6 DEC 2022
This document is intended to help valuers undertaking valuations for secured lending purposes on domestic residential flats, within residential blocks of 5 or more storeys or 11 metres or more tall. In accordance with the remediation schemes and qualifying lease protections, applicable to England only (this approach will be updated to reflect remediation arrangements and schemes in Scotland and Wales once published), as set out by Government.
This new professional standard is complimentary to the existing guidance effective from March 2021 and is intended to help valuers undertaking valuations for secured lending purposes on domestic residential flats, within residential blocks of 5 or more storeys or 11 metres or more tall.
It takes into account the effect of government remediation schemes and qualifying lease protections (in England only), and their impact on the value of properties.
The previous guidance was produced to help valuers understand when an EWS1 form is required due to visible cladding.
Lenders will confirm which valuation approach they wish to follow with the valuer - both pieces of guidance are necessary, but their areas of focus are different.
While it is possible that the principles of this standard can be applied to buildings under 11m, this standard focuses on blocks which have agreed funding and a timeline for remediation through the Government’s remediation schemes, for example, the Building Safety Fund, which currently only applies to buildings 18m+ or 7 storeys or more.
Yes – we would consult with the working group to amend the standard.
Lenders expressed their willingness to lend on blocks that have agreed funding and a timeline for remediation in a joint statement published in March 2022: Lenders update EWS1 assessments and mortgage lending (rics.org).
In the consultation responses from the lenders, they acknowledged the critical role this guidance plays in allowing them to fulfil their pledge to start lending on affected properties where leaseholder protections are in place. Responses from lenders to our consultation were overwhelmingly supportive of the approach set out. RICS strongly encourage lenders, as the clients of valuers, to fully adopt the approach set out in the guidance for their instructions to valuers in order to ensure consistency for consumers.
As the number of sales and purchases increase on this property type, the evidence base will grow, giving valuers and lenders more certainty in their valuations. This in turn will bring confidence to the housing market on these types of properties.
This new standard will be effective from 6 December as RICS recognises its importance in giving clarity to and supporting our valuers, as well as bringing confidence to the market and further clarity for buyers and sellers.
The level of information available to a valuer will vary from instruction to instruction,
This valuation approach, agreed by an RICS-convened expert working group, provides a potential path forward for valuation regardless of the level of information available.
Any valuation approach and the decisions on what information will be used will need to be agreed between the valuer and the lender client.