The Red Book Flashcards
The Red Book - full name and date
RICS Valuation - Global Standards 2021
(Red Book Global)
Effective 31st Jan 2022
Part 1 and Part 2
Intro and glossary
Part 3
Professional Standards
PS1 =
5 exceptions to depart from red book compliance
- Statutory purposes e.g. tax
- Agency opinion of value
- Internal purposes
- Negotiation and litigation
- Expert witness - in anticipation of giving evidence
PS2 = Ethics, competency and objectivity
COI
RICS rules of conduct
Demonstrate professional competence
VPS
Valuation technical and performance standards
VPS 1
ToE
VPS 2
Inspections, Investigations and Records
- desktop valuations - if asked need to consider: nature of restriction agreed in ToE, possible valuation implications should be confirmed in writing, is the restriction reasonable, restriction referred to in the report
VPS 3
reporting - contents of the report
Draft report - purpose?
Preliminary advice to be marked as draft and for internal purposes
can discuss the figure with the client but cannot be changed unless new material evidence comes to light.
Reasons for change must be noted on file
VPS 4
Basis of value, assumptions and special assumptions:
- Market Rent, Market Value, Fair Value and Investment Value (Liquidation Value, Equitable Value)
- assumption is something that you assume to be true for the valuation without having to investigate e.g. good repair
- special assumption is something is not true but you take it to be for the valuation (realistic, relevant and valid)
VPS 5 (IVS 105)
Valuation approaches and methods
APPROACHES = market, income and profit
METHODS = comparable, investment, residual, DRC, profit
VPGA
Valuation Practice Guidance Applications
VPGA1
for financial purposes
VPGA2
for loan security purposes:
- 2 year conflict check
- Disclose COI in report
- Valuation methodology adopted
- Recent transaction occurred, state t and how much it affected the opinion of value
- environmental considerations
- suitability for LS
- SA material difference
VPGA8
Valuation of real property interests
covers inspection and investigation with emphasis on ESG
- ESG - indirect (regulation, co2 emissions) and direct (flood risk) impact
NEED TO CONSIDER IN VAL
VPGA10
Matters that give rise to material uncertainty
- report must not be misleading
- valuer must draw attention to any issues surrounding the uncertainty of the valuation and a date
Part 6 of Red Book = IVS
General Standards (ToE, basis etc)
Asset Standards (related to specific type of property)
