The Royal Institution of Chartered Surveyors (RICS) has expanded its recommendations for sectors which no longer require a material uncertainty clause, the reason given for the swathe of property fund suspensions in March.
The RICS Material Valuation Uncertainty Leaders Forum (UK) met for the second time of 21 May and expanded its recommendations to include "non-reversionary residential ground rents in excess of 80 years" and "all types of rented social housing or leased shared ownership, owned by housing associations".
In the first meeting on 14 May, the forum initially reached a consensus that reporting on "long dated annuity income with at least 20-years unexpired term", "standalone food stores let to major operators" and "institutional grade primary healthcare facilities" no longer required a material uncertainty clause.
Any decision to remove the clause remains with the independent valuer and RICS reasserted that "regulated members should consider on a case-by-case basis whether it would be appropriate to include commentary that a valuation is materially uncertain" and that these recommendations "are not a substitute for that process".
According to RICS, when initially applying a material uncertainty clause, valuers must consider whether there is "evidence of disruption" to markets due to unforeseen events accompanied by "inconsistent, or an absence of, data" or "an unprecedent set of circumstances on which to form a judgement".
The degree of this uncertainty must fall "outside any parameters that might normally be expected and accepted" and the valuer's concerns about "the greater degree of subjectivity involved" must be "expressly signalled in the report".