RICS professional standards, global RICS Valuation ¢â‚¬â€œ Global 2018-07-24¢  review market dynamics and

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    RICS professional standards, global

    RICS Valuation – Global Standards 2017

    Incorporating the International Valuation Standards

  • RICS Valuation – Global Standards 2017

    Incorporating the IVSC International Valuation Standards

    Issued June 2017, effective from 1 July 2017

  • Copyright acknowledgment: International Valuation Standards 2017

    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 © 2017 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 2017 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 Valuation Professional Group of the Royal Institution of Chartered Surveyors.

    Previous editions

    The RICS Red Book was originally the RICS appraisal and valuation manual, which published as two separate titles: Guidance notes on the valuation of assets, 1st (1976), 2nd (1981) and 3rd (1990) editions, published under the title, Statement of asset valuation practice and guidance notes; and Manual of valuation guidance notes, 1st (1980), 2nd (March 1981) and 3rd (April 1992) editions. The RICS appraisal and valuation manual was reprinted in 1993, 1996, 1998, 2000 and 2002. The RICS Appraisal and Valuation Standards first published in 2003. Nine amendments published between March 2003 and April 2007. The RICS Valuation Standards, 6th edition, was: first published in 2008, amended in September 2008, reprinted in March 2009, amended in July 2009 and reprinted in April 2010. The 7th edition of the RICS Valuation Standards – Global and UK published in April 2011. The RICS Valuation – Professional Standards (Global and UK), 2012 edition, published in March 2012. The RICS Valuation – Professional Standards (Global and UK), 2014 edition, published in January 2014. Since then, with the emergence of other national valuation standards, the global and UK standards now publish separately.

    ISBN 978 1 78321 196 8

    © Royal Institution of Chartered Surveyors (RICS) June 2017. 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.

  • iiiRICS Valuation – Global Standards 2017

    Contents Preface 1

    Part 1: Introduction 2

    Part 2: Glossary 8

    Part 3: Professional standards 15

    PS 1 Compliance with standards where a written valuation is provided ����������� 15

    PS 2 Ethics, competency, objectivity and disclosures ��������������������������������������� 23

    Part 4: Valuation technical and performance standards 37

    VPS 1 Terms of engagement (scope of work) ���������������������������������������������������� 38

    VPS 2 Inspections, investigations and records �������������������������������������������������� 50

    VPS 3 Valuation reports �������������������������������������������������������������������������������������� 54

    VPS 4 Bases of value, assumptions and special assumptions �������������������������� 68

    VPS 5 Valuation approaches and methods �������������������������������������������������������� 78

    Part 5: Valuation applications 80

    VPGA 1 Valuation for inclusion in financial statements �������������������������������������� 81

    VPGA 2 Valuation of interests for secured lending ��������������������������������������������� 83

    VPGA 3 Valuation of businesses and business interests ����������������������������������� 91

    VPGA 4 Valuation of individual trade related properties ���������������������������������� 102

    VPGA 5 Valuation of plant and equipment ������������������������������������������������������� 111

    VPGA 6 Valuation of intangible assets ������������������������������������������������������������� 117

    VPGA 7 Valuation of personal property, including arts and antiques ��������������� 127

    VPGA 8 Valuation of real property interests ����������������������������������������������������� 133

    VPGA 9 Identification of portfolios, collections and groups of properties ������� 140

    VPGA 10 Matters that may give rise to material valuation uncertainty ������������ 143

    Part 6: International Valuation Standards 2017 147

  • 1RICS Valuation – Global Standards 2017

    Preface

    This new global edition of the RICS Valuation – Global Standards, or the RICS ‘Red Book’ as it has become widely known, reflects, among other things, the significant changes made and incorporated into the International Valuation Standards (IVS) 2017, as well as recent progress in the development of international standards for ethics and for measurement� Additionally it 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 is their definitive implementation guide�

    Changes in this 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 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 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 for