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 provided independent property consultancy services to the College for a number of years. This advice has included property valuations and negotiation around property acquisition and disposal, rent reviews and the preparation and negotiation of the College’s farm business tenancy agreement. The College has consistently received an excellent and professional service from Cooke & Arkwright and their valuable support to the College is recognised and appreciated.

Bob Bates, Director, Coleg Gwent