Axia Valuers

RICS Valuation Practice Alert - Coronavirus

RICS reminds Regulated Members that - in addition to following the directions of Government authorities - they should act in a transparent and professional manner.  Where there are changes to the way RICS Regulated Members normally proceed with instructions, this must be agreed with the client and any agreed changes must be recorded. RICS Regulated Members should make detailed file notes to support the rationale that underpinned the changes.

Any restrictions of information and/or the ability to inspect must be made clear, agreed with the client and clearly stated in the report. All affected terms of engagement must be amended to confirm this. These requirements also apply to any valuation assumptions that are made as a consequence of restricted access and/or valuation information. If the Regulated Member considers that it is not possible to provide a valuation on a restricted basis, the instruction should be declined.

RICS Members must be aware and act within the requirements of RICS Red Book Global. The relevant sections are:

1. VPS 1.3.1 (i) Nature and extent of the valuer’s work including investigations and limitations thereon
2. VPS 2.1 Inspections and Investigations
3. VPS 2.2 (g) Extent of Investigations
4. VPS 4.8 Assumptions

RICS Regulated Members should also ensure they understand and comply with any guidance or requirements issued by national jurisdictions (say as an emergency measure), which may take precedence over the RICS Red Book Global.

Individual Markets will react differently to the COVID-19 outbreak, and RICS Regulated Members may be considering whether a material uncertainty declaration is now appropriate. RICS Regulated Members should be fully aware of VPGA 10 and VPS 3 within RICS Red Book Global in the decision-making process. If material uncertainty is declared, you are reminded that this should be explicitly stated.

*RICS Regulated Members refers collectively to both individual registered members of the profession and firms that are registered with RICS for regulation.

** we = the RICS Regulated Member and not RICS

If the RICS Regulated Member has concluded there is material uncertainty, it is suggested that the following form of words can be used:

The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on 11 March 2020, has impacted global financial markets. Travel restrictions have been implemented by many countries.

Market activity is being impacted in many sectors. As at the valuation date, we** consider that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value.  Indeed, the current response to COVID-19 means that we are faced with an unprecedented set of circumstances on which to base a judgement.

Our valuation(s) is / are therefore reported on the basis of ‘material valuation uncertainty’ as per VPS 3 and VPGA 10 of the RICS Red Book Global. Consequently, less certainty – and a higher degree of caution – should be attached to our valuation than would normally be the case. Given the unknown future impact that COVID-19 might have on the real estate market, we recommend that you keep the valuation of [this property] under frequent review.

The full article is available here