As you navigate your way through the house buying process, you may hear banks, valuers, solicitors and other professionals who assess the value of properties referring to a Red Book valuation. If you’ve ever wondered what this is and when you might need one, read on.
What is a Red Book valuation?
The Red Book – otherwise known as the RICS Valuation - Global Standards –is issued by RICS – the Royal Institute of Chartered Surveyors – and details the mandatory rules and best practice guidelines for RICS members undertaking valuation services. It is updated every two to three years, with the latest edition taking effect on 31 January 2020.
While it doesn’t dictate what valuation methods should be used, the Red Book does set out the standards that valuers should follow. It covers ethics, duty of care, the valuer’s qualifications, and the minimum content of a valuation report.
Who is qualified to carry it out?
For a valuation to be a Red Book valuation, it must be undertaken by a RICS registered surveyor who is a member of the Valuation Registration scheme, a risk monitoring and quality assurance programme that checks compliance with the RICS Red Book. It also must adhere to the stated rules and guidelines.
When do you need one?
Red Book valuations can be specified by institutional lenders, such as banks and mortgage providers. In addition, a Red Book valuation is often requested by the solicitor or accountant where formal legal proceedings or tax calculations are involved, such as in a property dispute, a shared ownership purchase, a divorce case, as part of company accounting, partnership dissolution or compulsory purchase. Giving confidence that all the correct procedures have been followed and the valuation will stand up to any scrutiny it may face. HMRC also often requires more complex capital gains, and inheritance tax returns are accompanied by a Red Book valuation of the assets involved.
The benefits of a Red Book valuation
A Red Book valuation is designed to ensure high standards are maintained throughout the valuation process, from inspection to presentation. The Red Book is recognised globally as one of the most rigorous sets of criteria for valuations.
By issuing a Red Book Valuation, the valuer’s qualifications and the minimum content of the valuation report are guaranteed. Therefore, a client can be confident that they will receive a properly researched valuation prepared by a qualified and independent valuer. In addition, the final document will adhere to a set of accepted and consistent standards.
It is also designed to stand the test of time, so it can be referred back to if needed, for example, if historical values are needed during probate.
Does a mortgage valuation follow Red Book guidelines?
A mortgage valuation involves the bank asking a surveyor to assess the property to determine if they’re willing to lend the requested amount of money. Each lender has its own criteria, although they all follow similar guidelines. Most won’t show you the valuation outcome, which is why it’s always advised that you carry out your own valuation and survey.
The Novello Approach
As RICS registered surveyors, we’re able to produce accurate, impartial and expertly put together valuation reports whether you’re buying a home or calculating your tax liabilities.
We offer a wide range of valuation services, from right to buy and shared ownership valuations to capital gains, probate and inheritance tax valuations, all delivered promptly by our highly experienced team, setting the standard for value and convenience communication and speed.