What is the RICS Red Book?
The RICS Red Book contains mandatory rules, best practice guidance and related commentary for all members undertaking valuations of an asset (in our case, a property). It doesn’t tell a valuer how to value the asset, but does lay down the rules a valuer must follow.
There are two versions:
- RICS Valuation Global Standards (effective from 31 January 2020)
- RICS Valuation Global Standards 2017 UK National Supplement
The Global Standards adopt and apply the International Valuation Standards (IVS) 2020 and place a number of additional requirements on RICS members (AssocRICS, MRICS or FRICS). They are designed to ensure that valuation users (clients) are provided with the highest levels of assurance regarding professionalism and quality.
The UK national supplement sets out specific requirements, together with supporting guidance for members on the application of the Global Standards in the UK. Effectively, this includes other authoritative requirements specific to UK jurisdiction and subject to UK laws. This includes valuations for things like CGT (Capital Gains Tax) or ATED (Annual Tax on Enveloped Dwellings).
Only members of the RICS who are also Registered Valuers can undertake Red Book valuations.
What is a “Registered Valuer”?
Valuation registration is the RICS quality mechanism which monitors and assesses all registered RICS members who carry out Red Book valuations. It is important to note that a member of the RICS cannot carry out Red Book valuations unless they are also a registered valuer.
Every year, firms who employ registered valuers are required to submit an Annual Return to the RICS detailing the number of Red Book valuations undertaken. Registered Valuers are also open to an initial audit by an RICS Regulatory Surveyor, and other later reviews by the RICS, including a review of (normally) 3 valuations, supporting documents, report and file.
This ensures a valuation and report undertaken by a Registered Valuer meets the required professional standards and was carried out in accordance following best practice.
What does this mean for me, the consumer?
Handily, the Red Book answers this question thus:
For clients and other valuation users these global standards ensure that valuation assignments will be carried out in accordance with the International Valuation Standards 2017, and furthermore provide assurance of:
- consistency in approach, aiding understanding of the valuation process and hence of the value reported
- credible and consistent valuation opinions by suitably trained valuers with appropriate qualification and adequate experience for the task, including current knowledge and understanding of the relevant market
- independence, objectivity and transparency in the valuer’s approach
- clarity regarding terms of engagement (scope of work), including matters to be addressed and disclosures to be made
- clarity regarding the basis of value, including any assumptions or material considerations to be taken into account
- clarity in reporting, including proper and adequate disclosure of relevant matters where valuations may be relied on by a third party.
In essence, the aim of the Red Book and its application is to generate confidence in the valuation and report, and to assure the client that the work has been undertaken to the highest professional standards.
All our reports are signed off by RICS members who are also Registered Valuers.