The Royal Institution of Chartered Surveyors (RICS) has published two significant updates providing guidance for valuers, lenders, and regulators involved in bank lending valuations across Europe and globally.
The newly released Bank Lending Valuations and Mortgage Lending Value, 2nd Edition (Europe) and Bank Lending Valuations: Basel 3.1 Prudently Conservative Valuation Criteria Adjustments, 1st Edition (Global) respond to the evolving regulatory landscape shaped by the Basel Committee on Banking Supervision’s revised Basel 3.1 framework.
Together, the documents clarify the relationship between market value, mortgage lending value (MLV), and the prudently conservative valuation criteria introduced under Basel 3.1 and implemented in the EU through the amended Capital Requirements Regulation (CRR III).
The updated European professional standard offers revised guidance for RICS members providing mortgage lending valuations in EU jurisdictions. It incorporates Basel 3.1 requirements into the MLV framework and reaffirms MLV’s critical role – especially in covered bond markets – as a long-term, sustainable value measure alongside market value.
The global practice information addresses the broader application of Basel 3.1, outlining how valuers should approach the new prudently conservative valuation criteria across varied regulatory environments. It emphasises the importance of consistent, evidence-based adjustment models to detect deviations from long-term sustainable property values. Issued as guidance rather than mandatory instruction, it reflects the differing paces of Basel 3.1 adoption worldwide.
Developed in collaboration with academics, valuation professionals, and banking sector experts, the updates were led by Professor Neil Crosby of the University of Reading and supported by an international advisory group, including representatives from CBRE, Colliers, JLL, EMF-ECBC, and other key industry bodies.
ICS Professional Practice Lead, Jonathan Fothergill FRICS, said:
“The property market is central to the global financial system. The regulatory landscape for bank lending valuations is changing rapidly and is globally fragmented. As global economies grapple with inflation and interest rate shifts, the need for reliable, sustainable property valuations in response to through-the-cycle lending practises has never been more critical.
“These two RICS publications cut through the complexity, giving valuation professionals and the financial sector the essential clarity needed to implement the Basel 3.1 framework responsibly in those jurisdictions where real estate valuations for lending purposes are impacted. They affirm our commitment to seeking global consistency in valuation while providing the essential tools to make prudently conservative adjustments.”
Key updates include:
+ Full alignment with Basel 3.1 and the EU’s amended CRR III (2024)
+ Clarification of the distinction and relationship between market value, mortgage lending value (MLV) and prudently conservative valuation criteria
+ Practical guidance on long-term sustainable valuation approaches, including through-the-cycle modelling to counter the pro-cyclical nature of market value
+ Recognition of national variations in the adoption and interpretation of Basel 3.1 and MLV frameworks
+ Professional integrity: reinforcement of valuer competence, independence and professional responsibility under RICS’ Red Book Global Standards
The Practice Information document is effective straight away, the Professional Standard will take effect from 1 January 2026, providing valuers and financial institutions time to review and integrate the new guidance into their practices.
Read the orginal article: https://propertyindustryeye.com/rics-issues-key-updates-to-clarify-global-bank-lending-valuations/
