Bridging loan valuation:how lenders value commercial property
A bridging loan valuation is an independent RICS valuation of the property you are borrowing against, instructed by the lender to confirm its market value, its likely value on a quicker sale and, where works are planned, its value on completion. It decides how much the lender will advance, so it is one of the most important stages of any commercial bridge.
In this guide we explain who instructs and pays for the valuation, the different figures a valuer reports, how offices, shops, industrial units and trading assets are valued, how long it takes, and how to prepare. We arrange bridging finance through a broad panel of lenders, and a well-prepared valuation is often the difference between a smooth completion and a stalled one.
Key takeaways
A bridging loan valuation is an independent RICS report the lender relies on to size the loan.
The lender instructs a panel valuer and the borrower pays, usually up front.
Expect market value, often a 90 or 180-day value, and a GDV where works are funded.
Valuation method depends on property type: comparables, investment, profits or residual.
Good preparation reduces delays and the risk of a cautious down-valuation.
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Do you need a valuation for a bridging loan?
Almost always, yes. A bridge is secured on property and repaid in one lump sum, so the lender's protection depends on what the property is worth and how easily it could be sold. The valuation tells the lender both.
On commercial property, lenders usually require a full RICS valuation with an inspection, prepared to RICS Red Book standards by a valuer on the lender's panel. Desktop or drive-by valuations are sometimes accepted on simple, low-LTV cases, but they are the exception for commercial bridging finance rather than the rule.
The valuation feeds directly into your commercial bridging LTV: the loan is sized as a percentage of the valuer's figure, not your purchase price or estimate.
Who instructs the valuer, and who pays?
The lender instructs a valuer from its approved panel, and the report is addressed to the lender, which relies on it. You cannot usually commission your own valuation and submit it, because the lender needs a report it can rely on legally.
The borrower pays, usually before the inspection is booked. The fee is set by the valuer and depends on the property's value, type and complexity. It is normally payable whether or not the loan completes. See bridging loan fees explained for how it fits into total cost.
If you change lender part-way, some valuers will re-address an existing report to the new lender for a fee, provided that lender accepts the valuer. It is worth asking before paying for a new report.
What figures does a bridging valuation report?
A commercial bridging valuation can include several figures, each answering a different question for the lender.
Figure
What it means
Why the lender wants it
Market value
The price a willing buyer would pay after proper marketing
The main basis for LTV
90 or 180-day value
Value assuming a restricted marketing period
Shows what the lender might recover on a quicker sale
Vacant possession value
Value with no tenants in place
Tests the downside if tenants leave
Market rent
The rent the space could achieve
Supports a refinance exit
Gross development value (GDV)
Value once planned works are complete
Sizes works funding and checks the exit
Reinstatement cost
The cost to rebuild for insurance
Sets the buildings insurance requirement
The valuer also comments on condition, saleability, lettability and any risks, all of which shape the lender's view of your exit strategy.
Have a deal in front of you?Send us the property and the numbers. We will tell you quickly whether it is fundable.
How are different commercial properties valued?
Valuers use different methods depending on the property and how it earns money.
Comparable method: recent sales of similar property nearby. Common for smaller shops, offices, industrial units and vacant buildings.
Investment method: capitalising the rent from leases, adjusted for lease length, tenant quality and the market. Used for let investment property.
Profits method: based on the trading potential of the business, for hotels, pubs, care homes and similar trading assets.
Residual method: GDV less build costs and profit, used for land and development opportunities.
Trading assets need specialist valuers and carry more uncertainty, which is one reason lenders usually offer lower LTVs on them.
GDV: valuing property after refurbishment
Where your bridging finance includes a works budget, the valuer will also report a gross development value: what the property should be worth once the works are complete, on a special assumption that they are finished as specified.
To give an accurate GDV, the valuer needs your schedule of works, costings, plans and any planning consent or prior approval. Without them, the figure will be cautious. Lenders then size the facility against both current value and GDV, and may release works funding in stages. See our guides to light vs heavy refurbishment and refurbishment bridging loans.
How long does a bridging loan valuation take?
A typical bridging loan valuation follows five stages.
Instruction: once you accept terms and pay the fee, the lender instructs the valuer.
Booking: the valuer contacts the named access contact to arrange the inspection.
Inspection: the valuer visits, measures and photographs the property.
Research and report: the valuer gathers comparables, reviews leases and planning, and writes the report.
Lender review: underwriters review the report and may raise questions.
For a straightforward property, this can often move within days to a couple of weeks, depending on valuer availability and how quickly information arrives. Complex, multi-let or trading property takes longer. On an auction purchase, instruct as early as possible within the 28-day window.
How to prepare for the valuer's visit
Provide access quickly and name a contact who knows the building.
Send a pack in advance: leases, tenancy schedule, floor plans, planning history and any EPC.
Share your works plan and costings if you want a GDV.
Supply comparable evidence or agent opinions that support your view of value.
Explain any discount: if you are buying below market value, say why.
Have trading accounts ready for hotels, pubs, care homes and similar.
Preparation does not guarantee a figure. The valuer is independent and must reach their own view, but good information reduces the risk of a cautious figure caused by gaps.
What happens if the valuation comes in low?
A disappointing bridging loan valuation, often called a down-valuation, reduces the maximum loan, because LTV is calculated on the lower figure. On a purchase, you then need more deposit or a different structure.
Challenge with evidence: send relevant comparables the valuer may not have seen. Lenders will usually pass them on, though the valuer decides.
Renegotiate the price with the seller, using the report as support.
Offer additional security over another property to restore the loan size.
Try another lender, accepting a new valuation may reach a similar figure.
A low valuation is also a useful warning. If a professional valuer sees less value than you do, test your exit strategy before you proceed.
Unregulated commercial and investment bridging is arranged directly. Any case where the security includes a home you or an immediate family member occupies, including a flat above commercial premises, may be regulated and is introduced to a firm directly authorised by the Financial Conduct Authority. We are not directly authorised by the Financial Conduct Authority ourselves. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Almost always. A commercial bridging lender needs an independent RICS valuation to confirm what the property is worth and how saleable it is, because the loan is sized as a percentage of value and repaid by an exit. Desktop valuations are occasionally accepted on simple, low-LTV cases.
What is a typical interest on a bridging loan?
Bridging interest is quoted monthly and varies with LTV, property type, the strength of the exit, the borrower's experience and the loan size. Lower LTV and standard commercial property generally price better than high LTV, land or specialist assets. Our rates page explains the factors in more detail.
What exactly is a bridge loan?
A bridge loan is short-term, interest-only finance secured on property, typically for 1 to 24 months, used to fund a purchase, works or a capital need until a sale or longer-term refinance repays it in one lump sum. On commercial property it is usually arranged for business purposes.
What makes you eligible for a bridging loan?
Suitable property security, enough equity or deposit, a credible exit within the term, and a borrower who passes identity and anti-money laundering checks with an explainable credit history. A strong valuation supports all of these, because it confirms both the loan size and the exit.
Can I use a valuation I already have?
Usually not directly. Lenders need a report addressed to them from a valuer on their panel. Some valuers can re-address a recent report to a new lender for a fee, if that lender accepts the valuer. Ask before paying for a fresh valuation.
What is a 90-day or 180-day valuation?
It is the valuer's opinion of what the property would sell for if marketing were limited to 90 or 180 days. It is usually lower than full market value. Some lenders use it to size the loan on secondary or specialist property, so it can affect how much you borrow.