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What is this week's blog about?
In this week’s blog, we specifically look at UK VPGA 11 – Valuation of UK Residential Property. This is part of the UK National Supplement, which is published in a new edition to take effect on 1 May 2024.
You can read about the full changes in our blog.
What has changed in the revised UK VPGA 11?
The revised UK VPGA 11 provides comprehensive guidance on UK valuations of residential property. UK VPGAs 12 and 13 have been incorporated into UK VPGA 11 in the new edition of the UK National Supplement.
RICS have confirmed that UK VPGA 11 will supplement additional valuation guidance that will be published in future.
In the interim, they confirm that residential valuers will need to refer back to UK VPGAs 11, 12 and 13 in the 2017 edition of the UK National Supplement. They also provide a list of relevant guidance currently published in the new UK VPGA 11.12.
RICS confirm that valuers should also specifically refer to VPGA 2 of the Red Book Global in relation to secured lending valuations.
What is the role and remit of the residential valuer?
Residential valuers should provide clients with advice on:
The nature of the property
Factors identified during inspection that affect marketability and value
Market Value (or Market Rent, if instructed by a client), subject to any assumptions or special assumptions agreed with the client. Secured lending valuations are subject to the provisions of UK VPGA 11.2 Bases of Value in relation to planning and development potential (and the exclusion of this using a special assumption)
Factors that may materially impact upon value, such as substantial defects, disrepair or hazards
What does UK VPGA 11 say about inspection?
UK VPGA 11 confirms that residential valuers should physically inspect the internal and external parts of the property, provided that these areas are accessible and safe. The physical inspection should be supplemented by reasonable desktop due diligence and research.
RICS confirm that roof space inspections should be ‘head and shoulders’ and only required where the ‘valuer considers that such inspection is essential to identify matters likely to have a material impact on Market Value’ (RICS, 2023).
Where a client instructs the valuer not to inspect fully or to provide a desktop valuation, the limitations of this need to be stated clearly in writing. Valuations on either of these bases need to be informed by appropriate desktop research.
What does UK VPGA 11 say about investigations?
Desktop due diligence, or desktop research, is required for all valuation work. This includes using local knowledge and online (or physical) information sources.
If, upon inspection, the valuer considers that a visible defect may affect concealed building elements (and materially impact upon value), then the valuer should recommend that further investigations are undertaken. The advice should detail the issue and the justification, timescale and responsible party for the further investigation.
However, this is different to the case where a building element is inaccessible or visual inspection is limited. In this scenario, the limitation should be recorded within the valuation report.
The implications of Hart v Large are pertinent here (further details in our blog on this legal case). The RICS emphasise that ‘RICS members should exercise professional judgement and not call for further investigations only to cover themselves against future liabilities’ (RICS, 2023).
UK VPGA 11.6 details the extent of enquiries and assumptions for various matters, such as planning, legal, contamination and environmental matters.
Matters which do not need to be verified are also set out in this section, unless, of course, the valuer has evidence from their desktop research or physical inspection to the contrary.
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N.b. Nothing in this article constitutes legal, professional or financial advice.