RICS Publishes New Guidance Note on Technical Due Diligence of Commercial Property
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On 13 January 2020, the Royal Institution of Chartered Surveyors (RICS) published a new guidance note: “technical due diligence of commercial property (first edition).” available here
This guidance is designed to apply globally and will replace the current, separate guidance notes for England and Wales, Australia, New Zealand and Continental Europe. It will take effect on 1 April 2020.
The purpose of the new guidance is to ensure that technical due diligence reports carried out by RICS members or firms are standardised across the globe, whilst also ensuring that they clearly identify any technical risks associated with a particular property or transaction.
The guidance recognises that there are four types of technical due diligence process for a property: acquisition, occupation (for example, by a tenant), disposal and refurbishment (or development). Each of these processes will have a slightly different emphasis. It also recognises that chartered surveyors often take the lead in the technical due diligence process, liaising with specialist subconsultants and coordinating different inspections. In the future, reports will be expected to assess every element of the building methodically, providing thorough recommendations and making accountability clear.
In the wake of recent incidents such as the Grenfell Tower fire, the guidance also underlines the important of health and safety, as well as fire safety assessments, stating that due diligence reports should clearly identify any defects that require immediate action, or that could foreseeably pose a danger. Any defects should also be reported to the appropriate person (usually the building owner or manager) for action. It also introduces a ‘traffic light’ risk rating system, to enable those reading the report to assess, amongst the issues identified, their relative order of importance.
The RICS has confirmed that it will be releasing new guidance on planned preventative maintenance in early 2020.
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Posted:
Tom Warrender
Partner
Tom is a Partner and Commercial Property Solicitor with a wealth of experience acting for clients both locally and nationally since 2005.