RICS Red Book - UK National Supplement - Update 2022-2023

RICS is seeking views on updates to the UK National Supplement to the Global Red Book. This update will have two main purposes:   

  1. Regulated purpose valuations (UK VPS 3) updates in light of the Review of Real Estate Investment Valuation.
  2. Other updates relating to financial reporting, public sector valuations and residential valuations.

The sections of the UK National Supplement being updated are:

  • UK VPS 3: definition; changes regarding rotation policy; rotation transition policy; terms of engagement and instructions; and preliminary advice, draft reporting, and client discussions
  • UK VPGAs 1-3, 8 and 9: financial reporting
  • UK VPGAs 4-6, 16 and 17: public sector valuation
  • UK VPGA 11 (now incorporating UK VPGAs 12 and 13): residential valuation.

Note about Valuation Review related consultation material:

The proposed changes to UK VPS 3 have been informed by extensive market engagement, have the support of the Valuation Review Implementation Committee (VRIC) and have been approved by its Chair, Richard Waterhouse FRICS. It has also been approved by the Chair of the RICS Standards and Regulation Board (SRB), Dame Janet Paraskeva.

Stakeholder engagement thus far has included the 'Call for Evidence' for the Review of Real Estate Investment Valuations during 2021, and a formal 'Call for Views' conducted by RICS on possible changes to the Red Book standards, between 11 April and 20 May 2022. For further information on the Call for Views, click here.

FAQs and background information are contained on this page Review of Real Estate Investment Valuations (rics.org)

The draft Red Book UK Supplement makes numerous references to UK regulation and statute, some of which have changed since the last edition, or are due to change. We appreciate your further feedback on any outdated or missing references, which we will seek to address in the final published version. Valuers should always refer to the latest regulation and statute relevant to their area of work.

If you require further assistance or information, please contact Helvi Cranfield hcranfield@rics.org

This consultation will close on Wednesday 14th December 2022, at 23:59.

iConsult copyright notice: In using the iConsult web-space, you agree to license RICS and its group companies to reproduce in any format and at any place worldwide the contents of any posted material for any business purpose in perpetuity.

Proposed Valuation Review Amendments: Regulated Purpose Valuations

Background

The Review of Real Estate Investment Valuations was largely UK focused and principally looked at higher risk valuations upon which third party reliance is placed – essentially the valuations described in Red Book UK Supplement, VPS3. The review also made wider recommendations for the valuation profession that are not going to be reflected in this update of UK standards – such as around education and the professional assurance framework 

Rotation (UK VPS 3)

New sections have been added on rotation policy; rotation transition policy; terms of engagement and instructions; and preliminary advice, draft reporting, and client discussions.

The scope and definition have been amended.

If you are involved with regulated purpose valuations and would like to comment on proposed changes, please respond to the Rotation (UK VPS 3) questionnaire. 

Proposed General Amendments: Other updates relating to financial reporting, public sector valuations and residential valuations.

Background

The reasons for this technical update are as follows:  

You can comment on any aspect of the draft UK National Supplement through our General Questionnaire.

You can find a link to the current UK National Supplement (2018) here

In addition to commenting on general aspects of the UK National Supplement, there is a focus on three themes: (a) Financial Reporting [UK VPGAs 1-3, 8 and 9], (b) Public Sector Valuations [UK VPGAs 4-6, 16 and 17] (c) Residential Valuations [UK VPA 11], for which there are separate questionnaires linked below. 

Estimated Timeline and Further Engagement 

Post-consultation we will review all comments with our expert working groups and publish the updated UK Supplement by the end of Q1 2023.  

Please engage with us further on valuation through the MyRICS community or by email: standards@rics.org 

Financial Reporting (UK VPGAs 1-3, 8 and 9)

Valuations for financial reporting were the original raison d’être for the Red Book in the 1970s, and subsequently was the driving force for the IVS. Financial reporting still makes up a core element of the advisory content of the UK Supplement in its current format as per UK VPGA 1.as well as comprising content within Global – Valuation Standards (VPGA 1: ‘Valuation for Inclusion within Financial Statements). 

The reasons for this consideration of RICS financial reporting related content are as follows: 

  • Review alignment with the suite of overarching RICS standards, such as the current Global Valuation – Standards “Red Book” effective from 31/1/2022 and Rules of Conduct effective 2/2/2022.
  • Consider current end-user, market and professional assurance requirements.
  • Assess the need for any further content around emerging issues such as incorporating Environmental Social and Governance (ESG) factors in financial reporting, introduction of IFRS 16 etc.

Please note, public sector valuations, residential valuations and considerations from the Valuation Review are covered in separate sections.

If you are interested in giving your views, please respond to question 1 in the General Questionnaire.

Public Sector Valuations (UK VPGAs 4-6, 16 and 17)

Public sector valuation is considered in a number of elements of the UK Supplement, comprising advisory material at UK VPGA 4 (Valuation of local authority assets for accounting purposes), UK VPGA 5 (Valuation of central government assets for accounting purposes), UK VPGA 6 (Local authority and central government accounting: existing use value basis of value), UK VPGA 16 (Valuations for compulsory purchases and statutory compensation) and UK VPGA 17 (Local authority disposal of land for less than best consideration in England and Wales).  

The reasons for this consideration of RICS public sector valuation related content are as follows: 

  • Review alignment with the suite of overarching RICS standards, such as the current Global Valuation – Standards “Red Book” effective from 31/1/2022 and Rules of Conduct effective 2/2/2022.
  • Consider current end-user, market and professional assurance requirements.
  • Assess the need for any further content around emerging issues such as incorporating Environmental Social and Governance (ESG) factors in financial reporting, introduction of IFRS 16 in the UK public sector etc. 

In order to shape our development of public sector valuation content, we are undertaking this pre consultation of the content contained at UK VPGA’s 4, 5, 6, 16 and 17 Red Book UK Supplement.

Please note, financial reporting, residential valuations and considerations from the Valuation Review are covered in separate sections.

If you are interested in giving your views, please respond to question 2 in the General questionnaire

Residential Valuations (UK VPA 11)

RICS are reviewing all residential valuation content in the current Red Book UK Supplement and the residential mortgage specification contained in a previous (2015) version.  

The reasons for this consideration of RICS residential valuation content are as follows: 

  • Review alignment with the suite of overarching RICS standards, such as the current Global Valuation – Standards “Red Book” effective from 31/1/2022 and Rules of Conduct effective 2/2/2022.
  • Consider current end-user, market and professional assurance requirements.
  • Assess the need for any further content around emerging issues such as Environmental Social and Governance (ESG), leasehold reform and automated valuation models.
  • Provide clarity around the relationship with residential valuation content outside the Red Book UK supplement, for example the Valuation of Residential Leasehold Properties for Secured Lending Purposes Guidance Note.
  • Assess and review standards in light of the dynamics and range of contemporary residential valuation, from mainstream mortgage valuations to investment valuation and specialist valuation purposes.

In order to shape our development of residential content we are undertaking this pre consultation of the content contained at VPGA 11-14 and 18 of the Red Book UK Supplement and Appendix 10 of the 2015 standards.

Please note, financial reportingpublic sector valuations and considerations from the Valuation Review are covered in separate sections. 

If you are interested in giving your views, please respond to question 3 in the General questionnaire.

Timeline

  • Opened
    2 Nov 2022 at 06:00
  • Closes
    14 Dec 2022 at 23:59

Supporting Documents

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