RICS has issued new guidance for uncertainty in valuations during the coronavirus pandemic.
The body has released a recommended wording for appraisals impacted by market uncertainty, as coronavirus spreads across the globe.
It comes after a raft of fund managers suspended trading after agents introduced market uncertainty clauses into the valuations of their assets.
Aviva, Aberdeen Standard Investments, BMO Global, Columbia Threadneedle, Janus Henderson and Kames Capital, Legal & General and St James’s Place have gated more than £10bn in their open-ended funds.
Ben Elder, RICS international director for valuation, acknowledged that “unprecedented circumstances” would mean that comparable evidential data was less available, and inspections may be difficult.
He said: “RICS regulated members and firms may therefore be considering whether a material uncertainty declaration is now appropriate using the Red Book Process. If material uncertainty is declared, this should be explicitly stated, and RICS has suggested today, a form of wording that can be used.
“These are to assist where a valuer feels that the unknowns are so significant that the valuation produced would be less reliable than in normal circumstances.”
New rules from the Financial Conduct Authority specifying that shares in “funds investing in inherently illiquid assets”, or FIIAs, should be suspended if an independent valuer believes there is “material uncertainty” come into effect in September.
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