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RICS removes ‘material uncertainty clause’ for residential valuations

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  • 17/07/2020
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RICS removes ‘material uncertainty clause’ for residential valuations
The Royal Institution of Chartered Surveyors (RICS) has removed its guidance on ‘material valuation uncertainty’, which was issued as the UK went into lockdown to stop the spread of the coronavirus.

 

The trade body issued the clause on 19 March, which acknowledged the unprecedented circumstances presented by Covid-19 and therefore attached less weight to previous market evidence for valuations.

Mortgage Solutions this week reported how valuers had been using the clause to justify huge down valuations.

A forum of firms had been set up by RICS to consider on a weekly basis whether the material valuation clause should remain and has this week decided to remove it in relation to residential property and land.

Responding to the decision, Joe Arnold, managing director at Arnold & Baldwin Chartered Surveyors, said: “We are now in a position where we can see that the lockdown was just a pause on the market and not a complete reset.

“We now have more than two months’ worth of transactional evidence to show that the market has returned.

“Indeed in some areas, such as parts of London and the wider South East, the market is actually stronger now than it was prior to lockdown and the temporary reduction in Stamp Duty Land Tax will provide a further fillip for property values.”

However, he added that there was still clearly uncertainty.

“We do not know, for example, what impact increased unemployment will have on the market – but this is more standard market uncertainty than the material uncertainty we experienced earlier in the year.

“It is worth noting that surveyors will still have the option to apply the MUC to a valuation if they have particular concerns about the asset or area.

“This is likely to be reserved for properties where there has been less transactional evidence in recent weeks such as, for example, houses in multiple occupation (HMOs) or very high value properties,” he added.

 

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