Copyright: David Lawson– first appeared Property Week 1999
Home pageThere's a man in Chipping Sodbury who commands endless hours of attention from Alan Collett and Martin Angel. He may not know it: in fact he probably thinks that such London-based bigwigs don't even know he exists. But they do.
It's a different world out there, away from the headlines and hype over US takeovers and multi-million-pound deals. Strapping down some errant tenant in a small industrial building on the edge of town usually takes precedent over pontifications on esoteric nuances in valuation techniques by top surveyors like Collett and Angel.
Take the issue of banking mergers. Why should such high-level financial engineering matter to the small consultancies which make up the vast bulk of the property industry? Yet Collett, chairman of the ISVA valuation committee and the institute's next president, says this could threaten the earnings of hundreds of small firms.
Globalisation and the launch of the Euro is another issue that sets the big wheels spinning. But why bother ploughing through the reports when all your clients are within 10 miles of the office? Angel, chairman of the RICS acquisition and valuation standards committee, accepts that distinction. 'But what happens when the foreign parent company of one of those clients says valuations must be carried out to new European standards?'
It probably does not help the foot soldiers of the profession to have several voices like the RICS, ISVA and BPF talking at once about the supposed implications. At least one element of that confusion may be eliminated as the RICS and ISVA again contemplate merger.
Collett and Angel have already helped move the goalposts closer together, however. When they want to consult over some valuation issue, it takes no more than a stroll to the partners' coffee room. Both are senior members of Allsop & Co.
While chatting, they might also bump into another partner, Gary Murphy, who can chip in with thinking on the ISVA auctioneering committee or the RICS agency practice panel. Or Jon Gershinson can add views of his RICS insolvency practice panel.
While others scream and shout over whether property's two main professional groups should merge, Allsops has quietly made its own alliances. 'We decided a long time ago that partners who feel strongly about issues should get out and make their voice heard,' says Collett, who was a member of the RICS before he added the ISVA.
'One of the big threats to our profession is apathy. It is also good for the firm and clients. We learn a lot by being directly involved in issues of the day,' he says.
That is not to say everyone believes in the merger. Collett and Angel believe there should be a single voice for the profession but others are still on the fence over unification. It is unlikely, however, to generate the passions that periodically put valuers and surveyors at each others throats and bemuses outsiders.
'It seems a curious diversion of energy when question marks hang over the whole industry,' said one fund manager watching the battle lines being drawn up once again.
Collett will be in the thick of it when he takes over as ISVA president but he is already juggling with issues that could change the future. The banking mergers, for instance, could hit small firms hard.
'The Building Societies Act required valuations for every loan,' he says. 'But now most lenders are banks. They are willing to lend people up to 25,000 pounds on a credit card without asset backing.'
With average UK house prices at around 64,000 pounds and loan/value ratios of 60%, the amounts involved are perilously close to credit card levels. Banks under pressure to cut administration costs could decide they did not need property valuations.
That would hammer firms which rely on routine residential valuations. It could also leave surveyors competing for alternative commercial work. Collett sees a possible solution in switching from lenders to borrowers.
'We have to persuade buyers that they need to invest in valuations as they will have the lender on their back if anything goes wrong,' he says. That could fit new government thinking that every property should have the equivalent of an MOT certificate to grease the creaky wheels of buying and selling, although ministers see sellers rather than buyers footing the bill.
More esoteric matters are on Angel's mind. The industry has already been through the trauma of endless discussion and analysis of valuation techniques to create the famous - or infamous - Red Book. But it must now absorb the impact from new accounting rules, the Euro, demands for cashflow valuations and still unresolved issues about the nature of worth and value.
This is not a matter of pontificating for the masses. The RICS committee is as much a think tank as an appeal court, with sub-committees constantly worrying out the implications of issues picked up in everyday practice.
'The Red Book is a living document,' he says. 'We are talking to banks all the time about what they want.'
Then there is the Blue Book, a new set of guidelines which aims to unify standards across Europe. Foreign influences will grow with the globalisation of property investment and the move towards a unified European economy.
Angel is not as constantly aware of the mythical man in Chipping Sodbury looking over his shoulder, perhaps reflecting the structure of the RICS and its strength among big firms. But the vast majority of its 90,000 surveyors are based in small firms and just as vulnerable to changes from external forces.
Demands for work to US standards, for instance, will increase as investors cross the Atlantic and filter out to portfolios spread across the UK. This should not be a problem, as cashflow valuation is allowed for in the Red Book. 'It is just another technique,' says Angel.
More insidious are changes in accounting standards, which require lobbying, dissection and explanation. Recent changes in financial reporting directives by the Accounting Standards Board, for instance, will alter the way occupiers value property in their accounts. By next year, they must take account of the liability inherent in obsolete buildings which do not earn enough from sub-tenants to cover the headlease. This is one bright spot, as it should mean more work for commercial valuers as occupiers re-examine every building they own.
It could be a troublesome decade for the man in Chipping Sodbury. Lenders may ebb away, requiring vigorous marketing to replace them with borrowers. The letters may change after his name. He may need half a dozen different valuation programs on his calculator. But at least he is not being ignored by the bigwigs.