What Does VPV Stand For In Commercial Mortgages?
The acronym ‘VPV’ is an abbreviation that stands for Vacant Possession Valuation. It is most commonly used in the commercial finance industry when referring to the value of a commercial building that produces income. The VPV is the assumed value (usually calculated by a surveyor) of a building if the tenant(s) is not there.
The vacant possession value is usually lower than the market value or investment value (with income producing tenant in situ). It takes into account the potentially difficulty in replacing a tenant or cost to convert the space into other usages.
When applying for a Commercial Mortgage its important to understand what valuation method any potential bank or lender is using. This can effect the amount of money they are willing to lend against a commercial investment property.
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