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RICS Material Valuation Uncertainty Leaders Forum (UK)

RICS Material Valuation Uncertainty Leaders Forum (UK)

The Material Valuation Uncertainty Leaders Forum (UK) was setup by RICS to consider the unique events relating to the global COVID-19 pandemic and its impact on valuation assignments, with a focus on financial reporting and measures for the accurate and consistent reporting of material uncertainty. It comprises a group of expert valuers covering a wide range of asset classes and specialisms. The terms of reference are attached below.

RICS Material Valuation Uncertainty Leaders Forum (UK)  terms of reference

The forum meets weekly during events leading to the widespread use of material uncertainty clauses and produces a weekly UK summary output attached below. For transparency, each meeting output will remain available from the website or by request. Please refer to the relevant version. The output will assess material valuation uncertainty against a criteria published on the right of this page. The summary will comprise a short statement outlining the forum consensus opinion on markets where reporting material valuation uncertainty may no longer be appropriate. The summary will be binary and will not report on the weight of certainty in any particular market. The summary will not include a general market commentary and will only include additional information where necessary.

The outputs of the RICS Material Valuation Uncertainty Leaders Forum are based on a high-level overview of market conditions, and necessarily cannot take into account factors applying to specific assets, regions or markets. RICS reminds regulated members that the decision whether to insert, maintain or remove commentary that a valuation is materially uncertain is that of the valuer, taking into account the specific attributes and performance of the individual asset and its market. Regulated members should consider on a case-by-case basis whether it would be appropriate to include commentary that a valuation is materially uncertain. They should have a sound rationale for the decision they reach upon such consideration and should maintain a record of that rationale for future reference. The views of the Leaders Forum are not a substitute for that process.

Neither RICS or any member of the Material Valuation Uncertainty Leaders Forum (UK) accepts any responsibility, duty or liability to any party in respect of the contents of the Leaders Forum output. Any such responsibility, duty or liability is expressly disclaimed. RICS and the Leaders Forum shall therefore not be held accountable, either collectively or individually, for any losses relating to or arising out of a valuer’s decision to insert, maintain or remove any declaration of material valuation uncertainty.

Forum members

Colliers
Savills
Cushman & Wakefield
EY
Gerald Eve
Avison Young
JLL
BNP Paribas
Allsop
Knight Frank
Deloitte
Montagu Evans
CBRE

Forum outputs

The RICS Material Valuation Uncertainty Leaders Forum (UK) meets regularly to discuss material valuation uncertainty in UK real estate markets. The forum assesses this against the published criteria. Consensus has been reached this week (finalised 04 August) that reporting material valuation uncertainty may no longer be appropriate for:

New recommendations

  • All offices*

*Central London offices first recommended 7 July 2020

  • All industrial and logistics*, including self-storage facilities

*All industrial and logistics first recommended 11 June 2020

  • All healthcare*, excluding day nurseries

*Institutional grade primary healthcare facilities first recommended 14 May 2020

  • C3 and C4* residential property and land (including sui generis Houses in Multiple Occupation with more than 6 residents ) in England* and Wales, excluding only those cases with asset and/or locality-specific market issues that merit a declaration of material valuation uncertainty, at the discretion of the valuer.

*England first recommended 14 July 2020

*C3 Dwellinghouses
C3 (a) - use by a single person or a family (a couple whether married or not, a person related to one another with members of the family of one of the couple to be treated as members of the family of the other), an employer and certain domestic employees (such as an au pair, nanny, nurse, governess, servant, chauffeur, gardener, secretary and personal assistant), a carer and the person receiving the care and a foster parent and foster child
C3 (b) - up to six people living together as a single household and receiving care e.g. supported housing schemes such as those for people with learning disabilities or mental health problems
C3 (c) - for groups of people (up to six) living together as a single household. This allows for those groupings that do not fall within the C4 HMO definition, but which fell within the previous C3 use class, to be provided for i.e. a small religious community may fall into this section as could a homeowner who is living with a lodger

C4 Houses in multiple occupation
Small shared houses occupied by between three and six unrelated individuals, as their only or main residence, who share basic amenities such as a kitchen or bathroom


Recommendations 7 July 2020

  • Student housing of institutional grade, which is professionally managed.
  • Long dated annuity income with a secure covenant such as government or very strong investment grade*

* First recommended 14 May 2020 with at least 20-years unexpired term certain. Recommended term duration now removed.


Recommendations 11 June 2020

  • Build to rent residential property of institutional grade, which is professionally managed.


Recommendations 28 May 2020

  • Standalone food stores, including smaller format food stores, let to major operators*

*First recommended 14 May 2020, now including smaller format stores.

  • Commercial forestry (excluding amenity woodland)
  • Specialist supported housing of all types, designated either C2 or C3 use class, let to Registered Providers on FRI leases, and usually with a third-party care provider involved in providing care and support to residents, valued on the basis of Market Value


Recommendations 21 May 2020

  • non-reversionary residential ground rents (in excess of 80 years)
  • all types of rented social housing or leased shared ownership, owned by housing associations and valued on the basis of Existing Use Value for Social Housing (EUV-SH) only, and therefore assuming that all homes remain within the regulated, Registered Provider sector (but excluding social housing owned by local authorities where valued for Housing Revenue Account purposes under government guidance)



The outputs of the RICS Material Valuation Uncertainty Leaders Forum (UK) are based on a high-level overview of market conditions, and necessarily cannot take into account factors applying to specific assets, regions or markets. RICS reminds regulated members that the decision whether to insert, maintain or remove commentary that a valuation is materially uncertain is that of the valuer, considering the specific attributes and performance of the individual asset and its market. Regulated members should consider on a case-by-case basis whether it would be appropriate to include commentary that a valuation is materially uncertain. They should have a sound rationale for the decision they reach upon such consideration and should maintain a record of that rationale for future reference. The views of the Leaders Forum are not a substitute for that process.