Last updated: 20 May 2026
RICS has long been at the forefront of promoting prudent valuation practices in the real estate sector. Our standards, including the RICS Valuation – Global Standards (the Red Book), set clear guidelines for professionals to ensure transparency, accuracy, and responsibility in asset valuations. RICS actively supports the implementation of long-term prudent valuation models to strengthen financial stability and trust within the market.
RICS recognises that the implementation of prudently conservative valuation criteria requirements under Basel 3.1 / CRR3 is generating significant discussion across the market, particularly regarding the distinction between Market Value, Mortgage Lending Value and prudential valuation adjustments.
In the absence of any guidance provided in this area by EU/ECB on operationalising their own concept, RICS last year proactively published guidance relevant to this area in the form of:
• Bank lending valuations: Basel 3.1 prudently conservative valuation criteria adjustments – RICS practice information, global, 1st edition
• the updated Mortgage Lending Value professional standard
Please refer to: https://www.rics.org/profession-standards/rics-standards-and-guidance/sector-standards/valuation-standards/bank-lending-valuations
These publications are intended to support consistency of approach and to help clarify the relationship between Market Value, Mortgage Lending Value and prudential valuation considerations within bank lending contexts.
The current RICS position remains that where the required basis of value is Market Value, the valuer should determine Market Value in accordance with RICS Valuation – Global Standards. Any prudential adjustments, lending overlays or supervisory considerations applied for regulatory capital purposes would generally sit separately from the Market Value conclusion itself.
At present, RICS itself does not prescribe fixed adjustment factors, coefficients or country-specific methodologies for deriving “Prudent Value” from Market Value. Such adjustments may vary depending on jurisdictional regulation, lender policy, asset class, market conditions and supervisory interpretation. Accordingly, RICS is not currently in a position to provide universally applicable adjustment criteria across different national markets.
From recent insight we have received, with some exceptions in certain jurisdictions, banks themselves throughout EU Europe appear to be taking the responsibility for making appropriate risk adjustment related adjustments to Market Value and are well placed to do so based on the information at their disposal.
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