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24 OCT 2018

Valuation oversights

Luay Al-Khatib

Luay Al-Khatib

Director of Regulation - EMEA

London

RICS

Luay Al-Khatib, Director of Regulation EMEA, RICS, explains the importance of valuation standards, and its work to ensure the profession complies with the necessary standards.

Valuation standards

As a professional service that underpins confidence in investment markets, globally, valuation matters. Asset values take centre stage in any financial account, whether they relate to real estate, capital equipment, intellectual property or financial assets.

This is why significant effort has gone into developing an internationally agreed set of valuation principles and definitions, through the International Valuation Standards (IVS), which is now in its fourth decade, and increasingly recognised by governments and leading institutions around the world.

At RICS, we have been at the forefront of international standards development for over four decades and we are committed to embedding IVS as a single, consistent valuation standard, worldwide. As the leading global professional body for valuers we require the members of our profession, whatever sector or part of the world they operate in, to comply with IVS through our own mandatory standards framework. RICS Valuation - Professional Standards (commonly known as the 'Red Book') is issued by RICS as part of our commitment to promote and support high standards in valuation delivery worldwide. The publication details mandatory practices for RICS professionals undertaking valuation services. It also offers a useful reference resource for valuation users and other stakeholders.

Holding the profession to account

Without effective oversight, standards are no more than words on a page, with the risk advisers and their clients may ignore them. RICS has operated a mandatory valuer registration and monitoring programme (VR) to support the consistent application of Red Book valuation standards by members of the profession, worldwide. Introduced in 2011, VR is now mandatory for RICS members in most countries around the world with some 16,000 registered valuers worldwide.

Together, the Red Book and VR aim to raise confidence in and provide assurance to clients that a valuation provided by an RICS qualified valuer, or regulated firm anywhere in the world will be undertaken to the established international benchmark. Respectively, the standard and regulatory underpinning build trust in the profession - by maintaining a global framework of technical and professional standards rigorously enforced through a regulatory compliance monitoring regime and discipline.

Calling on a multi-disciplinary team, including specialist reviewers, the VR review programme has monitored the work of thousands of valuers, through detailed file review and audit, to check compliance with the Red Book. VR also checks firms’ systems and controls under which valuations are produced. The core monitoring programme is supported by the wider RICS team; responsible for training, standards development and, where it is needed, disciplinary action.

What can clients do to help?

As a client of an RICS member or firm, you can expect observance of our standards. Clients should take time to familiarise themselves with the Red Book (which is accessible for free on the RICS website). To explain the importance of the Red Book to valuers and their clients worldwide, and understand why it is essential to produce accurate, compliant and professional valuation reports RICS has put together the Global Red Book 2017 e-learning course. This course provides context to the Red Book, along with the fundamental principles underpinning their use, and mandatory rules, best practice guidance and related commentary.

Regional Significance

Ultimately it takes professional valuers, clients, redress providers, insurers and RICS to work together to maintain standards and for this reason, we encourage active engagement from all parties in the valuation process. We are consistently working on building a broader and more proactive dialogue with lenders and other institutional clients, to ensure we understand how the profession is performing and where the challenges lie from the client perspective.

Recently, RICS signed a Memorandum of Understanding (MoU) agreement with the Department of Urban Planning and Municipalities (DPM) in Abu Dhabi. Through the agreement, RICS will assist DPM in drafting and introducing a real estate valuation standard for Abu Dhabi that will be completely aligned with the International Valuation Standards (IVS) 2017. The local valuation chapter will also be fully compliant with the Red Book Valuations.

The valuation profession in this region is growing, and there is a concerted move, supported by authoritative bodies, towards embracing IVS. This year, IVS Council’s annual gathering meeting (AGM) took place in Dubai for the first time in the Middle East, with Dubai Land Department sponsoring the event. This shows that governments are now taking a real interest in developing an effective regulatory model that supports the valuation profession.

International Standards

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Luay Al-Khatib

Luay Al-Khatib

Director of Regulation - EMEA

London

RICS

Luay is Director of Regulation for EMEA (encompassing the UK and Ireland, mainland Europe, the Middle East and  Africa), a role which he took up in January 2015. As director he leads the EMEA regulatory team, responsible for delivering world class regulation of RICS qualified members and regulated firms in the region.

The work of Luay and his team, to monitor and, where necessary, enforce compliance with RICS standards, is key to ensuring the profession remains trusted and that the public interest is upheld. The EMEA regulation team work with the RICS Regulatory Board and its UK&I and EMEA sub-boards, to set and deliver RICS regulatory strategy.