RICS publishes updated Red Book UK Supplement
Today RICS is publishing the updated Red Book UK Supplement which incorporates technical changes and those based on the recommendations from the Valuation Review. These updates include a new time-limited, mandatory rotation cycle for regulated purpose valuations.
The updated Red Book UK Supplement will be available to download here.
Updates to UK VPS 3 introduce a compulsory rotation cycle for valuation firms and responsible valuers valuing an asset for regulated purposes. This ensures that valuations relied upon by investors remain relevant and trusted.
The rotation requirements include:
a maximum single engagement period of five years,
a maximum period of ten years before the rotation of a valuation firm - this might include multiple engagements,
a maximum period of five years before the rotation of an individual ‘responsible’ valuer,
a minimum three-year break after rotating off an engagement,
a two-year transition policy (simplified from the consultation version),
where there are truly exceptional circumstances, a carefully controlled option to deviate from the requirements with notification to RICS Regulation.
In addition to the rotation policy, UK VPS 3 sets standards for terms of engagement and instructions, preliminary advice, draft reporting, and client discussions. Other changes in the UK Red Book Supplement include updates to residential valuation, public sector valuations and financial reporting and governance changes.
How have these updates to the Red Book UK Supplement been developed?
These updates were developed by the Valuation Review Implementation Committee, Expert Working Group, and the Knowledge and Practice Committee as part of a three-year Valuation Review project, which included public consultation with those commissioning, undertaking, auditing, and regulating valuations.
The changes to the Red Book UK Supplement are intended to reduce the risks of conflicts of interest in the commissioning of valuation reports, in the public interest. They have been approved by RICS Standards and Regulation Board. These changes will come into effect on 1 May 2024, with a transition period for the rotation requirements to allow clients and valuers to implement them.
In response to feedback received from the public consultation, we recognise the need for a tailored approach for valuer procurement governance and rotation concerning valuations undertaken for financial reporting purposes of public sector related investment properties. RICS will commission a workstream to review these standards and work closely with key public sector stakeholders to deliver a practical and public interest-oriented approach
Where can I learn more about this update?
If you would like to learn more about these updates, we have organised a webinar that is relevant to all members and regulated firms undertaking the valuation of assets subject to UK jurisdiction. You can register for the webinar here.