RICS Valuation ¢â‚¬â€œ Professional Standards UK International Valuation Standards in the Red Book

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  • rics.org/standards

    RICS professional standards, UK

    RICS Valuation – Professional Standards UK January 2014 (revised April 2015)

    rics.org/standards

    RICS Valuation – Professional Standards UK January 2014 (revised April 2015)

    UK/APRIL 2015/20157/STANDARDS

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  • RICS Valuation – Professional Standards UK January 2014 (revised April 2015)

  • 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.

    ISBN 978 1 78321 105 0 (formerly included in RICS Valuation Professional Standards January 2014, ISBN 978 1 78321 025 1)

    © Royal Institution of Chartered Surveyors (RICS) April 2015. Copyright in all or part of this publication rests with RICS. 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 in Great Britain by Columns Design XML Ltd, Reading, Berks

  • Acknowledgments

    The International Valuation Standards Council, RICS, 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 © 2013 International Valuation Standards Council (IVSC). All rights reserved, subject to permission having been granted to RICS to reproduce the International Valuation Standards in the Red Book.

    No responsibility is accepted by the IVSC for the accuracy of information contained in the text as republished. 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

    The copyright of the text reproduced in UKVS 2.6 belongs to the Prudential Regulation Authority (PRA) and is reproduced with its permission. (Use of PRA material does not indicate any endorsement by the PRA of this publication, or the material or views contained within it.)

    RICS would like to thank the Chartered Institute of Public Finance and Accountancy (CIPFA) for its help in revising UK appendix 5. Extracts from the Code of Practice on Local Authority Accounting in the UK are reproduced with permission from CIPFA.

    The copyright of the text reproduced in UK appendix 9 belongs to the Financial Conduct Authority (FCA) and is reproduced with its permission. (Use of FCA material does not indicate any endorsement by the FCA of this publication, or the material or views contained within it.)

    Extracts from International Accounting Standard 17 Leases in UKGN 1:

    Copyright © IFRS Foundation. All rights reserved. Reproduced by Royal Institution of Chartered Surveyors with the permission of the IFRS Foundation®. No permission granted to third parties to reproduce or distribute.

    The IASB, the IFRS Foundation, the authors and the publishers do not accept responsibility for any loss caused by acting or refraining from acting in reliance on the material in this publication, whether such loss is caused by negligence or otherwise.

    RICS would like to thank Communities and Local Government for its help in revising UKGN 5, Local authority disposal of land for less than best consideration.

    RICS Valuation – Professional Standards UK January 2014 (revised April 2015) iii

  • Published in association with:

    www.irrv.org.uk

    The Institute of Revenues Rating and Valuation (IRRV) is the largest UK professional body operating in the field of revenues, benefits and valuation. IRRV valuer members usually have dual membership of RICS and IRRV.

    RICS Valuation – Professional Standards UK January 2014 (revised April 2015)iv

  • Contents

    1 Introduction to the UK valuation standards 1

    2 Summary of changes 6

    3 RICS UK valuation standards 10

    UKVS 1 Valuation of real property, plant and equipment for financial statements under UK GAAP 10

    UKVS 2 Valuations for financial statements – specific applications 34

    UKVS 3 Valuations of residential property 39

    UKVS 4 Regulated purpose valuations 49

    4 RICS UK appendices 51

    1 UK GAAP – Accounting concepts and terms used in FRS 102 51

    2 Property categorisation for company accounts prepared under UK GAAP 54

    3 Relationship with auditors 60

    4 Accounting for depreciation and associated apportionments under UK GAAP 66

    5 Valuation of local authority assets 73

    6 Examples of published references to valuation reports 81

    7 FCA Listing Rules 83

    8 Takeovers and mergers 89

    9 Collective investment schemes 92

    10 RICS residential mortgage valuation specification 95

    11 Application of the RICS residential mortgage valuation specification to related purposes 105

    12 RICS Scotland advice on issuing terms of engagement 114

    13 Valuation of registered social housing providers’ stock for secured lending purposes 116

    14 Affordable rent and market rent 119

    5 RICS UK guidance notes 122

    UKGN 1 Land and buildings apportionments for lease classification under IFRS 122

    UKGN 2 Depreciated replacement cost method of valuation for financial reporting 150

    RICS Valuation – Professional Standards UK January 2014 (revised April 2015) v

  • UKGN 3 Valuations for capital gains tax, inheritance tax and stamp duty land tax 168

    UKGN 4 Inspections and material considerations 174

    UKGN 5 Local authority disposal of land for less than best consideration 178

    UKGN 6 Analysis of commercial lease transactions 183

    UKGN 7 Valuations for charities 203

    RICS Valuation – Professional Standards UK January 2014 (revised April 2015)vi

  • 1 Introduction to the UK valuation standards

    Overall purpose

    1 Globally recognised, high-level valuation principles and definitions are now embodied in the International Valuation Standards (IVS) published by the International Valuation Standards Council (IVSC). The global edition of RICS Valuation – Professional Standards 2014, commonly referred to as the ‘Red Book’, formally recognises and adopts the IVS by requiring members to follow them. It also complements the IVS by providing detailed guidance and specific requirements concerning their practical implementation.

    2 This approach is reinforced by the RICS professional standards regarding ethics, skills a