Case study

Question 1

What is the definition of market rent?

Answer 1

Market Rent -

The estimated amount an interest in real property should be leased on valuation date between a willing lessor and willing lessee on appropriate lease terms in an arms length transaction, after proper marketing, and where both parties had acted knowledgeably, prudently and without compulsion.

Question 2

What is the definition of market value?

Answer 2

The estimated amount an asset or liability should exchange on the valuation date between a willing buyer and willing seller in an arms length transaction after proper marketing, and where the parties had acted knowledgeably, prudently and without compulsion.

Question 3

When did the global standards come into effect?

Answer 3

31st January, 2022

Question 4

How did you undertake a conflict of interest check?

Answer 4

I had not previously been instructed by the client, related parties or property before. I did a check through our internal system to ensure that there was no conflict of interest. I sent an email to all fee earners and received confirmation that there was no conflict of interest.

Question 5

Tell me about the terms of engagement.

Answer 5

The key matters must be included in VPS1 in the Red Book Global.

IPVIARCFCML -
- Identification of valuer, client, other users
- Property, Purpose(, currency)
- basis of Value, Valuation date
- extent of Investigation, nature and sources of Information relied upon
- Assumptions and special assumptions
- Restrictions for use, distribution and publication
- confirmation of Compliance with Red Book Global
- Fee basis
- reference to CHP
- statement that valuation might be Monitored by the RICS
- any limitations to Liability agreed

Question 6

What is a secondary retail parade?

Answer 6

Secondary retail parades are retail premises surrounding primary retail areas which are urban locations with strong footfall and catchment.

Question 7

How did you know this was of 1700s construction?

Answer 7

I found out through a search on the local authority website. The property was listed and I gained details on the construction date there.

Question 8

What is the significance of the property being Grade II listed and within High Street Epping Conservation Area?

Answer 8

The purpose of listing is to ensure that the character and special interest of the building is preserved.

Alteration on the exterior and demolition of the property is usually prohibited.

Question 9

What relevant equipment did you prepare for the inspection?

Answer 9

Phone, camera, laser, tape measure, notes, PPE, pen and paper. Reference to GNSS2019

Question 10

What is your company’s health and safety policy?

Answer 10

I comply with my company’s health and safety policy manual.

This has sections relating to the health and safety relating to the company, members, visitors/contractors. Policy includes reporting accidents, fire evacuation, safety clearways, inspection risk assessment, lone working, health and safety policy reviews, etc.

Question 11

Does your company have any guidance on lone working?

Answer 11

I diarise my inspection and recorde details including the location, time, client details. Upon inspection I ensure that my phone is fully charged and I am contactable at all times. My colleagues have access to my contact details if they need to reach me.

Question 12

Are you suitably qualified to make a statement on the interior or exterior condition?

Answer 12

I am aware of the basic specification and construction of the building for this type of construction. I am able to identify basic conditional issues including defects when carrying out due diligence in case any matter comes up which might affect the value of the property e.g. asbestos, movement, water ingress, contamination, environmental matters, hazardous materials, deleterious materials, etc.

When I come across a defect I photograph and record it, try to establish the cause, inform the client, and recommend specialist advice.

Question 13

What equipment did you use to measure the property?

Answer 13

Laser, rod, tape measure.

Question 14

Did you ensure the laser measurer was calibrated?

Answer 14

Yes. I check measured the laser against known distances.

Question 15

What did you exclude when you measured the shop?

Answer 15

Columns, common areas (including terraces, galleries, balconies, covered areas) Internal structural walls, areas with a headroom of less than 1.5m (for NIA).

Question 16

Tell me about the hierarchy of evidence.

Answer 16

I have reference to the RICSPSCEIREV2019 for this.
I consider direct comparable transactions of the contemporary
general market data
other sources

For rental evidence I also have reference to the rent review handbook by Reynolds and Bernstein. The following list begins in the order of most importance
- OML
- LR
- RR
- IE, arbitration
- Court
- Hearsay
- S&L
- Surrender
- Intercompany arrangements

Question 17

Tell me how you got to a yield of 5.82%

Answer 17

From sale comparable evidence for similar tenanted properties which had been verified and analysed.

Question 18

How would you have got to market value if the property was over rented?

Answer 18

I would have used the core and topslice technique of valuation.

Question 19

Was there another method of valuation you could have used to get to market value?

Answer 19

Comparable method of valuation on a sale per sq ft basis.

Question 20

What does zoning mean?

Answer 20

This is called the halving back principle. The area closest to the predominant area (with the most footfall) is the most valuable. The zones are 6.1m or 20 ft intervals, from Zone A or A/1, where each subsequent zone from the predominant area is halved. Zone B is at A/2, Zone C is at A/4 up to Zone D which is at A/8 or remainder.

Question 21

Is there any RICS guidance on zoning?

Answer 21

RICSGNCOMP2015

Question 22

What part of this case do you feel that you excelled at?

Answer 22

I believe I achieved an accurate and objective valuation for my client.

Question 23

Is there a part of this case where you felt you were lacking in perhaps experience or knowledge?

Answer 23

I felt that I lacked market comparable evidence and had to make adjustments because I was not able to rely on direct market comparables which were contemporary to the time of the valuation.

Question 24

What would you do differently next time?

Answer 24

I would seek to compile, verify and analyse more comparables to produce a more accurate valuation.

Question 25

How did you act ethically?

Answer 25

Within the ToE I included a full written instruction of the valuation report. I included details of the extent and limitations of the instruction, fee basis and referenced our CHP. I complied with detail of my instruction.

Question 26

What were your key achievements?

Answer 26

Measuring and inspecting the property, analysis of comparables, valuation methodogy, high quality service provided to my client.