What is it worth, and who is allowed to say

What the RICS is, and what it does

The Royal Institution of Chartered Surveyors is a professional body incorporated by Royal Charter. The charter is the source of its authority: it is not a statutory regulator created by Parliament, and no law says a valuer must be a chartered surveyor. It obliges the institution to act in the public interest, which it does by setting standards, admitting members against tested competence, regulating firms and disciplining those who fall short. Because lenders, courts and auditors rely on that framework, membership behaves in practice like a licence.

Conduct rests on principles rather than prohibitions. The Rules of Conduct bind members and regulated firms alike, and there are five: be honest, act with integrity and meet professional obligations, including obligations to the institution itself; maintain professional competence and ensure work is done by people with the necessary expertise; provide a good quality, diligent service; treat others with respect and encourage diversity and inclusion; and act in the public interest, take responsibility for your actions, and act to prevent harm and maintain confidence in the profession. The obligations with the most bite are conflict management, written terms of engagement, indemnity insurance, complaints handling and continuing professional development.

Firms are regulated separately from individuals. A firm providing surveying services to the public registers for regulation, which requires it to run to the Rules of Conduct, hold professional indemnity cover with run off cover when the firm closes, operate a written complaints handling procedure, protect any client money and submit to monitoring. That is what gives a client somewhere to go when the individual surveyor is unreachable, retired or insolvent.

Inside the Red Book, in outline

The RICS Valuation Global Standards (the Red Book) is the global framework, applied here alongside a UK national supplement adding domestic requirements for regulated purposes such as secured lending and financial statements. It first makes the valuer state the basis of value, because the same building is worth different amounts on different questions. Market value is the amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller at arm's length, after proper marketing, both acting knowledgeably, prudently and without compulsion. Market rent applies that idea to a letting on stated lease terms. Fair value, in the accounting sense, is the price receivable in an orderly transaction between market participants, used where financial reporting requires it. Investment value, or worth, is the value to one particular owner given their objectives, tax position and cost of money, and may legitimately sit above or below market value.

Everything hangs off written terms of engagement agreed before work starts: the client, anyone else who may rely, the purpose, the interest valued, the basis, the valuation date, the extent of inspection, any limits, the fee, and the valuer's confirmation of competence and independence. Inspection follows to the agreed extent, and the valuer records what was seen and what was not. Where a fact cannot be verified the valuer makes an assumption, something reasonably taken as true without specific investigation. A special assumption assumes facts differing from those existing at the valuation date, for example that planning permission has been granted, and must be agreed in advance and stated prominently.

The report carries all of that back to the reader: the instruction and its terms, the extent of inspection, the basis, the assumptions and special assumptions, the evidence and reasoning, the valuation date and the figure. The date matters more than clients expect: a valuation speaks as at that date and nothing else, it is not a forecast, and a market that moves afterwards does not make it wrong. Reliance is bounded too. The report is for the named client and stated purpose only, a third party reads it at their own risk unless the valuer agrees otherwise, and it cannot be published, quoted or referred to in a document without the valuer's written consent to the form and context of the reference. That is why a valuation obtained for a lender cannot be handed round to buyers.

Liability, the margin of error, and instructing well

A valuer owes a duty of care to the client, and sometimes to a limited class of others intended to rely on the work: to exercise the reasonable skill and care of a reasonably competent valuer, judged against practice at the time, not with hindsight. A figure the market later contradicts is not negligence. The claim is that the valuer used a method no competent valuer would have used, ignored evidence, misdescribed the property, applied the wrong basis, or reached a figure outside the range a competent valuer could have reached.

That last point is the margin of error idea, sometimes called the bracket. Valuation is opinion, and competent valuers can differ, so a claimant must show the figure fell outside a permissible range around the correct value rather than merely differing from it. That range is a matter of evidence in each case, wider for unusual properties and thin markets than for standard housing with plentiful comparables. Even outside the bracket, recoverable loss is limited by the principle that a professional supplying information for someone else's decision is responsible for the consequences of that information being wrong, not for all the consequences of the transaction going ahead.

Instructing well removes most of this risk. Approach two or three firms, confirm the individual is a Registered Valuer where a formal valuation is wanted, say plainly what it is for and who will read it, and check indemnity cover is proportionate to the value at stake. Read the terms of engagement before signing and query any special assumption you do not understand. Fees are quoted per instruction and driven by value, complexity, travel and purpose: a formal valuation costs meaningfully more than an agent's free appraisal and rather less than a full building survey on the same house. Get the fee and turnaround in writing first.

Scotland runs a different system at the point of sale. Under the Housing (Scotland) Act 2006 a seller must generally provide a Home Report before marketing, prepared for the seller and made available to prospective buyers. It has three parts: the single survey, a condition report with a valuation by a chartered surveyor; the energy report, giving the energy performance rating and recommendations; and the property questionnaire, completed by the seller, covering council tax band, alterations, services, parking and known disputes. Buyers still commission their own work where the property warrants it, but the baseline arrives with the listing rather than after an offer.