Please note: This practice guidance was originally published in November 2018 but was amended in March 2026 following the HM Treasury review.
HM Treasury’s thematic review of non-investment asset valuation has confirmed minor but material changes affecting Depreciated Replacement Cost (DRC) valuations used for UK public sector financial reporting. Alternative site assumptions are now prohibited: valuers must not assume relocation to lower-value sites or land outside the required service-delivery zone. Land and buildings must be valued as a single integrated DRC asset, and land costed on a Modern Equivalent Asset (MEA) basis must remain within the required geography.
The purpose of this UK practice guidance is to draw attention to matters relevant to the use of the depreciated replacement cost (DRC) method of valuation. RICS’ existing guidance has now been updated to fully reflect these new requirements, with changes made to maintain consistency, auditability, and regulatory compliance.
The ‘cost approach’ and DRC method are regarded as synonymous terms; both are in common use around the world to describe a method of valuation of all types of assets. This practice guidance also highlights the reporting requirements outlined in RICS Valuation – Global Standards – UK national supplement 2023 that are particularly relevant when the DRC method has been used.
Published date: 07 April 2026
