You’ve been told by your accountant that you need a Red Book Valuation of the commercial property that you own. Not sure what this means?
A Red Book Valuation refers to the rules and guidelines that are laid out by the Royal Institution of Chartered Surveyors that describe best practice when preparing valuations. It is not there to tell a valuer how to carry out the valuation but what the report should contain.
A Red Book Valuation is only valid if it conforms to these principles and is carried out by a RICS Registered Valuer. This is a Chartered Surveyor (MRICS or FRICS) who has the additional designation of a Registered Valuer which means they are subject to inspections by the RICS of existing valuations and their process to ensure they comply with the rules.
The Red Book sets out what is required throughout the process from the point of instruction, requiring Terms of Engagement to be signed and what should be in that document through to what the report should comment up in respect of the property. It describes the different basis of value such as Market Value, Market Rent and Fair Value among a variety of other areas.
The purpose of the Red Book is to provide those people using valuations carried out in accordance with its principles the confidence that it is of the high standards that are required. Banks and other financial institutions request valuations in this form because they have confidence that the end figure has been arrived at through a recognised process.
Why is it called the Red Book? Well quite simply because the cover of the physical book that is printed is .. yes you guessed it . Red!