Difference between existing use value and market value

The term 'existing use value' (EUV) describes what property or land is worth in its current form. In other words, the price that it can be sold for on the open market, assuming it will only be used for the existing use for the foreseeable future.

The term 'market value' refers to the price that property or land can actually be sold for on the open market.

Generally there is minimal or no difference between the EUV and market value of property or land, however, there are some instances where there will be a difference. For example, there may be an expectation that it will be possible to get planning permission to develop the land, or that it may be possible to change the use of property. This will give it a higher value, known as 'hope value'.

This can prove problematic when valuations are carried out, and generally the valuer will provide an opinion on both valuations and explain the reasons for the difference in their valuation report.

Such a difference could be material to an overall assessment of an entity’s financial position. For example, a company has an obligation under the Companies Act 1985 to disclose if the figure shown on its balance sheet is materially different from the market value of its assets.

There may also be a difference between the values if the valuation involves a property portfolio. According to 'RICS Valuation – Professional Standards', as long as the difference between the values on one individual property does not make a material difference to the aggregate value of the properties in the portfolio, the valuer is only required to indicate whether the market value of that particular property would be higher or lower than the EUV. They do not have to provide an alternative valuation or give reasons for the difference.

[edit] Related articles on Designing Buildings Wiki

• Development appraisal.
• Existing use value.
• Hope value.
• Land acquisition.
• Land value.
• Rating valuation.
• Red book.
• Site appraisal.
• Speculative construction.
• Use class.
• Value management.
• Value planning.
• What is a valuer?