RICS updates residential valuation guidelines

RICS is to clarify the guidance it provides to its members on the valuation of new build residential properties in the UK. These changes follow the recommendations of a joint Council of Mortgage Lenders (CML) and RICS working party which was convened to consider concerns over the difficulties facing valuers where sales incentives are offered by developers in an often less than transparent manner. It is not uncommon for furnishings and fittings, “cash-backs”,holidays or even new cars to be offered as incentives by developers to encourage people to buy new residential properties. These incentives can have a distorting effect on the market in that the price paid may not reflect the market value of the property. Valuers have always been required to provide mortgage lenders with an objective opinion of market value. This updated guidance should further assist them in this role. The updated guidance in RICS’s Red Bookfor valuers emphasises the need for valuers to be on their guard when valuing new build residential property and the effect of any sales incentives which could have a distorting effect on the agreed sale price.