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RICS > Red Book > Flashcards

Red Book Flashcards

1
Q

Red Book name

A

RICS Valuation - Global Standards

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2
Q

Purpose of Red Book

A

Provide consistency, objectivity and transparency of valuation practice globally

Provides public confidence that valuation undertaken by RICS Registered Valuer is consistent with international valuation standards

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3
Q

Difference between Red Book 2017 and 2020

A

Includes changes to IVS

Allowed improvements and clarifications to be made to sections of Red Book

PS1- ‘written’ valuations
PS2 - ‘professional scepticism’
VPS 3 - reinforces that valuation reports must clearly state approach and reasoning to valuation

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4
Q

Effective date of Red Book

A

31 Jan 2020

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5
Q

When is it mandatory?

A

For all valuations!

5 exceptions

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6
Q

What are the exceptions?

A
  1. Negotiation and litigation
  2. Statutory function
  3. Internal vals
  4. Agency and brokerage vals
  5. Expert witness
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7
Q

What is an assumption?

A

Something that is reasonable to believe to be true without undertaking specific investigations

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8
Q

What is a special assumption?

A

Something that you know not to be true but for the purposes of the valuation you assume to be fact

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9
Q

What is a departure?

A

A special circumstance where you state that application of a mandatory standard may be inappropriate

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10
Q

What is a special purchaser?

A

A particular buyer where that property has a special value because they own the property

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11
Q

Elements of the Red book

A

Professional standards

Valuation technical and performance standards

Valuation practice guidance applications

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12
Q

Professional standards

A

PS1 – compliance with Redbook

PS2 – acting ethically, being competent, and acting objectively and independently

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13
Q

VPS

A

1 – terms of engagement

2 – investigations inspections and records

3 – valuation reports

4 – bases of value

5 – valuation approaches and methods

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14
Q

Desktop valuations

A

Still Red book compliant however value a must consider for factors:

Must be agreed in terms of engagement that not inspecting

Must be confirmed in writing

Consider if restriction of inspection is reasonable

Restriction must be referred to in report

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15
Q

Market value

A

The amount for which an asset can be exchanged between a willing buyer and a willing seller in an arm’s-length transaction at the valuation date following it being openly marketed

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16
Q

Market rent

A

The amount for which a property can be exchanged/least between a willing lessor or lessee in an arm’s-length transaction at the valuation date and after being openly marketed

17
Q

Fair value

A

Definition taken from IFRS 13

Price that would be received for an asset in an orderly transaction at the measurement date

Use the financial reporting

18
Q

Investment value

A

Value of an asset to a particular owner or prospective owner for an investment

Similar to worth

19
Q

International valuation standards

A

International guidance for valuation professionals and underpins consistency transparency and confidence in valuations

Red book is the RICS document that supports the delivery of IVS by RICS members

20
Q

VPGA

A

VPGA 1 - financial reporting
VPGA 2 - secured lending valuations
VPGA 10 - material valuation uncertainty

21
Q

VPGA 10

A

Valuer must clearly draw attention to and comment on any issues relating to valuation uncertainty at the valuation date relating to the risk surrounding the valuation

Eg Covid

22
Q

Covid 19 valuation uncertainty clause

A

March 2020 – RICS guidance on material valuation uncertainty in reports

November 2020 – RICS advise no longer need material uncertainty clause unless very limited transactional data

23
Q

RICS RB UK National Supplement

A

Augments the Redbook setting out specific requirements for valuations undertaken in the UK

24
Q

UK VPS 3

A

Regulated purpose valuations

Valuations relied on by third parties

E.g. financial statements/stock exchange listings/takeovers and mergers

NOT SECURED LENDING

25
Q

UK VPGAs

A

VPGA 1 - financial reporting

VPGA 10 - secured lending

VPGA 15 - CGT/ Inheritance Tax/ SDLT etc

26
Q

RICS Valuer Registration Scheme effective date

A

October 2011

27
Q

Aims of VRS

A
  1. Improve the quality valuations and ensure the highest possible professional standards
  2. Meet RICS’ requirement self regulate effectively
  3. Protect and raise the status of valuation professional as the leading expert in valuation
28
Q

Requirements to register as a Registered Valuer

A

Level 3 Vals competency

Number of vals and types of vals undertaken
Firms total fee income for Red book vals over last year

Don’t need to be registered if don’t do red book vals

RICS (19 decks)

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