Can a valuation which includes a Valuation Uncertainty Clause be relied upon?

19 April 2020

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A client has asked whether a valuation which includes a Valuation Uncertainty clause in respect of Covid 19 can be relied upon. Director Elizabeth Hill responds.

The RICS are very clear in their guidance that it can.

As the RICS Guidance on Valuation states, the clause should be used to bring to the client’s attention the fact that, whilst a valuer is able to form an opinion of value, they are doing so in an environment which is abnormal.  This does not mean that those members are currently unable to value - valuation under these circumstances provides a key function to support markets and stakeholders. However, ‘if a failure to draw attention to material uncertainty gave a client the impression that greater weight could be attached to the opinion than was warranted, the report would be misleading’ (VPS 3.2.2 (o)). These decisions should be made on a case-by-case basis. 

At present there is limited access to current comparable evidence and most of the deals that are completing are in respect of properties that had been fully inspected and marketed prior to the imposition of movement restrictions.

A valuer cannot be expected to predict how long Covid 19 restrictions are going to last; however, their valuation should have regard to market sentiment.  The intention of a valuation uncertainty clause is to facilitate the flow of valuation information and should not be used by a valuer to avoid making a judgement on risk.

I have worked with Jeremy Symons over the past three years successfully leasing and buying property in support of my business. I continue to be very pleased with his knowledge of the market and expertise. Our relationship over this time has resulted in acquiring 20,000 sq ft at Capital Business Park in Cardiff, leasing 11,000 sq ft at Southpoint, and subsequently leasing an initial 42,000 sq ft at Parc Bedwas, followed by a succession of expansions of a further 11,000 and then 47,000 sq ft, enabling us to centralise all of our operations at Parc Bedwas in a single 100,000 sq ft facility. The acquisitions were completed at the perfect time for tenant purposes and the rent fixed throughout the term at very economical rates. A job well done.

Bob James, Aerfin