Mandatory valuer rotation among RICS Red Book proposals

The Royal Institution of Chartered Surveyors’ standards and regulation board has launched a public consultation on proposals for mandatory valuer rotation, among other changes to the Red Book. Under the proposals, an instruction on regulated-purpose valuations could last no more than eight years, with client-led reviews required to take place after five years. After the contract ends, there would be a mandatory break of five years until the next permitted instruction of the same valuer or firm. Such valuations are those that are relied on by third parties, for example in relation to financial reporting, mergers and takeovers or collective investment schemes. Early feedback, collected after the board called for views in April, showed stakeholders largely thought a shift from an advisory seven-year rotation to a potential mandatory five-year cycle was too limited and could cause market disruption. Those surveyors favoured a 10-year rotation with options for renewal, as applied in the audit profession. A five-year break following a rotation cycle was also deemed “excessive”. Following that feedback, the standards and regulation board’s valuation review implementation committee revised proposals to include scope for a three-year extension to the five-year cycle, coupled with a proposed policy aiding clients’ transition to new valuation advisers. The committee said the measures would take stakeholder feedback into account while remaining “robust and workable”. “The standing of the RICS professional and regulatory model relies on demonstrating robust standards and professional assurance in the public interest,” said the committee in a consultation summary. Surveyors are additionally urged to provide views on revisions to the scope and definition of regulated-purpose valuations. A public consultation on the proposals has been launched today (2 November), closing on 14 December this year. The committee aims to deliver finalised standards by Q1 next year, with new measures being brought into effect from 1 October 2023. Changes to the proposals are subject to approval from the standards and regulation board. Richard Waterhouse, chair of the valuation review implementation committee, said: “The institution is working with industry and all related stakeholders to future-proof practices in the valuation of real estate assets for investment purposes.  “These proposed new standards aim to be both proportionate and in the public interest. We recognise these proposed changes are significant, so we look forward to receiving views from many stakeholders to help inform the final position.”  The consultation is the first relating to Peter Pereira Gray’s independent report into valuations, which was published in January. Separate proposals will be produced and consulted on regarding issues such as valuation methodology, education and the professional assurance framework. To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews See also: RICS valuation review – act fast or risk more ‘draconian’ measures Photo © EG