When buying or selling property in Scotland, you may come across various types of property valuations, each serving a distinct purpose. One of these is the Scheme 1 valuation, a term often heard but not always fully understood. In this blog, we’ll break down what Scheme 1 valuations are, who needs them, and how they differ from other valuation types, including Home Reports.

What is a Scheme 1 Valuation?

A Scheme 1 valuation is a specific type of property valuation often requested by lenders during the mortgage approval process. Unlike the more comprehensive Home Report, a Scheme 1 valuation focuses solely on providing a valuation figure for the property. It is less detailed but essential in ensuring that the property’s value aligns with the mortgage amount being sought.

Who Needs a Scheme 1 Valuation?

Scheme 1 valuations are typically required by:

  • Mortgage Lenders: before approving a loan, lenders want assurance that the property’s value supports the mortgage amount

  • Buyers Using Special Financing Schemes: if you’re purchasing under a government or private financing scheme, such as shared equity, the lender or program administrator may request this valuation

  • Buyers Purchasing Property Without a Home Report: while most residential properties in Scotland require a Home Report, certain properties - such as new builds or commercial properties - are exempt and in such cases a Scheme 1 valuation might be required

What Makes Scheme 1 Valuations Different from Other Types of Valuations?

  1. Scope of the Report:

    • Scheme 1 Valuation: focuses solely on the market value of the property

    • Home Report: a comprehensive document covering the property’s condition, energy efficiency, and valuation

  • Purpose:
    • Scheme 1 Valuation: used primarily to satisfy lending requirements

    • Home Report: designed to inform buyers about the property’s overall condition and suitability

  • Detail:
    • Scheme 1 Valuation: includes only the valuation figure with minimal commentary on the property

    • Home Report: provides a thorough survey, including a condition report, energy efficiency rating, and valuation

  • Cost:

    • Scheme 1 valuations are usually less expensive than a full Home Report, as they require less detailed analysis

How Does a Scheme 1 Valuation Work?

The process for a Scheme 1 valuation typically involves:

  1. Appointment of a Surveyor:

    • A qualified chartered surveyor conducts the valuation on behalf of the lender

  • Inspection:

    • The surveyor conducts a brief inspection to assess the property’s location, size, and general condition

  • Valuation Report:

    • The surveyor submits a valuation report to the lender, specifying the market value of the property

When is a Scheme 1 Valuation Not Sufficient?

While a Scheme 1 valuation meets the needs of lenders, it might not provide enough information for buyers or sellers. For instance:

  • Buyers should not rely on a Scheme 1 valuation to assess potential repair costs or structural issues

  • Sellers might require a Home Report to comply with legal obligations for most residential sales

In these cases, a more detailed survey or Home Report is advisable.

Key Takeaways

  • Purpose: Scheme 1 valuations primarily serve lenders by providing a market valuation figure

  • Who Needs It: Buyers applying for mortgages or using special financing schemes

  • Key Difference: Unlike Home Reports, Scheme 1 valuations are not comprehensive and focus solely on property value

  • Cost-Effective: Generally more affordable but limited in scope

If you’re unsure whether you need a Scheme 1 valuation or another type of property report, it’s always best to consult with your mortgage advisor. At Simpson & Marwick, we’re here to help guide you through every step of the buying or selling process.

Need More Information?

Get in touch with our team at Simpson & Marwick for tailored advice on valuations, Home Reports and all things property-related.