When corresponding with potential clients regarding valuations, we often get the line ‘I have been told I need a Red Book valuation but don’t know what that means, can you help?’. We are more than willing to help and for those curious, often find ourselves explaining what a Red Book valuation is. This article goes some way to explaining how we tackle this query and explaining what a Red Book valuation is and why they might be needed.
Firstly, what. A Red Book valuation is a valuation that requires an RICS Registered Valuer to assess and provide a formal valuation report on the value of the property based on a set valuation date for a defined purpose. The Red Book element of this means that the valuation will adhere to a set of global standards that are produced by our regulatory body to ensure a certain quality level is met by all Red Book valuations. This then in turn should instil public confident and trust in valuations produced. A Red Book valuation is often a written valuation and there are very few exceptions where deviation in any way from the Red Book is acceptable.
Then, why. There are a number of situations and circumstances for which a Red Book valuation could be needed. To summarise, this will often be when there is a tax or legal proceedings to be dealt with. This requires the Red Book valuation as if it were to be legally challenged or required for statutory purposes or tax settlements, the valuer must be able to justify their valuation. Some examples of Red Book required include (but are not limited to):
- Tax planning purposes
- Calculating probate, or Capital Gains Tax
- Pension fund asset valuation
- Charities Act valuation
- Matrimonial proceedings
However, what is also worth noting, is that there are some circumstances where we are able to depart from elements of the Red Book. But there are absolutely no circumstances where written valuation advice is completely exempt from the Red Book. Departure is allowed for in the following 5 circumstances only:
- Providing agency or brokerage service in respect of the acquisition or disposal of one or more assets
- Acting or preparing to act as an expert witness
- Performing statutory functions
- Valuation purely for internal purposes, without liability, and without communication to a third party.
- Providing valuation advice expressly in preparation for, or during the course of, negotiations or litigation, including where the valuer is acting as advocate.
Whilst some of these exceptions may seem complex or not make sense to the general public or those who do not deal with valuations day to day, we are here to assist in explaining whether the valuation you require must be fully Red Book compliant or whether departure from certain elements is acceptable and justifiable. We are also happy with within instruction directly from solicitors where required.
When instructing us there is a defined list of information that we need to follow the required process for regulatory purposes however, as with most key stages of any types of work with Eldnar, we have key information sheets to make this as easy as possible for you to work through and provide so that we can produce your work as quickly and efficiency as possible whilst maintaining the expected, and required, high regulatory standards for all work.
Should you have a valuation enquiry or wish to discuss how we can assist you with your property enquiries, do get in touch with us.