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    RICS professional standards and guidance, global

    RICS Valuation – Global Standards Effective from 31 January 2020

    Incorporating the International Valuation Standards

  • RICS Valuation – Global Standards

    Incorporating the IVSC International Valuation Standards

    Issued November 2019, effective from 31 January 2020

    Copyright acknowledgment: International Valuation Standards

    The International Valuation Standards Council, the authors and the publishers do not accept responsibility for loss caused to any person who acts or refrains from acting in reliance on the material in this publication, whether such loss is caused by negligence or otherwise.

    Copyright © 2019 International Valuation Standards Council (IVSC). All rights reserved.

    No responsibility is accepted by the IVSC for the accuracy of information contained in the text as republished or translated. The approved text of the International Valuation Standards is that published by the IVSC in the English language and copies may be obtained from the IVSC, 1 King Street, London EC2V 8AU, United Kingdom. Internet: http://www.ivsc.org

    Published by the Royal Institution of Chartered Surveyors (RICS) Parliament Square London SW1P 3AD UK www.rics.org

    No responsibility for loss or damage caused to any person acting or refraining from action as a result of the material included in this publication can be accepted by the authors or RICS.

    Produced by the RICS Valuation Professional Group.

    ISBN 978 1 78321 383 2

    © Royal Institution of Chartered Surveyors (RICS) November 2019. Copyright in all or part of this publication rests with RICS. Save where and to the extent expressly permitted within this document, no part of this work may be reproduced or used in any form or by any means including graphic, electronic, or mechanical, including photocopying, recording, taping or web distribution, without the written permission of RICS or in line with the rules of an existing licence.

    Typeset using Typefi.

  • Contents

    Preface 1 Part 1: Introduction 2 Part 2: Glossary 7 Part 3: Professional standards 12

    PS 1 Compliance with standards where a written valuation is provided ����������������������������������������������������������������������������� 12

    PS 2 Ethics, competency, objectivity and disclosures ������ 18

    Part 4: Valuation technical and performance standards 29

    VPS 1 Terms of engagement (scope of work) �������������������� 30

    VPS 2 Inspections, investigations and records ������������������ 40

    VPS 3 Valuation reports ������������������������������������������������������� 43

    VPS 4 Bases of value, assumptions and special assumptions ��������������������������������������������������������������������������������������������� 54

    VPS 5 Valuation approaches and methods ������������������������ 62

    Part 5: Valuation applications 64

    VPGA 1 Valuation for inclusion in financial statements ����� 65

    VPGA 2 Valuation of interests for secured lending ������������ 68

    VPGA 3 Valuation of businesses and business interests ��� 75

    VPGA 4 Valuation of individual trade related properties ���� 84

    VPGA 5 Valuation of plant and equipment ������������������������� 91

    VPGA 6 Valuation of intangible assets ������������������������������� 96

    VPGA 7 Valuation of personal property, including arts and antiques ���������������������������������������������������������������������������� 104

    VPGA 8 Valuation of real property interests ��������������������� 109

    VPGA 9 Identification of portfolios, collections and groups of properties ������������������������������������������������������������������������� 114

    VPGA 10 Matters that may give rise to material valuation uncertainty ����������������������������������������������������������������������� 116

    Part 6: International Valuation Standards 118

    ii RICS Valuation – Global Standards

  • 1RICS Valuation – Global Standards

    Preface

    This updated global edition of the RICS Valuation – Global Standards, or the RICS ‘Red Book Global’ as it has become widely known, reflects, among other things, the recent changes made and incorporated into the International Valuation Standards (IVS), as well as continuing progress in the development of international standards for ethics and for measurement. Other refinements include:

    • articulating in more detail the performance and delivery standards applicable when providing valuations for financial statements, which in some jurisdictions may form part of a mandatory performance framework

    • supplementing VPGA 7 to provide better coverage of Arts and Antiques and

    • improving and/or clarifying some of the existing Red Book Global text in the light of experience and also evolving needs.

    Red Book Global reflects the growing importance of successfully combining professional, technical and performance standards in order to deliver high quality valuation advice that meets the expectations and requirements of clients; of governments, regulatory bodies and other standard-setters; and of the public.

    Transparency, consistency and the avoidance of conflicts of interest have never been more important. Nor has technical expertise and practical ability ever been more in demand, including the experience and insight necessary to interpret and review market dynamics and trends, and – in relation to real estate assets – to recognise the growing relevance of sustainability factors as a market influence. RICS-qualified valuers are at the forefront of the valuation profession and the Red Book Global is their definitive implementation guide.

    Changes in this updated edition continue to focus on enhancing its clarity and ease of use, with improved cross-references to other source documents. As before, the International Valuation Standards are cross-referenced throughout and reproduced in full in Part 6.

    All members providing a written valuation are required to comply with the standards set out in this updated edition – in other words, unless stated otherwise, they are mandatory. The valuation practice guidance – applications (VPGAs) also included in this edition focus in greater detail on the practical application of the standards in specific contexts, whether for a particular valuation purpose or in relation to a particular asset type – they are advisory. The status of the component elements of the Red Book Global is explained in more detail in the Introduction that follows and in the second section of the Glossary.

  • Part 1: Introduction

    Overall purpose 1 Consistency, objectivity and transparency are fundamental to building and sustaining

    public confidence and trust in valuation. In turn their achievement depends crucially on valuation providers possessing and deploying the appropriate skills, knowledge, experience and ethical behaviour, both to form sound judgments and to report opinions of value clearly and unambiguously to clients and other valuation users in accordance with globally recognised norms.

    2 As the requirements of governments and regulators progressively increase and the expectations of valuation users continue to grow, global standards for valuation have continued to evolve and now take three different but closely interrelated forms:

    a Professional standards – centred on ethics and conduct, underpinned by knowledge and competence

    b Technical standards – centred on common definitions and conventions, underpinned by consistent application through recognised approaches

    c Performance or delivery standards – centred on rigour in analysis and objectivity of judgment, backed by appropriate documentation and clarity when reporting.

    3 With its focus on practical implementation, this updated edition of the RICS Valuation – Global Standards, commonly referred to as the RICS Red Book Global, applies the latest international standards and supplements them with additional requirements and best practice guidance that, when combined, provide the highest levels of assurance regarding professionalism and quality.

    4 At its heart this volume adopts and applies the International Valuation Standards (IVS) published by the International Val

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