Clients progressively expect valuations to be produced at a faster rate and have sustainability and long-term value at the forefront of their expectations for a valuation report. The demand for valuations to be provided faster is reasonable, 20 years ago it was not unusual for a report to take around 10 business days to complete. As technology has moved forward with the likes of emails and Big Data, quality appraisals can be expected in just three to five business days. Therefore, it is probable that a demand for even less time taken is going to be realised soon through further technology and data advances. However, to do so valuers must be willing and able to embrace the new digital ways of reporting, respond to change in order to provide the most efficient service for clients. In line with this growing client expectation, the RICS now offer web classes and lectures as formal CPD (“Automated Valuation Models (AVMs) – Opportunity or Threat?”, 2018). This is to educate on the importance of embracing technology and to act as catalyst to encourage valuers to innovate their skillset and reporting.
As well as the reports being demanded in shorter period, clients require a more detailed analysis of past, present, and future market trends, as well as a risk analysis of the property being valued. The requirement for a long-term measure of collateral value has spawned out of the recent financial crisis according to IPF. The crisis has shown the adverse impact an over reliance on market value can have. Because of the public and statutory scrutiny in the fallout of this crisis, whilst market value still makes up the bulk of the report, there has recently been an increase of clients requesting a ‘long term value’ to be worked into the report to reduce investor risk. For instance, for long term investors the ‘one off’ market philosophy may be particularly damaging, attributing instant market values to assets whose valuations may take years to accurately assess. This long-term investor thinking will require valuers to not only have the capability of analysing past and present market cycles but also the confidence to predict how future economic cycles may affect an investor’s asset years in advance.
Another challenge which the increased demand for long term value will create is that presently there is no official framework or guidance as such. Whilst this allows for a degree of freedom for the valuer it also consequently means that a large degree of uncertainty will apply to the value. This uncertainty is likely fall outside the accepted norm of the RICS and the methods for expressing this uncertainty may not be covered by the Carsberg Report (2002) so new methods may need to be pioneered. Similarly, long term values will increase the time that a valuer’s report can be scrutinised for, more so than a traditional market value which is binding for about 3 years. This longevity and portability of reports created with long term value may also result in fewer valuations being necessary. These more technical long-term valuations being demanded by clients may cause valuers to increase their fee to account for the increased difficulty, risk and lower frequency of instructions.
Lastly, clients in the future will have a concern for the sustainability of their property due to growing legislative pressure such as the MEES (the Minimum Energy Efficiency Standards) that came into effect on 1 April 2018, the Code for Sustainable homes 2005 and Building Regulations. It may fall to the valuation process to advise on the current sustainability of a property at the point of valuation and to advise on how to increase a buildings sustainability to bring it into line, legislatively speaking. It is also likely that markets, over time, will become progressively sensitised to sustainability considerations. The valuation process will need to consider the impact of sustainability and the outcome it will have for their client’s asset in the market to add maximum value to the report. Valuers are also advised to collect appropriate and sufficient sustainability data as and when it becomes available for future comparability, even if it does not currently impact on value according to the RICS