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Wolfgang Kaelberer, Hon REVMember of the Board of TEGoVA

Member of the EVS Standards Board

Global Valuation Opportunities and Challenges: European Valuation Standards

EVS 2016

Resolved to:

• remain clearly focused on real estate;

• provide additional guidance and technical information;

• meet the diverse needs of the 63 TEGoVA TMA’s;

• concentrate on high level principles.

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Meeting the objectives:

• follows the direction of previous editions;

• informed by existing and emerging European regulation; yet

• upholding the scientific and professional obligation on the valuer.

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Status

• ECB Recognition (May 2014)“Real estate should be valued in line with European Valuation Standards 2012 (Blue Book) and anther international standards … - where a conflict is seen EVS 2012 will apply for the avoidance of doubt …” (Asset Quality Review)

• Mortgage Credit Directive (2014/17)

“In order to be considered reliable, valuation standards should take into account internationally recognised valuation standards, in particular those developed by … the European Group of Valuers Associations ...” (Recital 26)der to be considered reliable, valuation standards should take into account inter

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EVS 2016 provides:

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• harmonised European standards, guidance and technical information;

• designed for use by all sectors of the European valuation profession;

• corporate governance and ethical considerations embedded within the standards.

Divided into four parts:

Part 1 European Valuation Standards and

Guidance Notes

Part 2 European Codes

Part 3 European Union Legislation and

Property Valuation

Part 4 Technical Documents

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European Valuation Standards

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• EVS 1 Market Value

• EVS 2 Valuation Bases Other than Market Value

• EVS 3 The Qualified Valuer

• EVS 4 The Valuation Process

• EVS 5 Reporting the Valuation

all have been refined and reinforced

EVS 1

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EVS 1 Market Value - expanded to include a definition of Market Rent

“The estimated amount of rent at which the property should be leased on the date of valuation between a willing lessor and a willing lessee on the terms of the actual or assumed tenancy agreement in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without being under compulsion.”

EVS 2 • EVS 2 Valuation Bases other than Market Value

– Fair Value, Special Value, Investment Value, Mortgage Lending Value (MLV), Insurable Value

• Fair Value: distinguishes general definition for valuation from specific accounting definition

• MLV: extends the commentary, informed by Regulation (EU) No 575/2013 (CRR)“the value of immoveable property as determined by a prudent assessment of the future marketability of the property taking into account long term sustainable aspects of the property, the normal and local market conditions, the current use and alternative appropriate uses of the property.”

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EVS 3

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EVS 3 The Qualified Valuer, expands the requirements - not only competent to act, but also independent and without any undisclosed potential conflicts of interest:

“Any connection, other potential conflict of interest or other threat to the valuer’s independence and objectivity, should be disclosed in writing to the client and recorded in the valuation report”.

EVS 4

• EVS 4 The Valuation Process -incorporates and amends guidance published in 2013 relating to terms of engagement.

“Data retained following the submission of a valuation must be sufficient to enable verification that the analysis and evaluation undertaken in the approach, or approaches, to providing the opinion of value reported were sufficient for the type and scale of valuation”

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EVS 5

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EVS 5 Reporting the Valuation -provides commentary on situations where opinions of “value in the longer term” are requested -

“while such an approach may be useful ….. It will not be a measure of Market Value”

European Valuation Guidance Notes

EVGN 4 Assessment of Insurable Value and Damages

EVGN 3 Property Valuation for Securitisation Purposes

EVGN 2 Valuations for Lending Purposes

EVGN 1 Valuation for the Purpose of Financial Reporting

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European Valuation Guidance Notes

EVGN 7 Property Valuation in the Context of the Alternative Fund Managers Directive

EVGN 6 Cross-border Valuation

EVGN 5 Assessment of Investment Value

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European Valuation Guidance Notes

EVGN 10 Valuations: Compliance with EVS

EVGN 9 EMF / TEGoVA Commercial Loan Specification

EVGN 8 Property Valuation and Energy Efficiency

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New Guidance Notes:

• EMF + TEGoVA Commercial Loan Specification

• Valuations: Compliance with EVS

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Part 2

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•EC 1 European Valuers’ Code of Ethics and Conduct

•EC 2 European Code of Measurement

European Codes:

Part 3: European Union Legislation and Property Valuation

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1. General Introduction

2. The EU Internal Market

3. Health and Safety

4. Energy 5. Environment6. The Common

Agricultural Policy

Part 4: Technical Documents

EVIP 1 Sustainability and Valuation

EVIP 2 Valuation Certainty and Market Risk

EVIP 3 Apportionment of Value between Land and Buildings

EVIP 4 Valuation and Other Issues for Recurrent Property Tax Purposes

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EVIP 5 Valuation Methodology

EVIP 6 Automated Valuation Models (AVM)

EVIP 7 European Property and Market Rating: A Valuer’s Guide

EVIP 8 Fair Value Measurement under IFRS 13

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…. also in Part 4

Summary of TEGoVA’s Minimum Educational Requirements

Summary of Recognition of Qualifications: TEGoVA’s REV and TRV Programmes

Glossary

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New Technical Documents

• Valuation Certainty and Market Risk

• Automated Valuation Models (AVM)

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Global Valuation Opportunities and Challenges:

• Valuation Co-operation beyond Europe? Mutual Recognition of Valuation Standards and Qualifications?

• What do we have in TEGoVA? Minimum Educational Requirements, MER

Code of Conduct

EVS 2016

Involvement in Education

Recognised European Valuer REV and TEGoVA Residential Valuer TRV

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What is the Rationale for Strategic Partnerships ?

• Shared goals and shared problems, e.g. reputational damage to valuers from recession

poor fee income from a low value or devalued product

the Green Agenda – are valuers ready?

challenges arising from the use of AVMs

• strength in Co-operation

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• Strategic partnerships are an invitation to those with a shared ethos in order to address Synergy in goals

Synergy in Education Standards

Synergy in Valuation Standards

Synergy in Qualifications

• On an equal basis There is no need to subscribe to a global standard

that is in a hierarchy. We look to the best that exists in a comparable form and respect those other standards on an equal basis

Yet we respect the difference

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