Following recent scrutiny of the audit sector (due to widespread criticisms after various high-profile corporate failures, including the collapse of Carillion), the Royal Institution of Chartered Surveyors is reviewing the ethical standards and valuation methodology for the property sector.
The focus of the review includes: (i) potential conflicts of interests at valuation firms where they are appointed valuer of a fund manager or property company's assets at the same time as performing other consultancy services for that firm; (ii) more frequent rotation of valuers and how valuers should respond to the changing demands in relation to environmental sustainability; and (iii) the use of artificial intelligence in valuation assessments.
The concern is to avoid overly optimistic valuations and potential "unconscious bias", and to take pro-active steps within the industry, to maintain independence and avoid the need for government-imposed regulation.
Valuations underpin the real estate market and confidence in the parties that prepare them is an absolute must when considering investment, development and financing of Britain's largest investment asset class. With greater confidence in valuers and valuations, there is the potential for both borrowers and lenders to benefit from a more trusted view of the asset value and the possibility of a lessening of lenders' more protective tendencies.
Fundamentally, this is about retaining this profession’s status as one of high-quality and trusted custodians of the built and natural environment.