Valuation Uncertainty Resources
The “material valuation uncertainty” caused by the sudden closure of many markets in March 2020 because of responses to the Covid 19 pandemic has gradually disappeared as transactions have recovered sufficiently for valuers to assess the impact, if any, on the markets in which they operate. As long ago as September 2020 the RICS “Leaders Forum” consisting of the major firms involved in the commercial property markets recommended that for most sectors there had been sufficient post pandemic activity, in the UK markets at least, to mean that the recommended uncertainty caveat was no longer required. However, the RICS Practice Alert also included other guidance on accepting instructions, inspections and reporting, including providing a warning about the possible long term impact on the reported value in the event of future “waves” of the virus, and was updated regularly until July 2021.
On 3 March 2022 RICS announced it was formally withdrawing all its Covid19 related guidance. This means it is no longer current. However, it remains available for information should members need to look at the guidance that was relevant on the date of a retrospective valuation or if they are in a market where the impact of the pandemic on current prices is still unclear.
While the need to report that valuations are subject to material valuation uncertainty due to the pandemic may have largely passed, the principle remains that it may be appropriate to warn those relying on a valuation that there are abnormalities which mean less confidence should be placed on the figure than would otherwise be the case. These abnormalities can be market disruption on the valuation date or due to the asset in question being unusual and/or illiquid.
Below we provide links to guidance and articles relating to the 2020 pandemic and more general information about Valuation Uncertainty and how this differs from market risk.
Covid Pandemic Information
IVSC "Letter from the Standards Boards" -March 2020
RICS Practice Alert - April 2020
RICS Practice Alert Update - September 2020
RICS Practice Alert Update - November 2020
RICS Practice Alert Update - July 2021
Valuology Comments on July 2021 Update
Other Valuation Uncertainty Information
Valulogy Blog - October 2018
Our Valuers' Briefing "Valuation Uncertainty - Reporting the unknowable" provides a broad examination of the subject with discussion of the problem in different contexts. The aim is to help valuers develop a better understanding of when they should and when they shouldn't caveat their valuations.
It is available as an eBook or paperback