This document applies to RICS members in the UK when applying existing use value (EUV) valuations of owner-occupied operational properties in public sector valuations. The content is intended to assist members by explaining and reaffirming the principles of EUV when used in the public sector financial reporting context and to enable a more consistent approach. While the geographic scope of this standard is the UK, many of the principles are globally applicable and may support RICS members outside these jurisdictions.

This professional standard addresses the valuation for financial reporting purposes of UK public sector owner-occupied operational properties that are classified as non-specialised. Their prescribed valuation basis is existing use value (EUV) as defined in UK VPGA 6 of the RICS Valuation - Global Standards: UK national supplement (Red Book: UK).

Please note: The cross references in this standard relate to the updated Red Book: UK, which went to consultation in November 2022 and is due to be published later in 2023.

It does not address any other use to which the term 'existing use value' is put, such as in development viability, where existing use value is the first component of the benchmark land value within a viability assessment.

The current definition of EUV dates from its inclusion from 1 May 2003 in the RICS Appraisal and Valuation Standards, 5th edition. There have been two previous RICS publications providing guidance on its principles and application, these being Valuation Information Paper 01 in 2002 and the guidance note Valuations for financial statements under UK GAAP in 2011, both subsequently archived as the use of fair value became predominant for financial reporting purposes.

Use of the UK VPGA 6 EUV basis has continued in the public sector for the valuation of property classified as property, plant and equipment (PP&E) under IAS 16 for financial reporting purposes. RICS has become aware that the continued use of EUV by UK public sector bodies in what is otherwise an International Financial Reporting Standards (IFRS) reporting environment, and in the absence of the previously available RICS guidance, can give rise uncertainty and inconsistencies in how valuers and other stakeholders are sometimes interpreting and applying the EUV definition and its conceptual framework.

This professional standard explores the underpinning measurement principles of the adapted accounting standards, unpacks the EUV definition and considers its practical application and issues that may be encountered by valuers. Case studies in appendix A provide best practice guidance on the application of EUV in a range of real-life scenarios.

As a market-based assessment of value, EUV relies on the availability of comparable market evidence that is capable of analysis and appropriate application by the valuer, using the required assumptions embodied within EUV, to reliably inform the asset valuation being undertaken. Where there is an absence of such market evidence, the valuer may have to resort to the use of depreciated replacement cost (DRC) as a measurement basis (see section 8).

This professional standard will be effective three months after publication.