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Comparable Evidence in Real Estate Valuation – Key changes proposed by RICS in consultation

October 2026

Introduction

Asset valuation is premised on the economic principle of substitution; that a buyer will not pay more for any given asset than it would cost them to acquire a satisfactory substitute. The challenges in valuing real property lie in both understanding the various attributes which contribute to a particular property’s value and identifying suitable and reliable comparable evidence by which to assess them. For the most part, of course, the ‘satisfactory substitute’ does not exist. The valuer must therefore determine value by fashioning a theoretical substitute value from the plethora (or dearth, as the case may be) of comparable market evidence. Judgments in professional negligence claims concerning valuers are replete with intense debate over the correct approach to constructing that hypothetical substitute. To maintain valuation confidence (and to protect against the risk of PI claims), it is vital that professionals adopt a consistent, logical and methodical approach to establishing that hypothetical substitute, by identifying reliable, comparable market data and in making considered adjustments to that data to properly reflect material differences.

In 2019, the Royal Institution of Chartered Surveyors (RICS) published its Guidance Note ‘Comparable evidence in real estate valuation’, later re-issuing it as a Professional Standard. Seven years on, the RICS is looking to revisit that document and has recently consulted on revised guidance designed to encourage greater consistency in valuation practice (particularly as a much wider range of market evidence is increasingly being employed in the valuation process), and to emphasise the growing importance of data protection, sustainability and technology when producing valuations.

Key Changes

The guidance emphasises that comparable evidence underpins most real estate valuations and that properly identifying, analysing and applying comparable evidence is fundamental. Whilst, much of the earlier publication has been retained, there are notable additions which we consider below.

1. ‘Value as you devalue’

The guidance highlights that valuers should, when undertaking a valuation, seek to ‘value as they devalue’. This means that the basis, structure and analysis adopted in the valuation should mirror the way in which the available comparable evidence has been presented. For example, if market evidence is expressed in terms of rent and yield, the valuation should also be presented in the same way so that it is tested on a consistent basis. The objective of this addition to the guidance, is to ensure that the valuation is supported by and derived in a way that is consistent with the best available market evidence.

2. Post-Dated Comparable Evidence

Retrospective valuations are of particular relevance to establishing and defending PI claims. It is fundamental that a historic valuation should be judged by reference to the comparable evidence which would have been available on the date of the valuation. However, here the guidance has been revised to provide that evidence contemporary to the original date of valuation should “primarily” – but not exclusively – be used.

This change reflects decisions of the UK courts in Chifley Holdings Ltd v HMRC [2024] UKUT 00301 (LC) and Allen v Leicester City Council [2013] UKUT 16 (LC)) to the effect that post-dated evidence can be useful to establish objective facts at the date of valuation and to confirm market conditions at the valuation date. Published property market indices may also be used to adjust the evidence so that it is relevant on the date of valuation. However, the guidance makes clear that post-dated evidence should play a subordinate role in the retrospective valuation process compared to evidence available at the valuation date.

3. Recording Comparable Evidence

Another notable addition to the guidance is the importance of recording all evidence used by a valuer to arrive at an opinion of value. This evidence should be recorded in a form that can be used by both the valuer and anyone who may need to understand how the valuation was calculated at a later date. The importance in PI claims of being able to demonstrate the underlying rationale of a valuation produced often years earlier cannot be understated and focus on this in the guidance is to be welcomed

4. Dealing with shortages of evidence

The guidance sets out how valuers should approach circumstances where it may be difficult to find comparable data. This could be where the market is inactive, changing rapidly, where the asset to be valued is highly unusual or there is little data available

within the local market. As well as having to look further afield for comparables and consider local economic data, the guidance recommends that the valuer should discuss the valuation with colleagues to sense-check the methodology. This is a sound risk-mitigation step for a valuer dealing with a difficult or unusual valuation where fresh eyes may more readily identify any blind-spots.. The guidance also suggests obtaining an external peer review in extreme circumstances.

5. AI and Automated Valuation Models (“AVM”s)

An AVM is an AI based technology which reviews available data to provide an estimate of what it considers a real estate property is worth. AVMs are more accurate where there is a sufficient number of closely comparable properties. The guidance notes that AVMs are being increasingly used in the market.

RICS is clear that a value provided by an AVM is not a valuation, but rather a tool that can be used by a valuer as part of evidence in support of a valuation. If AVMs are used by a valuer in arriving at an opinion of value this must be disclosed to the client.

RICS has published a separate guidance note on the use of AVMs, which can be found here.

6. ESG and Sustainability

Valuers are not expected to have specialist knowledge of ESG issues, but the guidance makes clear that they should have sufficient knowledge to recommend further specialist advice where appropriate.

In particular, the guidance provides that valuers should consider significant ESG factors for the subject property and should seek to understand how ESG was considered as part of any comparable transaction. Factors that may be considered include:

• ESG/sustainability certifications and ratings attached to comparable properties.
• confirmation of the extent to which current and pending regulatory requirements have been met.
• the estimated costs of compliance with unfulfilled ESG and sustainability requirements and of future aspirations in this area.
• relevant ESG/sustainability KPI data as it relates to comparables.

7. Data Protection and Confidentiality

Given that comparable evidence is often provided by third parties and included in databases, questions of data protection and confidentiality will regularly arise. The guidance highlights that valuers need to understand how data protection legislation in the relevant jurisdiction applies to the valuation process and sets out the relevant principles to be followed. It also addresses how confidential data is to be treated.

Conclusion

Although not mandatory, the proposed guidance can be expected to bring about changes in practice and, going forward, to impact the expectations of the treatment of comparable data in the valuation process. Valuers will want to be able to demonstrate proper regard to the guidance to limit scope for criticism and those involved in defending claims will want to have the guidance clearly in mind when scrutinising the methodology adopted by their opponent’s expert.

A copy of the draft guidance can be found here.

If you have any questions regarding the information discussed in this article, please contact Martin Jensen and Priya Thakrar.

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