Using ‘Material Uncertainty’ declarations in valuations during Pandemic

The Material Valuation Uncertainty Leaders Forum (UK) forum was set up by RICS to consider the unique events relating to the global COVID-19 pandemic and its impact on valuation, particularly the reporting of material uncertainty.  The forum has a focus on financial reporting and measures for the accurate and consistent reporting of material uncertainty in the UK. It comprises a group of expert valuers covering a wide range of asset classes and specialisms, and the insight has informed a consistent market approach, supporting our professionals, their clients and the wider public.

While valuation is the judgement of the valuer on a case by case basis, RICS has made available online the recommendations of the forum, and these have been publicly available for consideration and notes of the forum published and updated on a weekly basis.

The latest output from the forum recommends a general ‘lifting’ of material valuation uncertainty on the terms set out below. This recommendation excludes some assets valued with reference to trading potential. Please see this page for recommended phrasing for reporting.

New recommendations

General ‘lifting’ of material valuation uncertainty on all UK real estate, excluding some assets valued with reference to trading potential. In the latter case, for some leisure and hospitality assets, in particular, it is too early to properly assess trading potential and hence value with a sufficient degree of certainty. It is emphasised that in these cases it is appropriate for a valuer to maintain the use of a material uncertainty declaration, based on individual valuer judgement, applied on a case by case basis.

The outputs of the RICS Material Valuation Uncertainty Leaders Forum (UK) are based on a high-level overview of market conditions, and necessarily cannot consider factors applying to specific assets, regions or markets.

The decision whether to include a material valuation uncertainty declaration is that of the valuer. It should be considered on a case-by-case basis looking at specific attributes and performance of the individual asset and its market. The valuer should have a sound rationale for the decision they reach upon such consideration and should maintain a record of that rationale for future reference. The views of the Leaders Forum are not a substitute for that process.  If it is felt that any investment in the valuer’s opinion remains materially uncertain, the declaration should remain in place.

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