential complexities.
· A disused, physically attached, building to rear (under the same ownership) to which – due to asbestos – we could not get access to but absolutely impacted on the assessment of the subject building. This is due to the fact that any damage to the subject building could potentially affect and destabilize the adjacent structure. Asbestos, being a hazardous material, requires strict control measures when working in its vicinity. If removal is necessary, it must be carried out following precise protocols, with waste transportation and disposal handled exclusively by licensed facilities. Consequently, demolition and debris removal involving asbestos typically incur significantly higher costs
· Complexity related to a Roman road running beneath the property. While it may seem almost humorous, the discovery of archaeological remains is relatively common in urban environments. Following a loss event, when building works commence, local authorities may require a temporary halt to allow for an archaeological assessment or even a full excavation. These costs typically fall to the property owner, which is why a contingency allowance for such expenses is included in any Kroll Expert Reinstatement Cost Assessment.
Points that came out of this survey: Most property in England and Wales is insured by the freeholder and generally this would include the roof and foundations. Leaseholders are then responsible for their specific floors and any interior fit out they have added.
It is very unusual for an entity to be insuring their ‘piece’ under a Buildings policy; it would normally be under a Tenants Improvements policy
Questions you will be asked by your surveyor:
1. Who owns the flats above and around? Same owner or someone else?
2. We understand you own the property to the rear, do you want that included as part of this assessment?
3. We understand that they may be asbestos, we therefore need to up the allowance for debris removal to take that into consideration.
4. Do you have any further information on the potential of archaeology under your building? This again needs to be considered as – in the event of a major loss – any reconstruction works may be paused to allow for archaeological investigation.
The evolution of desk-based property valuation services has undeniably introduced speed, efficiency, and environmental benefits to the insurance landscape. Yet, their utility is not universal.
Site visits remain irreplaceable in scenarios involving complex ownership structures, heritage buildings, unusual construction materials, or logistical constraints. The case study presented underscores how seemingly straightforward properties can conceal layers of operational and regulatory complexity that only a physical inspection can reveal.
At Kroll, we ensure that each assessment is tailored to the property’s unique characteristics. Desk-based services have their place—but only when guided by expert judgment, red-flag protocols, and a deep understanding of the built environment.
Ultimately, the goal is not just to assign a number, but to deliver insight. And that insight, when grounded in real-world observation, empowers stakeholders to make decisions that are not only cost-effective but truly fit for purpose.
About Kroll’s Fixed Asset Advisory Services
Kroll’s Fixed Asset Advisory Services team provides comprehensive asset valuations, insurance assessments and compliance solutions to help clients manage and protect their physical assets. With a focus on accuracy, transparency and regulatory compliance, we help clients navigate complex valuation challenges and make informed decisions.
Be the first to comment