RICS Red Book Valuations

At Monk and Partners our valuation team have a wealth of experience and knowledge within the South West Property market that spans over 3 decades and a combined experience of over 100 years in the local market.

Often valuations are referred to as ‘Red Book’, by solicitors or accountants. The Red Book is the RICS (Royal Institution of Chartered Surveyors) valuation guidance document and its proper title is the ‘RICS Global Valuation Standards’.

Monk & Partners have RICS qualified Registered Valuers who are able to provide Red Book reports on anything from simple terraced houses and paddocks up to commercial investment portfolios, farms and development land.

RICS Global Valuation Standards

These standards set down the rules by which RICS qualified valuers have to comply if they are valuing property for almost any purpose other than ‘valuations given in the course of estate agency’. This means that unless the figures are given as a guide price for a potential sale or letting, all valuations done by RICS qualified surveyors need to comply with a set of minimum quality standards governing the content of any written report.

The purpose of this is to make sure that there is no ambiguity in what is being valued, for what purpose and on what basis, so that anyone reading the valuation in the future can fully understand the basis of the figures. In the past, valuation reports often missed out important factors which could then lead to misinterpretation. One paragraph, ‘back of a fag packet’ valuations were common, with so many ambiguous elements it could be difficult to rely on the figures.

The Benefits of a Red Book Valuation

Red Book valuations are therefore fully researched and documented written valuations, which should be of a standard and clarity that stands the test of time and can be referred back to and understood in the future. Understanding the basis of a valuation done in the past can be especially useful in Inheritance Tax and Capital Gains Tax situations, where historical ‘base values’ are important. The banks also rely heavily on Red Book valuations to make sure that the property they take as security is worth enough to cover the loan. The main situations where properly researched and documented Red Book valuations are essential are:

For loan security assessment
In divorce cases or other legal disputes
For company accounts/financial reporting
Probate/IHT
Tax planning and calculation of tax liability
Partnership dissolution
Compulsory Purchase

As well as being essential for loan security and legal cases, HMRC usually require more complex CGT and IHT returns to be accompanied by a Red Book valuation of the assets in question, so the Red Book standard is the almost universally adopted standard for valuation. The benefits of a Red Book report are that it will be fully researched and the figures will be supported in the background by suitable evidence, so if necessary the valuation figure can be justified in negotiation with another party. Non-Red Book valuations, undertaken by non-RICS qualified valuers, are not generally accepted in court for instance and are easily ‘shot down’ by the opposing party’s barrister.