RICS - new guidance on new build valuations

Landlords looking at buying or selling new build properties should be aware that the Royal Institute of Chartered Surveyors (RICS) have drawn together and published for the first time all aspects of how they expect their members to approach the difficult task of valuing new build properties in a 'Guidance Note' to be published on 1st May 09.

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This follows on from changes to the valuation bible the Red Book which in September made it mandatory for members to ask the seller, builder or developer on site, or their selling agent, for a copy of any 'disclosure of incentives' for the new home property under consideration.

The form, prepared in accordance with guidance from the Council of Mortgage Lenders (CML), will consist of 12 questions which disclose the full details of all financial and non-financial incentives and also details of any third party interest in the transaction.

The guidance puts into context new-build valuations in the wider economic environment emphasising the relevance of the guidance to all market conditions, both in the heady days of a boom and the gloomy days of a recession.

The note stresses the need for valuers to differentiate between the new build premium, that portion of the price paid which will evaporate as soon as a newly-built property is occupied - and those value-adding factors (such as better building materials, enhanced insulation levels, or more efficient heating systems) which are intrinsic to a new property and which will remain when the home is sold.

RICS Spokesperson Barry Hall said: "All parts of the property industry are in agreement that standards must be maintained and this guidance note will provide the foundations stones for valuers working in the new build market. Developers and lenders agree that raising standards in the profession will benefit business and the consumer."

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