TEGoVA The European Group of Valuers Associations www.tegova.org - PowerPoint PPT Presentation

TEGoVA The European Group of Valuers Associations www.tegova.org

About TEGoVA The European Group of Valuers Associations (TEGoVA) - is the European umbrella organisation of national property valuation associations - was established in 1977 by valuation associations from Belgium, Germany, France Great Britain and Ireland in order to establish common valuation standards in accordance with the 4th company directive law

Members Today TEGoVA represents the interests of 40 professional associations from 27 countries with a total of 100.000 professional valuers.

TEGoVA’s Role The European Union is integrating rapidly, removing barriers and creating links between more and more citizens and states. Real estate is the bedrock of the European economy, - through housing - through ever-adapting accommodation for businesses and industry - through public economy and - as an asset class.

TEGoVA’s Role A dynamic European economy serving its citizens needs cross-border property investment. To invest in property, people need to be able to compare. Valuation is at the heart of this, as essential to transparency and comparison as the euro itself. Properties across the Union need to be valued on the basis of common European standards applied by valuers with a common high level of competence and integrity

TEGoVA’s Role TEGoVA organises and achieves this - by drafting European Valuation Standards (EVS), - through its systems of approval of valuer certification bodies according to EN 45013 and ISO 17024, - through it’s system of professional recognition and - through its minimum education requirements and corporate governance rules for valuers.

TEGoVA’s Role Headquartered in Brussels, TEGoVA is positioned to collaborate with the European authorities as they draft the European Internal Market legislation affecting real estate and valuation in the Union and beyond. TEGoVA Secretariat Place de la Vieille Halle aux Blés 28 1000 Brussels Belgium

EVS 2003 (the blue book) The Fifth Edition The fifth edition of European Valuation Standards 2003 breaks new ground by including material on valuations for securitisation purposes, the effect of market shock, corporate governance and much expanded sections of the valuation of agricultural properties. The section on country-specific matters has also been greatly expanded to cover most member countries.

EVS 2003 (the blue book) The Purpose EVS 2003 provides a benchmark against which consistent and coherent reports can be prepared for clients, compatible with international practice international accounting standards and European Legislation.

EVS 2003 (the blue book) The Structure The book comprises Standards, Guidance Notes and Appendices. Standards are concerned with fundamental valuation principles, and Guidance Notes are concerned with interpretation and application of those principles. Appendices give further assistance in the interpretation and application process.

EVS 2003 (the blue book) The blue book contains nine current European standards, 14 guidelines and eight appendices. New guidance notes have recently been introduced on: • The valuation of mortgage portfolios for securitisation purposes, • Reflecting market shock, and • Amended appendices on valuation methodology and corporate governance. Amended guidelines can be found concerning: • The valuation of agricultural property for lending purposes • Business valuations • Country-specific legislation and practice

EVS 2003 (the blue book) The Nine Standards Standard 1: Compliance Issues International Standards European Directives and National Law And Practice Derogation from European Standards

EVS 2003 (the blue book) Standard 2: The Qualified Valuer European Accreditation, Mutual Recognition, Local Regulation and Licensing. The Qualified Valuer - definition, competence, and qualifications and relations with the Client. Independence of valuers The Qualified Valuer's relationship with the Auditor Professional Code: - Certification - Qualification - Probity - Acknowledgement of outside assistance - Conflicts of interest - Support and promulgation of standards set out by - TEGoVA and IVSC

EVS 2003 (the blue book) Standard 3: Conditions of Engagement The importance of clear and unambiguous conditions in writing; Summary of what should be included in the conditions of engagement; Special considerations in the following circumstances: - Valuations carried out with limited information - Valuations which are inconsistent with the Standards - Reviewing valuations by other parties - Sub-contracted valuations * - Valuations passed to a third party

EVS 2003 (the blue book) Standard 4: Valuation Bases Valuation principles and reporting practice The purpose of valuation and uniform bases of valuation Market Value Market Rental Value EU Market Value Highest and Best Use value Fair Value Existing Use Value Value in Use Alternative Use Value Negative Values Depreciated Replacement Cost Mortgage Lending Value Enterprise Value Equity Value

