Chris Rispin, Managing Director of BlueBox Partners has provided his comment on the latest Red Book supplement.
Ben Elder, the Global Director for Valuations, issued a statement last week advising of the release of the UK supplement to the Red Book:
“The UK national supplement augments the Global Red Book for valuations that are subject to UK jurisdiction. The latest edition published on 14 November is effective for valuations where the valuation date is on or after 14 January 2019. The previous edition is effective for valuations where the valuation date is on or after 6 January 2014 (with certain elements effective from 1 January 2015) but before 14 January 2019.”
However, he did not mention that the residential sections of the supplement principally VPGA 11-14 have been amended but without full consultation and that will take place in coming weeks. In the overview for VPGA 11 it states as follows:
“Most lenders have standard terms of engagement and in many cases these refer to and expressly adopt the RICS Residential Mortgage Valuation Specification contained in UK Appendix 10 of the January 2014 (revised April 2015) edition of the RICS Valuation – Professional Standards UK. This Specification may continue to be adopted where agreed between the parties (and will be regarded as consistent with the guidance in this UK VPGA) subject to cross-references to the 2014 Global Edition now being read as relating to the equivalent sections in the 2017 Global Edition. In Scotland, regard must also be had to UK VPS 2.
It is anticipated that an updated version of the Specification will be developed in liaison with UK Finance and any other key stakeholders and published in due course. Any consequential changes to UK VPGA 11 will be made if necessary.”
What this means is that a Surveyor, and more particularly a valuer, will need to ensure which edition of the Red Book is to apply and get this confirmed in writing. It will be necessary to bear in mind that the 2014/15 version is slightly out of date in certain respects and that the new version has not been agreed, principally by UK Finance, who are the trade body for the lenders nor by the Residential Survey and Valuation Group who are the advisory working group to the RICS.
Therefore, Surveyors should check that if they are using the revised supplement, they are complying with the recommendations in that version.
For example, in VPGA 11.1 it states the following under the Valuer’s role and remit:
“The remit of the mortgage valuer is to provide an objective valuation opinion having regard to the lender’s policy and requirements.”
This is new wording and is ambiguous as it suggests that the lenders’ policy and “requirement” can overrule an objective valuation and how many times has that been a dilemma in the past!
Does “Requirement” mean the broker or keen mortgage salesman insists that the valuer ignore something? If the client wishes to change the objective requirements, then they do this via a special assumption or similar otherwise independence and objectivity are lost.
This also totally ignores the fact that the valuer has a duty of care to the applicant to the mortgage. So be careful if you are required to use the new version of the UK Supplement.