What is a Red Book (RICS) Valuation Report
A Red Book Valuation is a formal opinion of value and can be relied upon by the instructing party. While valuation is sometimes used interchangeably with market appraisal when talking about selling residential property, this is something different. The Red Book, otherwise known as the RICS Valuation – Global Standards, sets out the standards that valuers should follow.
Red Book valuations are often requested in instances where a tax calculation or formal legal proceedings are involved. For example, in cases of complicated inheritance tax or capital gains tax returns Revenue may require a Red Book valuation of the asset. Other examples could include a divorce case, property dispute, compulsory purchase, a shared ownership purchase, or a part of company accounting.
The importance of a professional valuation in these cases is to identify not only the total value of the property concerned, but an apportionment of that value between different elements to ensure that appropriate reliefs can be claimed.
These valuations are undertaken by members of the Royal Institution of Chartered Surveyors (RICS) and are prepared in accordance with the RICS Valuation – Global Standards (incorporating the IVSC International Valuation Standards) effective from 31 January 2022 together, where applicable, with the UK National Supplement effective 14 January 2019, together the ‘Red Book’.
It includes a rigorous set of criteria covering duty of care, ethics, the minimum content of a valuation report and the valuer’s qualifications among others. These valuations can only be undertaken by an RICS surveyor (that is, MRICS, FRICS or AssocRICS) who is a member of the RICS Valuation Registration Scheme and is known as a Registered Valuer (RV).
A Red Book valuation is designed to meet the high standards set by the RICS, from inspection through to reporting. Upon issuing a Red Book valuation, the valuer’s qualification and the minimum report content is guaranteed, adhering to accepted and consistent standards which provides public confidence. Reporting times will vary depending on the type of the asset and availability of comparable evidence.
All surveyors carrying out Red Book valuations are required to have sufficient professional indemnity insurance as the instructing party will be relying on the valuer’s professional advice.
