Case Study Flashcards
How did you determine the fee?
Assessed the resource and time needed.
Together with value.
What section of the Red Book is for loan security valuations?
VPGA 2
What were the loan terms?
The Client did not provide them.
Why did you complete COI checks?
To assess my impartiality and objectivity on the instruction.
How far back did you look for COI checkes?
24 months, in line with VPGA 2.
What would you do if your company did not have a database for COI checks?
Send a company wide email.
Check files/records
What was included in your fee quote?
Identification of property Brief overview of property Valuer The timescales we are currently working to Confirmation of no prior involvement The fee
What is the definition of Market Value?
The price paid at the date of valuation between a willing buyer and a willing seller, at an arm’s length transaction, after proper marketing, where both parties have acted knowledgably, prudently and without compulsion.
Where is GDV defined?
Not within the Red Book.
RICS Guidance note: Valuation of Development Property 2019
What is the definition of GDV?
The aggregate market value of the proposed development, assessed on the special assumption that the development is complete on the date of valuation in the market conditions prevailing on that date.
What is an assumption?
Something which is reasonable for the valuer to assume is true, without investigation.
What are some examples of assumptions?
Condition if not inspecting
Asbestos removal can be covered within the build costs.
What is a special assumption?
Something which the valuer has taken to be true, even though it isn’t.
What are some examples of special assumptions?
Planning has been granted
Scheme has been satisfactorily completed.
Vacant possession
What did you include in your terms of engagement?
- Valuer
- Valuer experience
- Identification of borrower, property and client
- Purpose of valuation
- Date of valuation
- Basis of valuation
- Assumption / Special assumptions
- CHP
- PII
Why did you wait until ToE were signed?
So I could fully understand the scope of work and PII cap was in place.
What is PII?
Professional indemnity insurance - protects myself, my firm and my client against negligent claims.
What is your PII cap?
Lower of 33% or £10m
What is the Red Book?
Provides mandatory rules and best practice guidance for valuers
Describe Great Baddow?
Great Baddow is situated to the south east of Chelmsford city centre.
Predominantly residential in nature.
Describe the area surrounding the subject?
Predominantly residential in nature.
Royal British Legion directly to the north. Beyond that allotments.
Baddow Road, which a main road leading in and out of Chelmsford, located to the south. Have a few commercial properties along it including two petrol stations.
Describe Chelmsford?
City of Essex - it has:
Open Space
High Street with shops and restaurants
Good road and rail links
Good schools and Universities
What PPE was needed?
Just Covid-19 related PPE.
As it was garden land and construction had not yet commenced, did not perceive any major hazards.
What due-dilligence did you do?
Planning
Environmental / flooding
Access
Land Registry
What is the Land Registry?
Her Majesty’s Land Registry is a non-ministerial department of the Government of the United Kingdom, created in 1862 to register the ownership of land and property in England and Wales.
What is included on a Title Register?
Title Number
Property Registry - describes the land
Proprietorship Register - identity of owner
Charges Register - matters which affect the land
What is included on a Title Plan?
Title Number North Point Red Line Boundary Administrative Area Scale
What was included on the Title Plans for the subject?
Rights of way over Chelwater Road to allow for cars to access the dropped curb on the eastern property.
Right of way over the Royal British Legion Land.
What is full planning permission?
sds
When had planning been granted?
About 10 days prior to inspection.
What is Promap?
Ordinance Survey Mapping Software which uses OS data.
How did you measure the site?
Using Promap - drew a boundary around the site following the development site plan.
What scale is typically used for Land Registry Title Plans?
1:1250
Why is it important to inspect properties?
To ensure there are no issues which would have a material impact on your valuation.
To note factors which would impact the value.
What were you looking for on the inspection?
Consistency with the development plan
Contamination - oils/decaying plants
Asbestos
What was on the site?
Predominantly laid to lawn
Some garages/sheds to the north of the plots (Concrete/timber with asbestos sheet roofing)
Patios/paths
What do you mean assembled into a single freehold title?
The Borrower was intending to purchase the garden plots of the 5 terraced houses and assemble into one parcel.
What were the details of the sale?
The sale was not yet complete, was going through the legal process.
Had agreed with the owners to purchase for a combined £440k.
Did you consider the sale details as evidence?
No, because it was an off market transaction based on garden land, it was not reflective of the MV.
What did the site have planning for?
6 residential units with associated infrastructure and landscaping.
4 3B Terraced & 2 x semi-detached.
Where there any planning conditions?
16 conditions.
What were the planning conditions?
- Development must occur within 3 years
- Materials to be provided
- Electric vehicle charging points (1 per house)
- Constructed to increase water efficiency
- Restriction on windows in order to ensure privacy of neighbours
How did you account for the electric vehicle charging points?
From speaking with developers, aware that they cost around £500 per one.
This was included within the QS’s costs.
How did you account for the increased water efficiency?
From speaking with developers, aware that this usually involves including control valves on showers to limit peak water flor and also eco efficient toilet flushes.
Typically around £500 per house.
Why did you adopt the comparable method?
Best method for formulating GDV
Looks at recent market evidence
Enough evidence in the locality to be able to do so.
What would you expect high specification to include?
Modern kitchen and bathrooms
Integrated appliances
Granite worktops
Why did you analyse on a rate psf basis?
Allowed me to adjust for quantum
Also looked at sales price basis as well to see if they were in line.
Tell me about Parva Green?
- Located to the northwest of the Subject.
- Comprised 30 no. 1 - 4 bedroom apartments and houses.
- The units were generally larger in size, so would - expect a higher rate psf due to quantum.
- However, despite being slightly further out, it is nicer than Great Baddow, so only a marginal increase.
- Provided good comparables for the semi-detached units, although the units are the subject were smaller.
Tell be about Coval Lane?
- Located to the northwest of the subject.
- Comprises 30 no. 1 - 4 bedroom apartments and houses.
- Good comparable as the terraced units were generally of a similar size, some larger and some smaller.
- However, Coval Lane is situated closer to the city centre and the station, so would see a higher price.
- So although the units are smaller at Coval Lane, would expect a similar sales price to be achieved to balance out.
Tell me about the adjacent new builds?
Comprise 2 x 3 no. semi-detached units
Sold 2018
Had been completed to a high specification.
Of a similar size, but slightly larger.
Will offer buyers a similar product.
But due to quantum and house price growth, believed higher.
What is quantum?
It means amount.
The larger something is. the less you pay. It’s about scalling and reflecting that in pricing.
