RICS Valuation – Global Standards

1 RICS Valuation Global StandardsEffective from 31 January 2022 GlobalRED BOOK Global STANDARDSRICS Valuation Global STANDARDSG lobalNovember 2021 Effective from 31 January 2022 Published by the Royal Institution of Chartered Surveyors (RICS) Parliament Square London SW1P 3AD UK 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 by the RICS Valuation Professional 978 1 78321 451 8 Royal Institution of Chartered Surveyors (RICS) November 2021. 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 using Valuations Standards copyright noticeThe adoption or use of any international Valuation Standards Council Standards by any entity is entirely voluntary and at the user s risk.

2 The international Valuation Standards Council does not control how or if any entity chooses to use the Standards and does not and cannot ensure or require compliance with the Standards . The international Valuation Standards Council does not audit, monitor, review, or control in any way the manner in which users apply the 2021 international Valuation Standards Council. All rights part of this publication may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without permission in writing from the international Valuation Standards address publication and copyright matters to: international Valuation Standards Council, 4 Lombard St, LONDON, EC3V 9AA, UK United Kingdom Email.

3 978-0-9931513-4-7 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 and printed by Page Bros, NorwichContentsPreface 1 Part 1: Introduction 2 Part 2: Glossary 8 RICS glossary of technical terms .. 8 Standards and guidance naming conventions explained .. 14 Part 3: Professional Standards 15PS 1 Compliance with Standards where a written Valuation is provided 15PS 2 Ethics, competency, objectivity and disclosures 221 Professional and ethical Standards .

4 222 Member qualification .. 233 Independence, objectivity, confidentiality and the identification and management of conflicts of interest .. 244 Maintaining strict separation between advisers .. 265 Disclosures where the public has an interest or upon which third parties may rely .. 276 Reviewing another valuer s Valuation .. 327 Terms of engagement (scope of work) .. 328 Responsibility for the Valuation .. 33 Part 4: Valuation technical and performance Standards 34 VPS 1 Terms of engagement (scope of work) 351 General principles .. 352 Terms of engagement format .. 363 Terms of engagement (scope of work) .. 36 VPS 2 Inspections, investigations and records 461 Inspections and investigations.

5 462 Revaluation without re-inspection of real property previously valued .. 483 Valuation records .. 49 VPS 3 Valuation reports 501 General principles .. 502 Report content .. 51 VPS 4 Bases of value, assumptions and special assumptions 62 IPiiiRICS Valuation Global STANDARDSIPivRICS Valuation Global STANDARDS1 Bases of value .. 622 General principles .. 623 Bases of value .. 634 Market value .. 645 Market rent .. 656 Investment value .. 657 Fair value .. 658 Assumptions .. 669 Special assumptions .. 6710 Valuations reflecting an actual or anticipated market constraint, and forced sales .. 6811 Assumptions and special assumptions related to projected values .. 70 VPS 5 Valuation approaches and methods 71 Part 5: Valuation applications 73 Introduction.

6 73 VPGA 1 Valuation for inclusion in financial statements 741 Scope .. 742 Valuations under international Financial Reporting Standards (IFRS) .. 743 Valuations of public sector assets under international Public Sector Accounting Standards (IPSAS) .. 754 Other cases .. 755 Performance Standards .. 75 VPGA 2 Valuation of interests for secured lending 791 Scope .. 792 Background .. 793 Independence, objectivity and conflicts of interest .. 804 Taking instructions and disclosures .. 815 Basis of value and special assumptions .. 826 Reporting and disclosures .. 83 VPGA 3 Valuation of businesses and business interests 861 Scope .. 862 Introduction .. 863 Scope of work and terms of engagement.

7 874 Businesses and business interests .. 875 Information .. 896 Valuation investigation .. 897 Valuation approaches and methodology .. 91 IPvRICS Valuation Global STANDARDS8 Reports .. 949 Confidentiality .. 95 VPGA 4 Valuation of individual trade related properties 961 Background .. 962 Terms used in this VPGA .. 973 Profits method of Valuation .. 994 Valuation special assumptions .. 1005 Valuation approach for a fully equipped operational entity .. 1006 Assessing the trading potential .. 1017 Valuation approach for a non-trading property .. 1028 Apportionment (referred to as Allocation of Value in IVS 104 Bases of Value) .. 1029 Valuation for investment purposes .. 103 VPGA 5 Valuation of plant and equipment 1041 Scope.

8 1042 Background .. 1043 Plant and equipment usually included in valuations of the property interest .. 1054 Plant and equipment separately valued .. 1065 Plant and equipment subject to finance, lease and collateral agreements .. 1076 Material considerations .. 1077 Regulatory measures .. 108 VPGA 6 Valuation of intangible assets 1101 Scope .. 1102 Introduction .. 1103 Terms of engagement .. 1114 Valuation concepts .. 1125 Valuation due diligence .. 1126 Valuation approaches .. 1147 Present value techniques .. 1158 Reports .. 1179 Confidentiality .. 118 VPGA 7 Valuation of personal property, including arts and antiques 119 1 Introduction and scope .. 1192 Terms of engagement .. 1203 Identifying the market.

9 1204 Inspection, research and analysis .. 1215 Valuation .. 1226 Reports .. 123 IPviRICS Valuation Global STANDARDSVPGA 8 Valuation of real property interests 1251 Inspection .. 1252 Investigations and assumptions .. 126 VPGA 9 Identification of portfolios, collections and groups of properties 1311 Scope .. 1312 Examples where specific clarification of the lotting assumption needs to be made .. 1313 Purpose of the Valuation and identification of the lots within the portfolio .. 132 VPGA 10 Matters that may give rise to material Valuation uncertainty 1341 Scope .. 1342 Examples .. 1343 Reporting .. 135 Part 6: international Valuation Standards 137 Summary of main changes to IVS 2020 effective from 31 January 2022.

10 137 PrefaceThis updated Global edition of the RICS Valuation Global Standards , or the RICS Red Book Global Standards 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, but are not limited to: articulating in more detail the need for clear, unambiguous and documented terms of engagement when members apply any exceptions to VPS 1-5 under PS 1 section 5, Exceptions definitions and additional commentary on matters relating to sustainability/resilience and environmental, social and governance (ESG) in the Glossary, VPS 2, VPS 3, VPGA 2, Secured lending and VPGA 8, Valuation of real property interests improving and/or clarifying some of the existing Red Book Global Standards text in the light of feedback, experience and also evolving needs.