From 1 January 2025 RICS regulated firms and members will need to comply with a new global standard titled "Property Agency and Management Principles".
The new professional standard sets a worldwide baseline expectation for how RICS regulated firms and members must provide services when acting as an agency or broker in buying, selling, auctioneering, leasing or managing property. The standard applies to residential, commercial and mixed-use property.
The standard has been developed by a group of property professionals and following a consultation with RICS members and firms. It replaces the Real Estate Agency and Brokerage professional standard (3rd Edition) 2016. The new standard will sit above two other new UK focused professional standards, the property agency, 1st edition, UK professional standard and the property management, 1st edition, UK professional standard, which are yet to be published.
The new standard draws attention to and is framed under the five RICS Rules of Conduct, which are:
- Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS.
- Members and firms must maintain their professional competence and ensure services are provided by competent individuals who have the necessary expertise.
- Members and firms must provide good quality and diligent service.
- Members and firms must treat others with respect and encourage diversity and inclusion.
- Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.
The 2016 standard provided separate guidance for members when acting for different categories of clients, i.e. acting for sellers vs buyers, and when acting in an agency management capacity. In comparison, section 2 of the new standard sets out expectations to be met when working with clients generally. The new standard provides more succinct guidance for RICS professionals and focusses on openness and transparency when working with clients, with an aim of improving public confidence in surveyors globally.
Perhaps of particular interest are the expectations in relation to advising on market property prices or rent for marketing purposes. The 2016 standard provided best practice guidance in relation to such advice, which members could depart from if there was a justifiable good reason for doing so. The new standard adopts the substance of the 2016 market advice guidance, but makes the expectations mandatory with no discretion for members to depart from the standard unless legal obligations in the member's or firm's jurisdiction require them to do so.
The mandatory expectations relating to market advice from 1 January 2025 require RICS members and firms to:
a) Only provide advice on an appropriate price or rent if they have a thorough knowledge of the market. Ensure that any figure provided is given in good faith and reflects current market conditions. Consider adequate and appropriate available comparable data for similar properties and consider whether adjustments are required to reflect subsequent changes in the market.
b) Establish as many facts about comparable transactions as possible to ensure that they were an open market agreement and not influenced by special factors such as a seller needing to sell quickly or issues about the condition of the property.
c) When advising on rent, also advise the key lease terms on which this rent is based. These should be terms that would be typical for the property in the current market.
d) Ensure that all material facts used in decision making have been disclosed to the client.
e) Make it clear to the client that the member or firm is providing an estimate of anticipated market price or rent solely for the purpose of marketing the property. If the client requires a valuation, this must be prepared by a valuer with the appropriate professional qualifications and in accordance with the applicable professional standards.
The change from best practice guidance to mandatory expectations could catch out members and firms and have a bearing on future negligence claims. It goes without saying that all RICS members who operate in property agency and management should familiarise themselves with the new standard well in advance of January 2025.
You can read the full text of the new global standard here.
In the meantime, keep your eyes peeled for publication of the two new UK focused standards mentioned above.
