As part of the new resource, summary content and guidance for members will be updated regularly to reflect current advice due to fast changing requirements. Separately, it is the duty of RICS professionals to keep up to date with the regulations and changing circumstances of their locality.
While it is the judgement of the valuer on a case by case basis*, RICS is also making available in the hub the recommendations of an RICS convened Material Valuation Uncertainty Leaders Forum (UK). The forum was convened by RICS to consider the unique events relating to the global COVID-19 pandemic and its impact on valuation assignments.
The forum has a focus on financial reporting and measures for the accurate and consistent reporting of material uncertainty in the UK. It comprises a group of expert valuers covering a wide range of asset classes and specialisms, and the insight will inform a consistent market approach, supporting our professionals, their clients and the wider public.
The terms of reference, recommendations, and criteria used to make the recommendations will be publicly available for consideration and notes of the forum published and updated on a weekly basis.
As part of the first update, and assessed against the published criteria, there was a consensus that reporting material valuation uncertainty may no longer be appropriate for:
- Long dated annuity income with at least 20-years unexpired term certain with a secure covenant such as Government or very strong investment grade
- Standalone food stores let to major operators
- Institutional grade primary healthcare facilities
As with all valuation, the judgment and expertise of the valuer, backed by evidence, is paramount. Valuer discretion should again remain in all cases and if it is felt that any investment in the valuer’s opinion remains materially uncertain, the clause should remain in place. The outputs of the RICS Material Valuation Uncertainty Leaders Forum (UK) are based on a high-level overview of market conditions, and necessarily cannot take into account factors applying to specific assets, regions or markets.
Ben Elder, RICS Global Valuation Standards Director comments: “Following the declaration of material valuation uncertainty, and as part of our leadership role, RICS convened a leader’s forum of experts in a wide range of asset classes and valuation specialisms. The insight from the forum will ensure consistency in decision making criteria and market approach as our profession make independent valuation decisions. It is of course, as with all valuation, up to the judgement of the individual valuer on a case by case basis. All decisions should be backed up by the appropriate evidence.
“The group will be publishing updates on a regular basis, and as part of the first output from the group, it has been recommended that in the limited circumstances of assets with Long dated annuity income with at least 20-years unexpired term certain with a secure covenant such as Government or very strong investment grade; standalone food stores let to major operators; and institutional grade primary healthcare facilities; Material Uncertainty Valuation declarations may no longer be appropriate. However, Valuer discretion should again remain in all cases and if it is felt that any investment in the valuer’s opinion remains materially uncertain, the declaration should remain in place.”