2024 Hot Topics

Question 1

Are you aware of any guidance that applies to RICS members when using social media?

Answer 1

The RICS introduced a guidance note on the use of social media in 2021. This note reminds members that the standards set out in the Rules of Conduct apply equally to face-to-face communication and social media communication.

Question 2

How do you ensure you operate in line with RICS guidance on the use of social media?

Answer 2

I ensure that I communicate online in the same professional manner that I would in person by using respectful language and refraining from saying anything that could undermine public trust in the profession or that is dishonest or discriminatory.

Question 3

When would the RICS investigate a social media post made by one of its members?

Answer 3

If it is discriminatory, dishonest, bullying, abusive, threatening or likely to cause significant harm, distress or offence

Question 4

What is your understanding of the RICS Inclusive Employer Quality Mark?

Answer 4

It is a scheme that the RICS will be launching to improve diversity and inclusion within the property sector.
The scheme requires employers to pledge their commitment to adopting and improving against six principles including:
leadership and vision
staff development
staff retention
staff engagement
continuous improvement

Question 5

What is your understanding of the rotation rules for valuation contained within the RICS Red Book UK Supplement?

Answer 5

The RICS released an updated UK supplement of the Red Book in January 2022 to update its recommendations around mandatory rotation cycles for regulated valuations.
The new rules mean that firms undertaking valuations for regulation purposes will not be able to repeat this service for more than ten consecutive years.
This aims to improve transparency and serving the public interest.
These new regulations took effect as of the 1st May 2024

Question 6

Please explain your understanding of the RICS discounted cash flow valuations guidance note November 2023?

Answer 6

This guidance note has looked to provide further clarity around the difference between the Market Value and Investment Value definitions set out under RICS VPS 4
Investment Value is defined as the the valuation of property that is applicable to a specific investor, as opposed to Market Value, which is applicable to the wider market as a whole.
This guidance note calls for the use of market based inputs when making an assessment of market value using the discounted cash flow method rather than inputs that relate to investment value.

Question 7

Please provide an overview of the current market trends at play within the commercial real estate sector

Answer 7

Hybrid working - ergo declining demand for commercial space, re-purposing, focus on more collaborative office spaces (breakout areas, hotdesking etc.)
EPCs - around 70% of Commercial Space in London currently falls below a B; estimated cost of upgrading this space to reach a B by 2030 is £40psf, ergo more demand for commercial space with an EPC rating of a B or above

Question 8

What is your view of the IPMS updates?

Answer 8

Talk about laudable aims (i.e. creating consistency across international markets); however, also mention slow take up due to ingrained preferences for alternative bases of measurements

Question 9

What are the benefits of diversity & inclusion?

Answer 9

Widening talent pool
Creating a sense of belonging amongst employees, thereby boosting retention rates
Likely to lead to more innovation due to people approaching challenges with different perspectives

Question 10

What is the RICS doing to improve D&I?

Answer 10

It has set up “Diversity & Inclusion leadership” which is a knowledge hub allowing the RICS to share ideas on how and why diversity and inclusion is so important to the RICS

Question 11

What are the Pros and Cons of Hybrid Working?

Answer 11

Pros
Improved work-life balance
Saved commuting time and cost
Savings on office space
Potentially higher levels of employee job satisfaction

Cons
Reduced collaboration
loss of social connection

Question 12

Explain your understanding of the Bichard Review

Answer 12

The Bichard Review was an independent review commissioned by the RICS governing board in December 2021 into the purpose, governance and strategy of the RICS. It was commissioned in response to the Levitt Review and aimed to create a new sense of direction and purpose in the RICS
The review advised on 36 recommendations that are currently being implemented, including the separation of commercial activity from other activities within the RICS which will be overseen by a suitably qualified executive with strong commercial experience; the establishment of a Diversity and Inclusion Panel and a Public Interest Panel to advise the RICS board; the improvement of technology within the RICS

Question 13

How does the RICS define Professional Standards vs Practice information?

Answer 13

Following the Bichard Review and its recommendations the RICS have introduced two new definitions for professional guidance - professional standards and practice information. These supersede the former definitions including professional statements, guidance notes and codes of practice
Professional Standards: mandatory requirements and best practice guidance for RICS members and regulated firms with a focus on baseline expectations for competence and ethical behaviour
Practice Information: supporting guidance to advise surveyors in delivering specific areas of practice. E.g. toolkits, processes, checklists etc.

Question 14

Explain your understanding of the guidelines around the use of the RICS logo

Answer 14

There are RICS guidelines for firms’ use of the RICS logo and designation as well as for personal use of the RICS logo.
As a qualified RICS member you have the right to use the logo for personal use (e.g. on business cards or personal e-mail signatures)
There are specific rules around how the RICS master logo is presented (e.g. font and colour cannot be adjusted)

Question 15

Are you aware of any key updates to the RICS leadership team?

