Valuation Notification - COVID-19 (Coronavirus)

The effects of the COVID-19 Virus will affect the work carried out by RICS Regulated Members in a variety of ways, with varying impacts. The exact consequences of the COVID-19 outbreak are unknown but inspecting property may be difficult either through their Firm’s own internal procedures, Government imposed restrictions or unwillingness of occupants to grant access. Access to evidential data such as comparables may also be less freely available.

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.

Current circumstances related to the global COVID-19 pandemic are leading some RICS regulated members* to include ‘material valuation uncertainty’ declarations in their reporting and advice. This does not mean that some RICS regulated members are currently unable to value, indeed valuation under these circumstances provides a key function to support markets and stakeholders. However, valuations may reflect the restrictions that material uncertainty brings. These decisions are on a case by case basis.

Springtime is traditionally a busy period for valuation and other financial reporting; in a fast-changing global situation, RICS regulated members need to be alert to circumstances at the valuation date. RICS has provided a suggested form of words within a Practice Alert on our website to support RICS regulated members who have made the independent decision to report material valuation uncertainty. RICS Red Book Global defines material uncertainty and its circumstances to assist the valuation process but the decision to report it remains with the independent valuer.

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

Ben Elder, RICS International Director for Valuation said: “The current unprecedented circumstances are challenging for everyone.  RICS expects its members and firms to act professionally and transparently at all times and this is particularly important when market conditions are changing rapidly.

“The effects of the COVID-19 Virus will affect the work carried out by RICS Regulated Members and firms in a variety of ways, with varying impacts. Inspecting property may be difficult and access to evidential data such as comparables, less freely available.

“RICS Regulated Members and firms may therefore be considering whether a material uncertainty declaration is now appropriate using the Red Book Process.  If material uncertainty is declared, this should be explicitly stated, and RICS has suggested today, a form of wording that can be used.

“These are to assist where a valuer feels that the unknowns are so significant that the valuation produced would be less reliable than in normal circumstances.”