A valuer’s guide to the RICS Red Book

• Structure 1 of 4 · Parts 1–2

• Structure 2 of 4 · Part 3 · Mandatory

Part 1 explains the purpose, coverage, structure and effective date of the standards. Part 2 defines terms with a special meaning, such as assumption, special assumption, departure and external valuer, and sets the naming convention: “must” marks a mandatory requirement, “should” marks best practice and “may” marks an option.

PS 1 sets when the Red Book applies and how compliance, exceptions and departures work. PS 2 covers ethics, competency, objectivity, conflicts of interest, disclosures and responsibility for the valuation. Both are mandatory whenever a member provides a written valuation, and no departure from them is permitted.

• Structure 3 of 4 · Part 4 · Mandatory

• Structure 4 of 4 · Parts 5–6

Technical standards (VPS 1–6)

Guidance (VPGA 1–11) and IVS

Six valuation technical and performance standards: terms of engagement, bases of value and assumptions, approaches and methods, inspections and records, valuation models, and reports. Their order mirrors the IVS General Standards (IVS 101–106), which they adopt and apply.

Part 5 holds eleven valuation practice guidance applications (VPGAs) for specific purposes and asset types. They are advisory, not mandatory, but point to the mandatory material that applies. Part 6 reproduces the International Valuation Standards in full, with the IVSC’s permission.

• PS 1 essentials · Who must comply

• PS 1 essentials · Technology

PS 1, PS 2 and VPS 1–6 are mandatory for every RICS member and RICS-regulated firm undertaking or supervising written valuation advice, on paper or in any electronic form. This includes those who produce reports without signing them and supervisors who sign them. Valuer Registration Scheme rules also apply.

Output from an AVM, calculation software, a template tool or an AI-assisted process counts as a written valuation only after a valuer applies professional judgement to it. AI and scraped or API data may be used, with due regard to confidentiality, IP, input verification and transparency.

• PS 1 essentials · Exceptions and departures

• PS 2 essentials · Ethics and competence

Exceptions and departures

Ethics, competence and conflicts

VPS 1–6 need not apply to five exceptions: agency or brokerage, negotiations or litigation, expert witness work, statutory functions, and purely internal valuations without liability to third parties. Any other advice contrary to VPS 1–6 is a departure and must be disclosed. A valuation is either Red Book compliant or not: terms like “partial Red Book” must never be used.

Valuers must act with integrity, independence and objectivity, apply professional scepticism, keep client information confidential and manage conflicts of interest. Each valuation needs a named, suitably qualified responsible valuer; RICS does not allow a valuation to be prepared by a “firm”.

■ Structured summary

The standards and guidance, one by one

The left column is mandatory for every written valuation by an RICS member or RICS-regulated firm. The right column is advisory guidance for particular purposes and asset types; it does not add new mandatory rules, but cross-refers to the mandatory material in IVS and the PS and VPS that applies.

Mandatory: PS and VPS

Advisory: VPGAs

PS 1 Compliance with standards where a written valuation is provided: mandatory application, compliance within firms, adoption of IVS, jurisdictional standards, the five VPS exceptions, departures, and RICS monitoring.

PS 2 Ethics, competency, objectivity and disclosures: qualification criteria, independence and conflicts of interest, confidentiality, public-interest disclosures, valuation review, and the named responsible valuer.

VPGA 1 Valuations for financial reporting: compliance with valuation standards in an accounting context and guidance on selected IFRS, including fair value measurement.

VPS 1 Terms of engagement (scope of work): written terms for every valuation, internal or external, agreed before any advice or draft is given and covering at least items (a) to (s) in the checklist below.

VPGA 2 Valuations for secured lending: taking instructions, independence and conflicts, basis of value and special assumptions, and reporting for lenders.

VPS 2 Bases of value, assumptions and special assumptions: the IVS bases and IFRS fair value, the market value definition, transaction costs, assumptions, special assumptions, marketing constraints, and projected values.

VPGA 3 Businesses and business interests: scope, information, investigation, approaches and reporting.

VPGA 4 Trade related properties: properties valued with regard to trading potential, using the profits method.

VPS 3 Valuation approaches and methods: the valuer adopts and justifies the market, income or cost approach and the methods used, having regard to the asset, the purpose and any statutory requirements; no approach automatically takes precedence.

VPGA 5 Plant and equipment (including infrastructure): inspection, finance and lease arrangements, regulation and approaches.

VPGA 6 Intangible assets: terms of engagement, due diligence, approaches, discounted cash flow and reporting.

VPS 4 Inspections, investigations and records: agree the extent of inspection, verify information, handle revaluation without reinspection, keep a proper audit trail, and collect sustainability and ESG data.

VPS 5 Valuation models: complex or proprietary models must be suitable for the purpose and applied with professional judgement, together with IVS 105.

VPGA 7 Arts and antiques: identifying the market, inspection, research and reporting.

VPGA 8 Real property interests: inspection, investigations and assumptions, and sustainability and ESG matters.

VPS 6 Valuation reports: a clear, unambiguous report in writing that deals with everything agreed in the terms of engagement and covers at least items (a) to (q) in the checklist below. Avoid terms such as “valuation certificate”.

