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Savills and JLL have removed the ‘material uncertainty clause’ (MUC) for valuations made based on market value throughout the UK.
The MUC had previously been introduced by the valuers due to the impact COVID-19 was having on the real estate market and has now been removed from the “vast majority” of valuations, the valuers have said.
In late May, the MUC was removed for valuations using the Existing Use Value for Social Housing (EUV-SH) method, which assumes social housing units will continue to be let in perpetuity for the property’s existing use.
A briefing note on today’s announcement said: “We are pleased to announce that, with effect from today, 17 July 2020, we are also lifting the MUC for all valuations in the social housing sector reported on the basis of Market Value, subject to existing tenancies (MV-T) and are doing so throughout the UK.”
The move follows a decision taken by the Royal Institution of Chartered Surveyors (RICS) today to remove the MUC for most valuations including those of owner-occupied homes for mortgage or transactional purposes and market rented homes.
“Given the role played by market values assuming vacant possession in our valuations of social housing on the basis of MV-T, we consider that this removes the need for the clause in our reports,” JLL and Savills said.
The valuers noted that the RICS announcement refers to property and land in England because restrictions in devolved nations mean those markets are “not yet as mature”, but RICS agreed for the clause to be lifted by valuers where they feel able to do so.
But Savills and JLL said: “We are comfortable, in relation to tenanted social housing valued on the basis of MV-T, that the criteria for the lifting of the clause are met, including in particular sufficient liquidity in the lending markets.”
In their first briefing on how valuations would be impacted by coronavirus, the valuers said EUV-SH valuations were likely to remain stable whereas MV-T ones may fall by 10%.