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News & opinion

29 MRZ 2018

Mortgage lending value – what can an RICS valuer do?

In Europe, RICS professionals are from time to time requested to undertake a Mortgage Lending Value (MLV). As MLV is not a recognised valuation base of International Valuation Standards and the Red Book, RICS provides further guidance.

The newly published RICS guidance note  Bank lending valuations and mortgage lending value, 1st edition seeks to answer some key questions on MLV raised by our professionals, and also opens up a debate on ‘long-term value’.

Why an RICS Guidance Note on Mortgage Lending Value?

Put simply, clients can request MLV in certain jurisdictions for bank lending purposes. The guidance note gives an overview on the countries where MLV is part of legislative requirements, such as Germany and Spain. However, this guidance note also has relevance for valuers in markets where MLV is not part of legislation, but where international clients (such as German banks) ask for it.

What does an RICS valuer need to take into account?

Most importantly, this guidance note expressly confirms that there is no objection for a suitably qualified and experienced RICS valuer to provide advice on MLV, provided the valuer understands the method and the underpinning regulation. 

Also, the valuer will need to make explicit which MLV definition is used and which methodology is applied, making it clear it is distinct from Market Value (MV). It is not an MV under special assumptions.

Whilst the RICS Red Book does not oblige, we advise that MV remains an important and integral component of any valuation assignment, and we therefore recommend that MV is provided for all secured lending valuations regardless of any other method of valuation used.

What’s next?

Beyond MLV, we address ‘long-term value’ in Annex A of the Guidance Note. This topic is also addressed in the recently published RICS Insight Paper on the Future of Valuations. We expect this topic to become increasingly relevant and of interest to both valuers and clients, and we will continue the discussion in cooperation with e.g. valuation organisations such as HypZert, and industry organisations representing the major clients. Do let us know your thoughts.  


Sander Scheurwater, Director Corporate Affairs, Europe, RICS