Answer 15

Tina Paillet has replaced Ann Gray as the President

Question 16

What is IPMS

Answer 16

International Property Measurement Standards. It is a coalition of 80 global professional organisations that was first formed in 2013 when it produced its first version of its measurement standards
IMPS All Buildings was introduced in January 2023 and supersedes all previous standards.

Question 17

Explain your understanding of recent IPMS updates

Answer 17

IMPS All Buildings was introduced in January 2023. Key updates include:
A shorter and more concise format
Definitions have been refined to avoid confusion amongst existing standards across global markets
The IPMS is organised into 4 volumes that can be utilised by different professional groups in various scenarios. This is to encourage adoption on a global scale.

Question 18

What are the new RICS Professional Indemnity Insurance requirements?

Answer 18

As of 2022, larger companies with a turnover in excess of £10m have no maximum limit of uninsured excess

Question 19

What are the general requirements regarding Professional Indemnity Insurance set out by the RICS?

Answer 19

Policy cover must be on an each and every claim basis
RICS sets out the minimum levels of indemnity
policy must be fully retroactive
RICS sets out maximum level of uninsured excess
run off cover must be in place
policy should cover past and present employees, directors and partners

Question 20

What is the RICS futures report?

Answer 20

Original report was published in 2015 to highlight key trends such as urbanisation, the disruption of big data and the climate crisis as presenting key challenges to the property industry.
A follow-up report was published in 2020 which outlined how members can address these key issues. This included advice on better data utilisation within the construction sector, more sustainable development in highly urbanised areas and the safe use of drones

Question 21

What is the Levitt Report?

Answer 21

It was commissioned by the RICS following a Treasury management audit in 2018.
The Report concluded that there was an internal power struggle due to the two board structure (management board and executive board)
The report made recommendations which were all accepted by the RICS. These included:
The RICS governing council are to have more oversight over internal dealings of the RICS
The RICS governing council are to be briefed by the management board as opposed to a single CEO
Greater transparency
The RICS governing council are to oversee executive management bonsues

Question 22

What are the new RICS rules of conduct?

Answer 22

1.Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS.
2. Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise
3. Members and firms must provide good-quality and diligent service.
4. Members and firms must treat others with respect and encourage diversity and inclusion.
5. Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.

Question 23

Why did the previous rules of conduct change in 2021?

Answer 23

The previous rules had been in place since 2007 and the majority of members and firms voted in favour of replacing them following a consultation period.
This was to provide a single document to enable greater clarity for RICS members and firms, with more focus on clearer example behaviours (previously there were separate documents for members and firms)

Question 24

Explain how you adhere to Rule 1?

Answer 24

I don’t allow myself to be influenced improperly by others as a result of accepting disproportionate gifts or hospitality.
I identify conflicts of interest and do not provide services or advice where these conflicts of interest occur

Question 25

How do you adhere to Rule 2?

Answer 25

I only undertake work for which I have the knowledge, skills and resources to carry it out competently I also ensure that any subcontractors have necessary knowledge, skills and resources to carry our works competently.

Question 26

How do you adhere to Rule 3?

Answer 26

I ensure I fully understand my client's needs and objectives before accepting any professional work. I also agree the scope of services to be provided, including any limitations and timescales for the work

Question 27

How do you adhere to Rule 4?

Answer 27

I ensure that I treat clients, colleagues and suppliers with courtesy, treating everyone fairly and not discriminating against anyone on improper grounds.

Question 28

How do you adhere to Rule 5?

Answer 28

I always question practices and decisions which I suspect are not right and raise concerns with colleagues or senior management where appropriate.

Question 29

What are the professional obligations of members?

Answer 29

Members must complete 20 hours of CPD for each calendar year, of which 10 must be formal. Members must cooperate with the RICS and must promptly provide all information reasonably requested by the Standards and Regulation Board

Question 30

What are the professional obligations of firms?

Answer 30

Firms must publish a complaints-handling procedure and maintain a complaints log Firms must ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity cover Firms with a sole principle must make appropriate arrangements for their professional work to continue in the event of their death, incapacity or inability to work. Firms must cooperate with the RICS Firms must display a designation that denotes that they are regulated by the RICS on their business literature

Question 31

What steps would you undertake in the event of a main contractor insolvency?

Answer 31

I would refer to the RICS guidance note on Termination of Contract, Corporate Recovery and Insolvency

Question 32

What affect has the conflict in Ukraine had on the UK property & construction industry?

Answer 32

Resulted in significant energy price increases due to the high dependency that Europe has on Russian gas and oil. This has increased the cost of producing building materials including steel and bricks, which require high energy input Supply chain delays

Question 33

How has Brexit affected the UK Property and Construction Industry?

