Updated RICS Rulebook
Royal Institute of Chartered Surveyors move the goalposts …
Last month we published an article titled 'All That Glitters Aint Gold' so it was timely news released by RICS (Royal Institute of Chartered Surveyors) this week.
All surveyors who are members of RICS are governed by the rules set out in the RICS Red Book and this week they revised a number of sections related to new build properties based on 2 points. How to value new build properties and the treatment of incentives associated with new build properties.
In section 5.5 RICS deal with incentives stating that developers will often offer these to encourage quick sales or give the impression of higher sale prices, they state the following as all being examples of incentives though they also say this list is not exhaustive!
- Payment of legal/survey fees.
- Re-imbursement of the deposit on exchange.
- Guaranteed rental for a number of years.
- Discounts for multiple purchases.
- Purchase of the buyers current property.
- Payment of the mortgage for a specific period.
- Cash back offers.
- High level material gifts / furnishings or electrical goods.
The book states how the valuer must take care when valuing the property, taking into account any incentives as well as relying on the usual comparable work. The book also states valuers must assure themselves that the discounted price has not in fact become the norm.
In a similar way the revisions mention how the valuer needs to ensure that when dealing with buy to let properties the rental assessment is true of what will be obtained on a 6 month AST basis and warns that sometimes guaranteed rents are inflated.
It is good to see RICS taking this approach to help their members whilst attempting not to hurt the new build market.
Written by: Ben Saxton
From: http://www.quicksaleproperty.net
Date written: 19/06/2006
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