VPGA 9 Portfolios and groups of assets: how the purpose of the valuation shapes whether assets are valued individually or together.

VPGA 10 Material valuation uncertainty: when MVU arises, how to report it and when to remove the declaration.

VPGA 11 Relationship with auditors: the role of the independent auditor, and the valuer acting as management’s expert or as the auditor’s expert, including responding to auditors’ requests.

• VPS 2 · Bases of value 1 of 4

• VPS 2 · Bases of value 2 of 4

The Red Book adopts the six IVS bases: market value, market rent, investment value (worth), equitable value, synergistic value and liquidation value, plus fair value under IFRS for financial reporting. The basis must suit the purpose and appear in both the terms of engagement and the report; any other basis must be fully defined and explained.

The most widely used basis: the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller, at arm’s length, after proper marketing, with both parties acting knowledgeably, prudently and without compulsion. It reflects the asset’s highest and best use.

• VPS 2 · Bases of value 3 of 4

• VPS 2 · Bases of value 4 of 4

Assumptions and special assumptions

No “forced sale value”

An assumption is a supposition taken to be true that, by agreement, the valuer need not verify. A special assumption supposes facts that differ from those at the valuation date, such as a building treated as complete. Unrealistic special assumptions should be declined.

A forced sale describes the circumstances of an exchange, not a basis of value, so the term “forced sale value” must not be used. Where a valuation must reflect an actual or anticipated marketing constraint, the constraint and its reasons must be agreed in the terms of engagement, typically as a special assumption.

■ Two checklists

Two checklists every Red Book assignment needs

VPS 1 lists what the written terms of engagement must address before any advice or draft is given; VPS 6 lists what the report must cover. The Red Book lists go further than IVS, adding fees, complaints handling, RICS monitoring and liability limits.

Terms of engagement (VPS 1)

Valuation report (VPS 6)

1. People: (a) identification and status of the responsible valuer, including any material connection or involvement; (b) the client(s); (c) any other intended users.

1. People: (a) identification and status of the responsible valuer; (b) the client and any other intended users.

2. Subject and purpose: (d) the asset(s) or liability(ies) being valued; (e) the valuation currency; (f) the purpose of the valuation.

2. Subject and purpose: (c) the purpose of the valuation; (d) the asset(s) or liability(ies) valued.

3. Basis and date: (g) the basis or bases of value adopted; (h) the valuation date.

3. Basis and date: (e) the basis or bases of value adopted; (f) the valuation date.

4. Work and information: (i) the nature and extent of the valuer’s work, including investigations, and any limitations; (j) the nature and sources of information relied upon; (k) all assumptions and special assumptions.

4. Evidence: (g) the extent of investigation; (h) the nature and sources of information relied upon, including key data and inputs; (i) assumptions and special assumptions.

5. Report and compliance: (l) the format of the report; (m) restrictions on use, distribution and publication; (n) confirmation that the valuation will follow IVS and/or the Red Book Global Standards.

5. Use and compliance: (j) restrictions on use, distribution and publication; (k) confirmation that the valuation follows IVS and/or the Red Book Global Standards.

6. Commercial and regulatory: (o) the basis of the fee; (p) the firm’s complaints handling procedure, if RICS-regulated; (q) a statement that compliance may be monitored by RICS; (r) any agreed limitations on liability; (s) significant ESG factors to be considered.

6. Reasoning and result: (l) the valuation approach and reasoning, including methods and any complex or proprietary models; (m) the amount of the valuation; (n) the date of the report.

7. Risk and context: (o) commentary on any material valuation uncertainty where essential for clarity; (p) any agreed limitations on liability; (q) significant ESG factors used and considered.

• Practice point 1 of 4 · Red Book and IVS

• Practice point 2 of 4 · Wording

The Red Book adopts and reproduces IVS, so a report may state compliance with IVS, the Red Book, or both. Where VPS 1–6 were not applied under an exception, IVS compliance must not be claimed; the work may be described as Red Book on an excepted basis.

Parts 3 and 4 use “must” for mandatory requirements. The VPGAs in Part 5 use “should” for best practice, recognising that acceptable alternatives may exist, and “may” for options. In regulatory, disciplinary or legal proceedings, RICS professional standards are likely to be taken into account.

• Practice point 3 of 4 · Uncertainty

• Practice point 4 of 4 · Public interest

Material valuation uncertainty

Disclosures third parties rely on

All valuations carry some uncertainty. Material valuation uncertainty (MVU) is uncertainty beyond what is normally expected and accepted, for example for unique assets or very thin markets. VPS 6 requires MVU commentary where essential for clarity; VPGA 10 explains how.

Where third parties may rely on a valuation, PS 2 asks for disclosures on valuer rotation (within seven years is good practice), time as signatory, involvement in the past 12 months, and fee share: minimal (under 5%), significant (5–25%) or substantial (over 25%).

✱ Keep learning

Read the official text, then go deeper

This guide is Valuvix’s independent summary of RICS Valuation – Global Standards; we are not affiliated with or endorsed by RICS. The definitive current text is the one on the RICS website, which may also publish national supplements and jurisdiction guides. Use this page to orient yourself, then rely on the official standard, and see our IVS 2025 guide for the standards it adopts.