RICS Knowledgebase

If the asset is a new home RICS does have a professional standard related to this. The standard is from 2019 and therefore the valuer should consider it in light of any more recent (and overarching) Red Book Global principles and be aware that RICS is due to launch a new professional standard Residential property valuation for owner occupation 1st edition in 2026

Section 8.4 of the 2019 Valuation of individual new-build homes standard refers to ‘First-owner benefits’, sometimes called the 'new premium' and notes that:

‘some lenders may wish to exclude value that is derived from a first-owner benefit by way of a special assumption. The special assumption will be stated in their terms of engagement and may be included as a statement in the valuation report, where the reporting format permits, when using standard pro formas. It may extend to related matters, such as excluding new-build sales evidence because it could include a first-owner benefit.’

Fundamental principles should be the same whatever the asset type. References to Red Book Global below refer to the RICS Valuation – Global Standards (Red Book) effective from 31 January 2025.

• The decision on whether and how to proceed with a valuation is a professional judgement of the valuer and must be made in accordance with relevant standards, regulation and legal considerations.  
• The agreed terms of engagement will govern the valuation process, including any relevant assumptions and/or special assumptions (which would reasonably be regarded as realistic, relevant and valid for the particular circumstances of the valuation in the valuer’s professional judgement).
• VPS 1 paragraph 1.3 of Red Book Global notes that ‘a master service agreement may already be in place between a client and member or RICS-regulated firm. Where such an agreement exists, a member is not always required to complete separate additional terms of engagement. However, a member must confirm in writing and document any additional items required to meet the minimum requirements of VPS 1 paragraph 3.1.’ In addition to their report, it is the master service agreement and/or terms of engagement that the valuer will ultimately be held to, so it is important that these are where valuation requirements are contained.
• Global Red Book VPGA 2 in respect of secured lending states the following:
• 4.1 Valuers are reminded that the terms of engagement must incorporate the minimum requirements of VPS 1 paragraph 3.1 with suitable records kept. Additional client requirements can be agreed as long as they do not directly conflict with VPS 1 or any other mandatory standard. These should also be recorded [my highlighting]. Particular care is to be taken to agree and record any special assumptions that are to be made.
• 4.2 Valuers may be asked to agree lender's terms of engagement documentation before commencing work. Valuers should acknowledge the client’s instructions in writing, confirming any VPS 1 matters not included in the client’s terms of engagement. Where accepting the lender’s terms of engagement, the valuer should carefully consider implications such as, but not limited to, their indemnities and liability.
• A valuation is defined in Red Book Global as ‘An opinion of the value of an asset or liability on a stated basis, at a specified date’ [my highlighting]. For UK secured lending, the basis of value will usually be market value, defined in IVS 102 Bases of Value: Appendix A10.01 as: ‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’ Where calculating market value the valuer will consider those matters in the minds of the willing buyer and willing seller at the valuation date, subject to assumptions and special assumptions. Other bases may be relevant outside the UK.  
• Required levels of independence and objectivity are crucial to the role undertaken by the valuer. Red Book Global PS 2 paragraph 3.10-3.15 refers to a risk to the member’s objectivity where the outcome of a valuation is discussed before its completion with the client. I’ll not repeat these here for the sake of brevity, but the enquirer should refer to them.