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.

Cooke & Arkwright have been providing rating valuation advice to The Welsh Rugby Union Limited (“WRU”) and Millennium Stadium plc for many years. They were recently successful in achieving substantial reductions in the assessments of the Millennium Stadium, covering both the 2005 and 2010 rating list. These negotiated reductions yielded savings of c.£3.5m which, crucially, allows the WRU to re-invest in rugby throughout Wales. They advise the WRU across the group portfolio including the National Centre of Excellence in the Vale of Glamorgan. The valuation issues across the WRU portfolio are complex requiring a high level of understanding of the funding and finances of professional sport in Wales. Cooke & Arkwright’s experience and understanding of these issues and application to the rating valuation have yielded these substantial negotiated reductions. The WRU and the Millennium Stadium entrust our work to organisations with the required levels in experience and expertise in dealing with these complex issues. I am glad to say we have this expertise in Wales. I would have no hesitation in recommending ratepayers making use of this Welsh based expertise.

The Welsh Rugby Union Limited, Welsh Rugby Union Group