Valuers urged to alter methods: Profession told 'aura of mystique' must go. Tom Stevenson reports
Michael Mallinson, the former Prudential property director who wrote the report, says valuers must remove the 'aura of mystique' from their work.
Accordingly the report, commissioned by the Royal Institution of Chartered Surveyors, makes more than 43 recommendations for change.
Its publication comes in the light of the Queens Moat Houses affair, which saw two leading firms of surveyors come up with six different figures over two years for the value of the hotel chain.
One of the report's key recommendations is that the Rics should be given increased investigatory powers to ascertain whether surveyors have acted in accordance with professional guidelines.
The Rics is unlikely to be given the power to question subjective assumptions, such as appropriate investment yields, but it is expected to have the power to call in valuers' papers for scrutiny and develop clear rules under which members can be disciplined.
The Queens Moat case highlighted the subjectivity of assessing properties where values depend on future business.
The report says valuers should never state a figure without indicating the valuation basis adopted. They should also be more honest about the uncertainties that surround their work.
Greater communication with clients could help prevent legal actions such as the writ issued this week against Richard Ellis by Nykredit, the Danish bank. The bank is taking the agent to court over a pounds 37m valuation on a London site in 1990, two years before it sold for pounds 6.8m.
The case highlighted the need to refine valuation methods which depend on an analysis of similar transactions and investment yields.
The report says the Rics should investigate alternative methods and adds that when a valuation is dependent on trading potential with no reliable comparisons it should say so.
The potential failings of current methods were highlighted during the flotation of the out- of-town shopping developer, Capital Shopping Centres. Its directors disagreed with DTZ Debenham Thorpe's valuation of its centres.
They argued current valuation methods failed to take into account the growth potential of immature shopping centres which do not reach their full trading potential for up to 10 years after they are opened.
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