EVS 2003 (the blue book) Standard 5: Valuations for the purpose of Financial Reporting Background Classification of Assets The Selection of Consistent Bases of Valuation Definitions Apportionment between Land and Buildings Disclosure Provisions Methodology under EC Directive 91/647/EEC Special Properties

EVS 2003 (the blue book) Standard 6: Valuations for Bank Security Purposes and in relation to the Issue of Asset and/or Mortgage Backed Securities The importance of consistent valuation across the European Union The valuation basis Market Value Mortgage Lending Value Special fiduciary responsibilities and obligations of a valuer The independence of the valuer Specialist knowledge Conditions of Engagement Investment Properties Owner occupied properties Development properties Properties usually valued on the basis of their trading potential Wasting assets Forced sale value, or liquidation value

EVS 2003 (the blue book) Standard 7: Estimates, forecasts and other appraisals The Concept of Worth (or Value in Use) - Investment Value Replacement Valuation Value in Use Forced Sale Value Bricks and Mortar Valuations Forecasts Retrospective Valuations Valuation Reviews Other Bases of Appraisal

EVS 2003 (the blue book) Standard 8: Valuations for Investment - Insurance Companies, Property Unit Trust, and Pension Funds, etc The EC Directive on the annual and consolidated accounts of insurance undertakings; The EU definition of Market Value; Categories of property; Reporting Practice; Transaction costs; The Qualified Valuer (Summary of parts of Standard 2;) Independence and conflicts of interest; Departure provisions; The Valuation Certificate; Methodology.

EVS 2003 (the blue book) Standard 9: Valuation Reporting The form of certificate used The contents of the certificate, including: The instructions, time period, identification, basis of valuation, compliance statement, condition of the property, environmental issues, risk assessment, valuation schedules, the treatment of process plant and machinery, the currency or currencies in which the valuations are to be reported, publication and confidentiality clauses, third party liability, taxation, financial liabilities, model clauses for the valuation certificate Model Clauses

EVS 2003 (the blue book) 14 Guidance Notes Guidance Note 1: Special Factors affecting Value Guidance Note 2: Valuations of Special Properties Guidance Note 3: Valuation of Plant and Machinery Guidance Note 4: Valuations of Assets for Development Guidance Note 5: Valuations of Agricultural Properties Guidance Note 6: Valuation of Historical Properties Guidance Note 7: Business Valuations Guidance Note 8: Valuations of Intangible Assets Guidance Note 9: Valuations for real estate indices Guidance Note 10: Cross-Border Valuations Guidance Note 11: Valuations for Joint Ventures, and Limited Partnerships Guidance Note 12: Apportionment between Land and Buildings Guidance Note 13: Country-Specific Legislation and Practice Guidance Note 14: Valuation of Mortgage Portfolios for securitisation Purposes

EVS 2003 (the blue book) 8 Appendices Appendix 1: Valuation Methodology Appendix 2: Certification Appendix 3: Reviewing Valuations Appendix 4: Ethics Appendix 5: Model Conditions of Engagement and Valuation Check List Appendix 6: European Code of Measuring Practice Appendix 7: Glossary of terms used in valuation and related subjects Appendix 8: List of TEGoVA members

EVS 2006 - sixth Edition New Structure to be presented at the General Assembly November 2005, Vienna

Transparency in Property Valuation Through Cross-Border Harmonisation of Valuers‘ Qualification Qualification of Methods the user

Transparency in Property Valuation Through Cross-Border Harmonisation of Valuers‘ Qualification MER - Minimum Educational Requirements Certification 'Approved by TEGoVA ’ Certification bodies that have been accredited by a national accreditation body according to EN 45013/ISO 17024 and fulfil certain criteria set by TEGoVA can obtain a mark of excellence 'Approved by TEGoVA' Professional Recognition