Valuation rotation becomes mandatory
The RICS is implementing a mandatory valuation rotation as part of its latest update to the Red Book.
The Red Book is the master document for regulating the valuation profession globally, and the new changes address recommendations from the Independent Review of Real Estate Investment Valuations, which was published in January 2022.
One of the biggest 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 RICS is implementing a mandatory valuation rotation as part of its latest update to the Red Book.
The Red Book is the master document for regulating the valuation profession globally, and the new changes address recommendations from the Independent Review of Real Estate Investment Valuations, which was published in January 2022.
One of the biggest 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.
The RICS said the critical changes would improve transparency.
To enable the new rules to be properly embedded, the RICS has set a transition period for their implementation, with the new regulations coming into effect on 1 May 2024.
RICS board chair Martin Samworth 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.”
Nigel Clarke, interim chair of the RICS standards and regulation board, added: “These innovative changes to our standards serve the public good and will grow confidence in the sector. They will increase the trust that clients have in the standards of the UK’s valuation profession.”
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