RICS has released a consultation draft of changes proposed to its Global Valuation Standards.   These were last updated in 2022.  The prime driver for these changes is because the IVS have recently been updated.

The recent Pereira-Gray Review into valuations for property investment funds found that the Red Book is a "daunting document and that the reader might benefit from its structure being simplified to make it more accessible".  While it is proposed to remove some repetition along with a few minor layout simplifications, a lot more could be done.  However, a longer time scale than RICS has allowed for this update would be necessary.

Unfortunately, RICS do not follow IVS or other standard setters such as the Appraisal Foundation in the USA  in allowing a reasonable period for comments and consultations.  Having published the draft on 1 July, they have provided a consultation period of only 33 days, as comments are required by 2 August.

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We have now worked through the draft and our comments on each section can be viewed below.  Whether you agree or disagree with what we say you will hopefully find these helpful in understanding what changes may impact you and prompt you to respond, even if this is just on a single proposed change.

Here are some of the more significant changes proposed:

• The numbering sequence of the VPSs has been changed to reflect the latest IVSs and a new standard VPS5 - Valuation Models has been introduced.

• PS1 Section 5 has changes on the types of valuation work excepted from the VPSs.  Did you think a valuation for the internal use of the valuer's employer was one such exception?  It isn't anymore.

• VPS 1 has a new requirement if valuing a property held in a special purpose company.

• VPS 2 includes a new section on the treatment of Transaction Costs.

• VPGA 1, Financial Reporting, has been completely rewritten and now provides a comprehensive guide to the valuation requirements in IFRS for all non-financial assets

• VPGA 2, Valuations for Secured Lending, proposes a number of additional requirements, including making it compulsory to provide an as-is valuation if a special assumption valuation is provided, regardless of whether the client wants it.

• The scope of VPGA 7 overlaps with that of VPGAs 5 and 6.

• The guidance on ESG factors affecting real property values in VPGA 8 now has its own section.  This includes social and governance issues which seem to be a box ticking exercise of questionable relevance to the value of real property.

• The changes made to VPGA 10 on Material Valuation Uncertainty have not improved clarity and need revisiting.

• A new VPGA11 - Relationship with Auditors has been introduced.

 
While we appreciate valuers are busy, we urge as many Red Book users as possible to let RICS know what you think, even if it is only to make the point that if they want meaningful member engagement, a consultation period of at least three months is needed.