RICS updates Red Book valuation rules

The Royal Institution of Chartered Surveyors (RICS) has published an updated UK supplement of its ‘Red Book’ – its master document for regulating the valuation profession globally.

The new UK supplement update addresses recommendations found in the Independent Review of Real Estate Investment Valuations published in January 2022.

One of the main changes is the implementation of time-limited, mandatory rotation cycles for regulated purpose valuations, alongside measures to ensure an orderly and consistent transition to the policy, standardise its governance, and prevent conflicts of interest in the commissioning and receiving of valuation reports.

The new rules will prevent valuation firms from valuing an asset for regulated purposes for more than 10 consecutive years, requiring a change or "rotation" to a different valuation firm. These changes will improve transparency, ultimately serving the public interest, the RICS said.

A transition period for the implementation of the rotation requirements has been set so that clients and firms have a reasonable timeframe to rotate their business relationships. The new regulations will come into effect on 1 May 2024, and RICS will give a series of briefings to help the industry understand its requirements over the coming months. These measures include an online webinar scheduled for 6 November.

Martin Samworth, chair of the RICS board, said: "This update is a logical evolution for valuation practice. The new provisions on rotation are aligned with other similar requirements for audit. The amendment will help to enhance the integrity, transparency and robustness of all valuations conducted in accordance with the RICS Red Book provisions, underpinning it as the global valuation standard. These changes are also appropriate for the continued good governance of our profession.

“I am proud of the significant work that RICS, its members, staff and partners in industry have undertaken to deliver this crucial update. We look forward to engaging with firms across the industry to make this transition as efficient and thorough as possible.”

Nigel Clarke, interim chair of the RICS Standards and Regulation Board, added: "RICS is proud to lead on the regulation of the built environment, and these innovative changes to our standards serve the public good and will grow confidence in the sector. 

“They will increase the trust clients have in the standards of the UK's valuation profession, which sits among the most respected in the world."