Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Cemap 2&3 Self Testing > 13. Assessing The Property > Flashcards

13. Assessing The Property Flashcards

1
Q

What is vacant possession?

A

Property wont be occupied when sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is an assured shorthold tenancy?

A

Fixed tenancy for short period (usually 12 months) where landlord can gain possession at end of agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a sitting tenant?

A

One who remains in the property when it is sold as they don’t have an AST

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Why are lenders reluctant to lend to BTL properties with sitting tenants? (2)

A
  1. downvalues the property
  2. makes it hard to remove them as they can gain an OVERRIDING INTEREST in the property
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the two things that relate to the legal title that could make a property worth less?

A
  1. defects
  2. disputes
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What might property disputes include? Who’s responsibility is it to disclose them? What happens if they fail to disclose?

A

includes things like boundaries, trees, access and noise in relation to neighbours

it is the vendor’s responsibility to disclose and they can face legal action if they do not

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are things that can downvalue freehold tenure properties? (3)

A

Freehold are usually free from restrictions but value can be affected by:

  1. Easements
  2. Covenants
  3. Flying freehold
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What things can affect the value of a leasehold property? (3)

A
  1. Restrictions/obligations
  2. Time remaining on lease term
  3. Former local authority flats
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What type of construction might be less valuable with a block of flats?

A

Concrete high rise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What problems have there been in recent years in regard to new build leasehold properties? (3)

A
  1. must pay ground rent to developers
  2. must seek permission to make changes
  3. ground rent doubling every 10 years
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is a solution to someone with a new build leasehold if they are struggling to sell it due to unattractiveness of lease conditions?

A

buy the freehold if they can, though some have already sold it on to spectators

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the leasehold reform bill? what will it cover?

A

A bill, not yet passed as an act of law

if passed, would make leasehold new builds illegal and would backdate to Dec 2017

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What do graphs of relativity display?

A

How the value of a leasehold property diminishes as the term on the lease gets shorter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the minimum term lenders usually require to be left on the lease?

A

30-40 years after the term ends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How long must a new owner hold a leasehold property for before they have the legal right to extend the lease?

A

2 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is a statutory notice of claim?

A

When the vendor applies to the landlord to transfer their rights to extend to the new owner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Leasehold vendors should really consider extending the lease before selling if their property has less than how many years on the lease?

A

Less than 80 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is Marriage Value?

A

The difference between a property’s current value if it has less than 80 years on the lease and the value of if it was extended by 90 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

When extending a lease, what percentage of the marriage value does the freeholder have the right to?

A

50% - leaseholder must pay them this, plus fees

designed to encourage them to want to extend the lease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How do you calculate the cost of extending the lease to a freeholder?

A

Marriage value +
Diminution value (loss of ground rent, the fact they wont get the property back for another 90 years)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What considerations should be taken into account with the value and saleability of bungalows?

A

They are attractive but niche. In areas with too many, prices will be driven down

22
Q

What considerations should be taken into account with the value and saleability of period properties?

A

Desirable if they are in good condition. Areas with lots of period properties are very rare and drive prices up higher

23
Q

What considerations need to be given to the value of properties that have flat rooves?

A

Less value, the felt might need replacing regularly

24
Q

What types of construction are easier to get a mortgage?

A

traditional types, bricks, mortar and tiled roof

25
Q

What do lenders usually require of new builds with more innovative construction methods? (2)

A
  1. methods need to be proven
  2. builder needs buildmark scheme or similar
26
Q

Do lenders usually lend on pre-fab houses?

A

Yes, they are less desirable but most will lend after remedial work is done

27
Q

Do lenders usually lend on modern pre-manufactured houses assembled on site?

A

Yes, designed to meet modern standards/backed by accredited schemes

28
Q

What is the RICS valuation guide?

A

Contains guidelines for valuing properties

29
Q

What is a multiple use property? How do they affect value and saleability?

A

flats above shops etc

harder to get mortgages, smells and noise affect marketability, buyer has little to no control over what goes on in the business

some better than others depending on surrounding area and nature of the business, but there’s nothing stopping the business from changing

30
Q

What are two issues that usually make it difficult for people to get insurance on their properties?

A
  1. subsidence
  2. flooding
31
Q

What do insurers usually require for properties which have suffered subsidence before they will insure?

A

Problem rectified with professional guarantees

32
Q

What can be used to check a property’s history with flooding?

A

Flood maps

33
Q

What is the Flood Re Scheme?

A

A RE-INSURANCE scheme designed to increase the availability and affordability of insurance for those with flood risk properties

34
Q

What is Re-insurance?

A

The insurer passes on some of the risk to another insurer/company in exchange for a premium

i.e. insurers insure themselves for if they have to pay out

35
Q

What type of organisation is Flood RE?

A

A non-profit company owned by the insurance industry

36
Q

How is the amount of annual levy an insurer receives as part of the flood re scheme determined?

A

Based on their share of the home insurance market

37
Q

How much premium do insurers pay for each property within the flood re scheme?

A

A capped amount based on the property’s council tax band

38
Q

True or false, flood re premiums reflect the property’s level of flood risk?

A

False, based on council tax band

39
Q

True or false, insurers on flood re scheme pay an excess for every claim?

A

true

40
Q

Can insurers re-insure properties anywhere other than flood re?

A

Yes, if it turns out to be cheaper than flood re

41
Q

Do customers with flood risk properties have to use flood re?

A

No, can use any insurers

this is good as it drives up competition and lowers prices for consumers

42
Q

What are the eligibility requirements of a property re-insured by flood re scheme? (4)

A
  1. Residential
  2. Built before Jan 2009
  3. Insured by an Individual home owner
  4. Have a council tax band
43
Q

What are the stress tests that lenders should carry out on BTL property, as required by PRA? (2)

A
  1. Gross Yield
  2. Net Yield
44
Q

What is gross yield?

A

Rent as a percentage of purchase price

45
Q

What is net yield?

A

(Rent - running costs) as a percentage of purchase price

46
Q

Which is a more accurate assessment of returns? Net yield or gross yield?

A

NET

47
Q

Which is more of a concern with BTL properties? yield achievable or capital gains?

A

yield achievable

48
Q

Would investors expect BTL yields to be higher or lower than savings and other investments? why?

A

Higher, because there is a high level of risk involved

49
Q

Are mortgage payments allowed to be included as running costs when calculating BTL yields?

A

NO

50
Q

How can we calculate the total return on a rental property including mortgage repayment costs?

A

Annual net rental income (rent received minus expenses) minus annual mortgage repayments = net income after mortgage costs

to convert this into total return per year

(net income after mortgage costs/purchase price) *100 = total return per year

Cemap 2&3 Self Testing (29 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions