MUCs lifted for nearly all UK property valuations
RICS has recommended removing material uncertainty clauses on almost UK valuations, including retail.
The organisation said that since many of the restrictions on business and society imposed by the government have been eased, there is “sufficient evidence of market activity to warrant recommending this general lifting”.
However, it emphasised that this should exclude “some assets valued with reference to trading potential”, where leisure and hospitality in particular are concerned. RICS has recommended these may be applied on a case-by-case basis by an individual valuer, until the property’s trading potential “can be seen more clearly”.
RICS has recommended removing material uncertainty clauses on almost UK valuations, including retail.
The organisation said that since many of the restrictions on business and society imposed by the government have been eased, there is “sufficient evidence of market activity to warrant recommending this general lifting”.
However, it emphasised that this should exclude “some assets valued with reference to trading potential”, where leisure and hospitality in particular are concerned. RICS has recommended these may be applied on a case-by-case basis by an individual valuer, until the property’s trading potential “can be seen more clearly”.
Other indicators such as rent collection statistics, landlord and tenant negotiations on lease variations to turnover rents, rent reductions and CVA outcomes should also play a part in applying a material valuation uncertainty declaration.
It comes after MUCs were relaxed for all residential properties on 28 August, when the organisation recommended clauses on Northern Ireland housing to be removed.
Clauses for all office types were also relaxed last month, as well as all industrial and logistics properties.
RICS’s material valuation uncertainty leaders’ forum includes JLL, CBRE, Savills, Knight Frank and BNP Paribas. It was set up earlier this year to assess the pandemic’s impact on valuation assignments.
Ollie Saunders, head of UK valuation and alternatives at JLL, told EG: “The decision to lift the remaining material uncertainty clauses across the UK was taken last night – we did it as there is now increasing visibility of transactional evidence across all sectors, and a greater clarity about investor sentiment in our new normal.”
However, he added that there “will be circumstances where it will still be used”, and that “high levels of scrutiny” remain as the market “discovers what 2020 has done to capital values”.
See also: How the industry collaborated to lift material uncertainty clauses
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