IVS 210 vs RICS Red Book: Which for Lending?

In January 2024, NatWest became the first UK high-street bank to make IP-backed lending a standard product — advancing up to around 50% of appraised IP value on loans of £250,000 to £10 million. But the cheque never turns on the valuation alone. It turns on which valuation standard the report was built to, and whether it answers the one question a credit committee actually asks: in a default, what could we recover?

That is where IVS 210 vs RICS Red Book stops being an academic distinction and starts deciding whether a loan gets approved. This guide sets out what each standard is, how they interlock, and what a lender genuinely needs on the desk before it will lend.

What IVS 210 Actually Is

The International Valuation Standards (IVS), issued by the International Valuation Standards Council, are the global technical rulebook for valuation. Within that framework, IVS 210 (Intangible Assets) is the asset standard — it governs how patents, trademarks, software, data and brands are identified, characterised and valued.

IVS 210 does not work in isolation. The 2025 edition renumbered the wider structure: reporting requirements moved to IVS 106 (previously IVS 103) and bases of value to IVS 102 (previously IVS 104). So a lending-grade intangible valuation typically cites IVS 210 for the asset, IVS 102 for the basis of value chosen, and IVS 106 for how the report is written up.

The IVS 210 Methods a Lender Will Recognise

IVS 210 accepts three approaches — income, market and cost — and several methods within them. These are asset-level methods for valuing a specific intangible under IVS 210; they are distinct from the investment- or company-level techniques used under IPEV-style fund reporting, and should not be conflated with them.

IVS 210 methods and where they fit

Two disciplines matter for lending. First, the discount rate should reconcile to the business's overall return through a Weighted Average Return on Assets (WARA) check. Second, economic life is not accounting life — a patent may be on the books for one horizon yet lose commercial force far sooner, and a Tax Amortisation Benefit may be layered in. For a fuller treatment, see valuing IP for secured lending.

What the RICS Red Book Adds

The RICS Red Book (formally the RICS Valuation – Global Standards) is the professional-conduct framework that RICS-registered valuers must follow. Two parts speak directly to lending.

VPGA 6 covers valuations for secured lending generally — independence, conflict management, and the duty to spell out any factor that could affect the lender's security. RICS also publishes dedicated guidance, Valuation of Intellectual Property Rights (2020), and — most importantly for this discussion — Appendix A, "Valuations supporting IP debt financing".

That single instruction reshapes the whole exercise. A fair-value report answers "what is this worth to a willing buyer?" A Red Book Appendix A report answers "what could a lender realise if this business fails?" — and those are very different numbers.

How the Two Standards Relate

Think of it as technique versus conduct. IVS 210 tells the valuer which method to apply and how to derive the inputs. The Red Book tells the same valuer how to behave, what premise to adopt for lending, and how to report it so a credit committee is not misled. A robust IP lending valuation is therefore usually IVS 210-compliant in method and Red Book Appendix A-compliant in premise and reporting.

The practical translation of both, together, is a set of deliberately conservative inputs:

• A royalty rate at the low end of the comparable range.
• A discount rate carrying a risk premium for illiquidity and enforcement uncertainty.
• A finite economic life, not a perpetuity.
• A cautious terminal value, or none at all.

What the Lender Actually Needs

A standard-compliant number is necessary but not sufficient. A lender converts a valuation into a lending decision by applying three tests to the asset, then sizing the facility around cash flow.

The Three Lender Tests

Every credit team assesses collateral through the same lens: separability (can the asset be split from the business and sold on its own?), saleability (is there a realistic buyer universe in a distressed timeframe?), and legal strength (is title clean, unencumbered and enforceable?). An orderly-disposal value is only worth what these three tests say a lender could actually recover against it — which is what ultimately sets the loan-to-value. Registered rights carry more weight than unregistered ones for exactly this reason. The collateral suitability and orderly liquidation value concepts sit at the heart of this judgement.

Indicative LTVs seen in the UK market

These are indicative ranges, not commitments — every facility is priced to the specific asset, borrower and structure. See how much you can borrow against your IP and the IP loan eligibility criteria for the qualifying gates.

Cash Flow Is the Primary Repayment Source

Here is the point most borrowers miss: collateral is the fallback, not the plan. Operating cash flow is the primary repayment source; the IP is what the lender turns to only if servicing fails. That is why licensed IP with attributable royalty income is the preferred collateral — it is the asset and the repayment stream in one.

Lenders size the facility on serviceability. The Debt Service Coverage Ratio (DSCR) — net operating income, or EBITDA less cash taxes, divided by total debt service — is the gate. Below 1.0 there is a shortfall; a minimum of roughly 1.20–1.25× is a common threshold, though it varies by lender and risk. Expect to provide two to three years of statutory accounts, current management accounts, a forecast, and — for IP-backed facilities — around three years of projections with sensitivity. The mechanics are set out in serviceability & DSCR.

Security Must Be Registered

A valuation and a serviceable cash flow still leave one gap: the charge itself. The strongest security over IP runs from a legal mortgage or assignment by way of security (with a licence-back), through a fixed charge by patent number, down to a floating charge. Whichever is used, it must be registered at Companies House within 21 days under s.859A Companies Act 2006 — miss that and the charge is void against a liquidator or administrator — and it should also be recorded at the UK IPO. The detail lives in security & charges over IP.

Bringing It Together for a Credit Committee

A lending-ready package weaves the standards and the tests into a single evidence trail: clean, unencumbered title with a documented chain of title; an independent IP audit confirming rights are in force; encumbrance searches at both Companies House and the UK IPO; an IVS 210 valuation reported on a Red Book Appendix A liquidation premise with ranges and sensitivity; and a serviceability case that stands on operating cash flow. The IP collateral due-diligence checklist and the borrowing base for intangibles show how each strand is assembled and tested.

Advisers preparing a client should start from preparing a client for an IP-backed loan and building the collateral evidence pack; borrowers weighing the route can compare debt vs equity for IP-rich clients.

The Bottom Line

IVS 210 and the RICS Red Book are not an either/or choice. IVS 210 gives the method; the Red Book — through VPGA 6 and Appendix A — gives the lending premise and the reporting discipline. A credit-grade valuation is built on both: liquidation premise, conservative inputs, explicit downside ranges, and a clear read on separability, saleability and legal strength. Get that right and the three lender tests, the DSCR gate, and a properly registered charge do the rest.

To see whether your — or your client's — intangibles clear these hurdles, start by reading valuing IP for secured lending, then work through the Lending Readiness Report and the wider lending standards & diligence hub. Advisers can begin at IP finance for advisers; borrowers new to the route should read the borrower's guide and the lender's guide to see both sides of the desk.