Case Study Flashcards
What is hope value
Potential increase in value due to expectation of future development exceeding current use value
What are the changes to Class Q - 3
- Floor space has increased to 1000 sq/m
- Number of dwellings increased to 10
- Single dwelling size increased to 150 sq/m
What other agreement type could you have used for the outbuildings
I could’ve used a 54 act tenancy and contracted out of the security provisions to ensure possession could be regained
Talk me through your advice for separating off the outbuildings from the farmhouse
Given the government are proposing to abolish Section 21 notices, regaining possession of properties could be harder. To ensure my client can regain possession at short notice I advised they would be better on a separate licence
Why did you opt for a conventional oil boiler given your clients objectives
Considering the eligibility issues with the Boiler Upgrade Scheme, my client would’ve had to put more capital investment in the property than planned. Due to the upfront cost, I advised my client to install an oil boiler with necessary infrastructure put in place to allow retrofitting of solar or a heat pump
Did you consider IHT changes in your refurbishment advice
As the property is in a trust, The 10 year payments would increase if the value of the property increased. This was something considered within the budget
Explain why you didn’t get a formal valuation for the property
As this was for internal processes, I discounted the need to spend additional money obtaining a valuation. If my analysis provided sound reasoning for disposing of the property I would’ve obtained a formal valuation
Why would poor market conditions impact your client
Hesitant vendors would impact my client by prolonging the transaction and sale of the property
What taxes would be applicable if you sold the property
CGT and SDLT
Give a rough cost for converting the outbuildings into residential dwellings
£265 / ft2 but this depends on condition of buildings, specification. This amount would also be plus fees and a contingency
What are the long term benefits from investing in the property
My client would be able to secure and increased rental income for a long period of time
Did you think of a target market when advising on the refurbishment extent
We were targeting a higher rental market. Ideally people who had children going to local schools so they could settle in the property for a long period of time
Talk me through your ROI’s
The standard refurbishment would provide a 10.5% ROI whilst the high level refurbishment would provide a 12.5%. The hybrid version we opted for was 11.8%. The additional items in the high refurb didn’t warrant a higher rental value
Could you surrender some farmland to make a grazing paddock available
I spoke with the farm manager to investigate this option however, the nearest field to the property was the most productive in terms of yield. The farm manager was therefore not willing to surrender part. The location of the field would also mean walking through the farmyard with horses which poses a health and safety issue
Would you consider full planning rather than Class Q
Class Q would benefit from quicker planning processes. Although I would consult with our planning expert before advising my client
Talk me through the marketing process for renting the property
I didn’t openly advertise the property. As the Estate keep property enquiry forms I was able to do enough viewings without marketing the property, saving costs
What is the smart readiness fund
An indicator used to measure a buildings capacity to use smart ready systems
How did you advise your client in relation to APR when the holding was surrendered
As the holding was within an AHA tenancy, this is subject to 100% relief for inheritance tax. The new tenancy which was granted for the land and agricultural buildings was an FBT, this is now only subject to 50% relief
Did you carry out your valuation in accordance with the RICS Red Book
As this was a valuation purely for internal purposes without liability and without communications to third parties this, VPS 1-5 was not complied with
