IPMS: residential valuation
Made to measure
14 February 2017
Fiona Haggett explains the concept of residential valuation and IPMS
The launch of the International Property Measurement Standards (IPMS) for residential buildings in September 2016 means that the way we measure residential property is changing. Furthermore, with the forthcoming publication of the associated RICS professional statement in 2018, the existing Code of measuring practice (CoMP) for residential buildings – from which we have all been working – will be superseded, and measurement to the IPMS will in time become mandatory.
[RICS] expects its members to champion the use of the new standards and lead the way in their implementation
What are the IPMS?
They are an international suite of standards, developed by a consortium of more than 84 professional organisations around the world, with the aim of bringing clarity and ensuring assets are measured in a consistent and transparent way across the globe. IPMS will:
- provide a basis on which to support valuation;
- help analysis of transactions across the world; and
- ensure that stakeholders and surveyors across functions and borders are speaking the same language.
Embedding IPMS will take time, but RICS professionals have a vital role in this process. The organisation expects its members to champion the use of the new standards and lead the way in their implementation. From a valuation perspective, we must be clear that measurement is not about the value, neither should it influence valuation technique; it is about the classification of areas to which you apply your value judgment.
This article will anticipate questions you may have about the implementation of the new standards, and offers some answers.
Will IPMS be mandatory?
The answer is yes, in time. However, although RICS expects all members to advise their clients of the benefits of IPMS, if your client still then expects measurement to be on a different basis, then you should fulfil their requirements.
If you can also show and document that, in your professional judgment, applying IPMS is not practical for a particular property, you can use an alternative basis of measurement. In these circumstances, you must document that reason in your case file.
What about comparable evidence?
This will probably be measured on a different basis in the short term until the use of IPMS is embedded in the market. In such cases, it may be necessary to convert the IPMS back into CoMP terms to aid comparison. To assist, RICS provides a free converter tool. At the time of writing in September 2016, the tool is intended for office buildings, although it is understood that it will be extended to cover residential property as well. In addition, a pro forma has also been developed that will help with conversion from one basis of measurement to another.
I am using measurements or plans that are presented as CoMP. Should I re-measure?
There is no requirement to re-measure existing buildings if you would not ordinarily do so. In the case of a new measurement event – an instruction where the building size will need to be established prior to valuation – the IPMS and the RICS professional statement set the expectations. However, it is recognised that this may not be the best course of action where the valuer needs to use their professional judgment to identify specific circumstances, such as where the building forms part of an existing portfolio.
Requirements to note
In addition to the questions that the new standards will raise, there are a number of requirements to observe.
- It is mandatory for you to advise your clients about the benefits of IPMS.
- You must put a date on your plan indicating when the measurements are taken.
- You must state the standard to which you are measuring – e.g. CoMP, gross internal area or IPMS2 – as well as the unit and the method of measurement, such as laser or tape measure.
- If possible, reference and scale the plan.
- If you are converting between metric and imperial, you must state the conversion factor and clarify where you have rounded up or down.
- It must be clear on the plan who has taken the measurements.
- Where you are relying on existing plans or measurements, you are expected to carry out an appropriate level of due diligence and document this.
- You are required to state the tolerance (i.e. extent of estimate) to which you are measuring – an accuracy of between 1% and 10% is considered acceptable, depending on the circumstances and the application.
How can CoMP be converted into IPMS?
Roughly speaking, the following terms apply.
- Gross external area = IPMS1: the sum of the areas of each floor measured to the outer perimeter of the external construction features.
- Gross internal area = IPMS2: the sum of the area to the Internal Dominant Face or finished surface.
- Net internal area = IPMS3: the floor area available on an exclusive basis to an occupier.
There are, however, some variations. For residential property, additional subdivisions into IPMS3a, b and c apply:
- IPMS3a: measurement to the outer face of the external wall and centre line of shared walls; measurement to finished surface of walls in common facilities.
- IPMS3b: area in exclusive occupation, including internal walls and columns, measured to the Internal Dominant Face and finished surface.
- IPMS3c: area of exclusive occupation, excluding the walls and columns, measured to the internal dominant face and finished surface.
The main differences and areas where you should take care are as follows.
- Restricted-use areas: under CoMP, areas less than 1.5m high were excluded. For IPMS, all restricted use areas are measured but stated separately.
- Walls and columns (including chimney breasts) are approached differently.
- Enclosed walkways and covered atriums (base level only) are included.
- Covered balconies and verandas are included, but they are stated separately.
- Internal voids are treated differently – you must identify these.
- Internal Dominant Face (IDF): the inside finished surface, comprising more than 50% of the floor-to-ceiling height for each wall section. If this cannot be identified, or there is only one surface, then the finished surface is deemed to be the IDF.
- Finished surface: the wall surface directly above the horizontal wall–floor junction, ignoring skirting boards, cable trunking, heating and cooling units and pipework.
- Centre of wall: depending on the standard used and whether the building is in single or multiple occupation, a measurement may need to be taken to the centre line of a dividing internal wall between attached dwellings. This will require the valuer to be aware of the thickness of the wall, or in the event of uncertainty, state the assumed thickness of the wall.
The challenge of change
Like all changes, the introduction of IPMS will present a few early challenges as valuers get to grips with the new concepts; only through use and familiarity will those become second nature. The global consistency and transparency that common standards bring can only help to enhance the reputation of the surveying profession and minimise the scope for misunderstandings. For this reason, I would encourage you to adopt these changes at the earliest opportunity.
Fiona Haggett FRICS is RICS UK Valuation Director
This feature is taken from the RICS Property journal (December 2016/January 2017)