RICS publishes guidance for new building valuations

The Royal Institute of Chartered Surveyors (RICS) has published a new guidance note to draw together all aspects of the 'challenging process' of valuing new build properties. The guidance comes into effect on 1 May 2009.

In September 2008, the industry agreed changes to the Red Book which encouraged valuers to ask for incentives to be disclosed on new build properties. RICS says its new publication has moved a step further by pulling together all issues in a best practice Guidance Note.

RICS said the guidance also 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.

Commenting, 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.'