What does “material uncertainty” mean for property valuations?
— 18 May 2020 12:32:36 by Mark Deacon
Since lockdown our Professional Services team have undertaken RICS Red Book Statutory Valuations for a number of different reasons, such as Inheritance Tax (Probate), Leasehold Extensions, Pension Fund and Insurance.
In line with the Royal Institution of Chartered Surveyors guidelines, we’re able to undertake “desktop” valuations where the property is occupied and we’re unable to inspect in person. On a recent instruction, we were provided with a very clear video of the property through a client walk-through, which was as good as a physical inspection. Not only were we able to refer to the video throughout our preparation of the report, but we included it within the report itself.
RICS-regulated members, which GS&P are, have a professional duty to keep up-to-date with the latest government and regulatory requirements in their jurisdiction and locality. As a result of the RICS guidance, Valuers may refer to “material uncertainty”. In considering the degree of uncertainty at a specified valuation date, careful regard is given to the level of activity in the relevant market and the existence, and degree of reliability, of recent or contemporary evidence.
Where a material uncertainty clause is used, its purpose is to ensure that any client relying upon that specific valuation report understands that it has been prepared under extraordinary circumstances.
The RICS have clarified as follows: “The term is not meant to suggest that the valuation cannot be relied upon; rather, it is used in order to be clear and transparent with all parties, in a professional manner that – in the current extraordinary circumstances – less certainty can be attached to the valuation than would otherwise be the case. Indeed, with regard to the process itself, professional Valuers will almost certainly have undertaken far more due diligence than normal, in order to arrive at their estimate of value.”
To book a property valuation, contact Mark Deacon, Partner & Head of Professional Services.