As part of the REVALUE project, roundtable discussions were held across Europe with practising valuers over the summer of 2017. Three workshops took place in England (London, Birmingham and Manchester) and three in mainland Europe (Amsterdam, Barcelona and Berlin). In total, some 25 RICS registered valuers working for a range of valuation consultancies participated. Each workshop took approximately two hours and involved discussion partly stimulated by consideration of example typical properties. The purpose was to establish the extent to which valuers were examining energy efficiency as part of their due diligence process and reflecting it within their valuations.
There were several themes and topics that repeatedly cropped up in discussion:
- Valuers act in response to the instructions they receive and many lenders and buyers do not specify consideration of energy matters,
- Valuers have found little evidence that EPCs ratings impact the market value of residential assets
- However, some physical features which enhance energy efficiency – such as double glazing and efficient heating systems are increasingly regarded as ‘normal’; a brown discount may apply if they are missing
- Some valuers may lack the knowledge and/or data to do a detailed energy assessment
Given that valuers reflect, rather than make, markets, it seems unlikely that that simply changing guidance on inspection will have a dramatic and immediate effect. However, the markets are moving, even if it is a case of incremental changes. Buyer and renter expectations are changing, and lenders are beginning to take more of an interest in energy. This might well provide the market stimulus needed to enable valuers to respond.
“The findings on valuation of this report are good for the European Commission to retain because they are spot on, describing what valuers can and cannot do about energy efficiency given that the valuer’s job is to objectively gauge market value, not drive energy efficiency, and given also client pressure on remuneration for valuation reports and thus on the amount of effort the valuer can put into energy efficiency aspects.”
Michael MacBrien, Adviser to TEGoVA
For more details, please read the full report here.