Answer 33

1. Movement of people Restricted following the end of free movement. Employers now have more stringent standards when hiring people from outside the UK, resulting in labour cost increases and a reduction in the availability of labour 2. Movement of materials The price of goods moving across the border is expected to increase due to the additional border checks and administrative work

Question 34

Are you aware of any RICS guidance notes on Brexit?

Answer 34

The RICS has provided a number of position statements highlighting concerns and issues with Brexit on a sector-by-sector basis. This has included encouragement of growth and diversity of the construction workforce due to the potential loss of non-UK workers

Question 35

What is the residual valuation method and how is it applied?

Answer 35

The main aim is to establish how much a purchaser should pay for a development site The GDV is established first of all and then the costs associated with undertaking the development are deducted, leaving a surplus amount which is known as the residual value (this represents how much the developer can afford to pay for the development site or property The GDV is the aggregate market value of the development based on the special assumption tat the development is complete at the date of valuation. The costs deducted include site preparation, construction, marketing and sales, financing fees and developer's profits

Question 36

When is the profit method of valuation used and how is it undertaken?

Answer 36

It is derived from trade-related properties where the value is derived from the business and its trading potential. Examples would include pubs, theatres and hotels Trading Potential = the profit that an REO would expect to realise from occupying the property The value reflects the trading potential of the property and includes the property interest, business, location, goodwill and fixtures and fittings

Question 37

What is the depreciated replacement cost method of valuation and how does it work?

Answer 37

Provides an indication of value based on the buyer paying no more or no less than the cost to obtain the asset based on the current equivalent. This involves calculating the replacement cost of the asset with its modern equivalent including deductions for physical deterioration and all other relevant forms of obsolescence. This is the method of last resort and used only when it is impractical to use all other valuation methods It is mainly used to value unusual properties where there is no active market (e.g. wharfs, churches) Under this approach, the capital value is determined by calculating the cost of building the equivalent asset and the purchase land value The replacement build cost should be calculated using new and cost effective building materials and techniques. The total value of the new property is then adjusted for deterioration using evidential information and recent transaction values to calculate the land purchase cost.

Question 38

What is the comparable method of valuation and how does this work?

Answer 38

Uses sales data of properties that have recently been sold, focusing on assets that have a similar size, location, condition, features and specification. It is underpinned by comparable evidence which is identified, analysed and applied to the real estate that is to be valued and is therefore fundamental to producing a sound valuation that can stand scrutiny from the client and market. The valuer will compile a schedule of evidence to include building age, location, tenure, size, transaction price, date of sale, price psf etc. The comparable evidence should be comprehensive, recent and very similar.

Question 39

What do you need to consider before going to site to carry out an inspection?

Answer 39

You have to ensure: you are competent to undertake the inspection are properly insured have an agreement that has been signed have assessed the risks involved know what kind of survey it is have reviewed all relevant existing building information including leases

Question 40

What risks do you consider when undertaking an inspection?

Answer 40

Lone working asbestos accessing roofs hazards associated with derelict / empty properties or in confined spaces

Question 41

How does a distometer work? How can you check its accuracy? When is it least accurate?

Answer 41

It sends out a laser beam and measures the time taken for it to reflect, which gives it a distance. You can measure it against a known distance in the office. It becomes less accurate the longer the distance and it is more inaccurate outside when it is harder to aim and see the laser

Question 42

What are the typical defects of a flat roof and what are the remedies?

Answer 42

Surface crazing (i.e. cracking) is caused when there is a lack of adequate protection from the harmful effects of sun exposure. If this is widespread, the areas will have to be re-roofed Blistering can be caused by water vapor pressure occurring below the roof covering. The blister should be cut and then re-bonded to the underlay, allowing any trapped moisture to escape first. The source of the moisture should also be traced and rectified.

Question 43

What sort of cracks would you expect to see on a brick building and what might have caused them?

Answer 43

Subsidence- a movement down in the ground level. This can lead to vertical cracking if in the centre of the building and diagonal cracking if in the corner of the property. Heave - a movement upwards in the ground level. Settlement - a movement down due to an increased load.

Question 44

What is damp and how can you test for it?

Answer 44

A building is considered to be damp if the moisture becomes visible through discoloration and staining of finishes or causes mould growth, frost damage etc. You can establish the moisture content of walls and the level of damp by using a protimeter moisture meter.

Question 45

How would you identify rising damp? What are the causes? How would you remedy it?

Answer 45

causes high tide marks, peeling and blistering of wall finishes, musty smell, rotting of timber You can use a speedy carbide meter to measure moisture. Causes: no damp proof course, DPC bridged by pointing Remedy - remedy DPC problems, remove bridging of dpc

Question 46

What type of soil is susceptible to heave and what are the possible causes?

Answer 46

Cohesive soils such as clay. Possible causes include removal of trees and leaking drains.