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RICS consultation on independent expert rent reviews

RICS has just published its draft updated Guidance Note on Surveyors Acting as Independent Experts in Commercial Property Rent Reviews for public consultation. If you are interested, click here.

The guidance sets out the duties and procedures to be followed and applies both to experts appointed by the President of RICS and to those appointed directly by the parties. It is a complete rewrite of the existing edition. There are no radical changes but it is updated, improved and easier to read and understand. RICS is inviting comments. If you wish to make any, please follow the link. Alternatively, feel free to share your thoughts with us and we will pass them on. The document is intended to be a practical guide for those surveyors who are acting as independent experts but the views of consumers are fundamentally important as the process only works if it has “buy-in”.

The consultation closes on 1 October and the intention is that the new edition should go live in late January 2014.

The draft helpfully clarifies some situations which have caused confusion or disagreement. One of those is the date on which the appointment takes effect which, in the case of an appointment by the President, is when he signs the appointment letter creating a tripartite agreement between the parties to the dispute and the independent expert. Another problematic area is where surveyors appear before an independent expert as expert witnesses (nearly always by way of written submissions). It is noted that the specific roles of the two “combatant surveyors” are less critical than when they appear before an arbitrator. However, RICS guidance to date has been based upon the practice that surveyors may adopt either the role of expert witness or advocate. The key is to be clear as to which it is and not to confuse the two. Ultimately, the only opinion that matters is that of the independent expert. In practice, nearly all rent review cases tend to proceed on the basis that the surveyors will give their evidence as expert witnesses. Quite why is not altogether clear.

The draft also contains useful guidance on establishing the facts and is a reminder that, even if the parties have produced a statement of agreed facts and agreed that the independent expert may rely upon it, the expert remains under a duty to acquire any additional information that is necessary to reach a conclusion based upon his or her own opinions and calculations.

The document recognises that, contrary to what may be seen as the leading strengths of independent expert determination (namely, a quick, simple and cost effective means of dispute resolution), it has become established practice to invite the parties to provide material to the independent expert in much the same way as if the matter were proceeding by way of arbitration. This seems to reflect the parties’ understandable desire to “have their say” rather than simply relying upon the independent expert as being truly “independent” as well as “expert”. Perhaps the parties should give more consideration to going back to basics, dispensing with expert evidence and simply asking the independent third party for an answer to what is, more often than not, a straightforward valuation question.

The guidance ends with a very useful table comparing arbitration with determination by independent experts. Those of you who are involved in rent review work might find this table useful even if you do not feel the need to read the entire guidance note.