It is good to see that the Royal Institution for Chartered Surveyors (RICS) are working with the banking sector to explore how property valuation standards can be reviewed with the aim of future-proofing such valuation advice.
It must be appreciated though that a valuation is a professional opinion based upon a snapshot in time and as Valuers we cannot be expected to predict the future. The credit crunch of 2008-11 had a severe impact on many property values not just in the UK but well beyond our shores.
At Andrew Idle Associates we do adopt a thorough, rigorous but balanced approach to property valuations. We have been appointed as an Expert to review valuations carried out by others in the past. In some cases the comparable evidence then used does not stand up to scrutiny and we have had to conclude that at the time the property in question was over-valued.
The Valuer has a duty of care and has to cast a critical eye over any proposed property loan. Too often in the past firms providing valuations to the lending sector have felt under pressure not to down-value during buoyant, even over-heated times, where lenders were seeking to maximise their loan book. In these circumstances, an element of caution in valuations is required.
One of the key areas is how sustainable the property will be in the coming years with rising emphasis on energy efficiency – will it cost a lot of money to upgrade; and how readily it would re-let if leased areas fall vacant.