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Case Study Flashcards

1
Q

Describe Wimborne as a location

A
  • Historic market town
  • Dates back to 12th century
  • Within easy access of both Bournemouth and Poole
  • Canford School is one of the main employers nearby
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2
Q

How did you ensure clarity in your marketing strategy?

A

Parties were issued with a Best Bids letter which clearly set out expectations of bidders and a sales timeline

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3
Q

What anti-money laundering regulations did you adhere to in your Client on-boarding process?

A

Money Laundering, Terrorist Financing and Transfer of Funds

  • Undertook CDD
  • Ensured detailed records had been maintained since our promotion instruction
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4
Q

What is Greenbelt land?

A

Area of land protected from most forms of development

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5
Q

What is a Promotion agreement?

A

Legally binding contract between the land owner and their partner – usually a land promoter

Land owners to get the expertise and financial support they need to secure planning permission for development on land they own

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6
Q

What were the terms of the promotion agreement?

A

5 year agreement

- subject to an extension should Planning Extensions be in train

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7
Q

What does site adoption mean?

A
  1. Call for Sites Consultation approved by Cabinet for a period of public consultation
  2. Examination
  3. A Local Plan adoption
  4. A site is then adopted into The Site Specific Allocations of Land (SSAL) development plan. This document details the development proposals for new homes, employment land, community facilities, open space and other uses
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8
Q

What does it mean when a planning application is validated?

A

Local planning authority (LPA) checks whether an application is complete:

A valid application comprises:

  • Information requested on the standard application form
  • Mandatory national information requirements, including a design and access statement if one is required
  • Information specified on an LPA’s local list.
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9
Q

Why has there been such a delay in obtaining Outline consent?

A

Ongoing staffing issues at BCP town planning department

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10
Q

What did you consider during your inspection?

A

Surrounding area

  • comps
  • enviro hazards
  • proximity to amenities

Site itself

  • Boundaries (check against Title Plan)
  • topography
  • ground conditions
  • Notable features (e.g. Considered the large Oak tree in the middle of the site and suggested the name Oakwood Park)
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11
Q

What guidance did you comply with during your inspection?

A

RICS Surveying Safely 2018

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12
Q

How did you comply with RICS Surveying Safely 2018?

A
  • Considered Personal safety
  • Undertook a risk assessment
  • Visiting premises
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13
Q

How did you assist in formulating a disposal strategy?

A

Worked alongside my Director to advise the client on marketing timescales and the most effective method of sale for this type of opportunity

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14
Q

What was your role in the creation of a dataroom?

A

Populated the dataroom with all relevant planning, technical and summary documents.

I organised the dataroom to make the interested parties due diligence process as straightforward as possible

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15
Q

What regulations or legislation did you consider when creating the dataroom

A

General Data Protection Regulations 2018

As this was a UK instruction the Data Protection Act 2018

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16
Q

How did you effectively manage interested parties?

A

Ensures communication was:

  • Clear
  • Concise
  • Complete
  • Courteous

Throughout the instruction kept them updated with relevant information

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17
Q

What were you considering when reviewing and analysing bids?

A

Capital sum offered

Funding assumption

Design assumptions

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18
Q

What did you consider when providing a formal recommendation to your Client?

A

Ultimately considered my key requirement to maximise capital receipts.

Also considered the need to secure a developer who could fulfil the needs of the restrictive covenant

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19
Q

What was your role in assisting an execution of a site disposal?

A
  • Helped advise on a marketing list
  • Established interest levels
  • Distributed marekting material
  • Drafted best bids letters
  • Analysed bids
  • Assisted in recommending parties to my client
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20
Q

What is a restrictive covenant?

A

A promise to engage in or refrain from a specified action

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21
Q

How was the Design Code agreed? Who was in agreement?

A

Promotor engaged with the Planning Authority to determine key elements before presenting this to them prior to our marketing campaign.

The relevant planning officer advised that there was unlikely to be any major issues with the designs after a number of weeks of feedback

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22
Q

What were the key issues you envisaged through splitting the site into Lots?

A

Initially:

  • Multiple sales contracts
  • Potential for disharmony through multiple developers on site at any one time

Subsequently:

  • Issues relating to s.106 triggers
  • Parcel delivery issues
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23
Q

What is Lady Wimborne style architecture famous for?

A

111 cottages were built for estate workers from 1867 onwards, mostly as semi-detached pairs but with a few variations,

The Gothic revivalist design drafted by Sir Charles Barry junior

· Pitched roofs with gables to the front and sides,
· Arrow slit openings in each gable.
· A central brick built chimneystack
· Flemish bond style brick walls

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24
Q

How would you split land up?

A
  • Splitting of the existing title

- Important to have a land registry compliant red line plan

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25
Q

What is RICS Valuation Information Paper 12?

A

ARCHIVED

Valuation of Development Land

Discusses the approach to the valuation of property where the proposed development is of a cleared, or greenfield site

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26
Q

What was VIP12 Replaced with? And why didn’t you use this newer version when undertaking your valuation?

A

GN Valuation of Development Property (2019)

This newer version only came into place in October just after I had started my valuation process

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27
Q

What legislation did you consider throughout this instruction?

A 
Estate Agents Act (1979)
Misrepresentation Act (1967)
Consumer Protection Act (2008)
Bribery Act (2010)
Proceeds of Crime Act (2002)
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28
Q

What guidance did you consider throughout this instruction?

A

Comparable Evidence in Real Estate Valuation (2019)
Complaints Handling Procedure (2016)
Valuation of Development Property (2019)

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29
Q

Talk to me about the contents of the Promotors costing estimate that they had previously undertaken? Were you happy to rely on this?

A

Undertaken by a quantity surveyor in July 2019 prior to marketing

I checked the figures against BCIS

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30
Q

How did you rank the schemes you found in terms of comparable evidence?

A

The Cloisters (listed)

Fernlea (luxury scheme)

Broadoaks (adjusted for location)

Pottle Walk (historic)

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31
Q

Why did you analyse comps in terms of GIA?

A

Code of Measuring Practice (2015) advised measuring on Effective Floor Area which equates to GIA

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32
Q

What does your net figure in Argus represent?

A

GIA

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33
Q

How would you measure the Site via Promap?

A

Confirm title boundary correlates with Land Registry Title Plan

Use Promap measuring function

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34
Q

What did you consider on your inspection?

A

Anything that would impact marketability.

  • Topography
  • Proximity to local amenities
  • Existing property on the site
  • Neighbouring properties
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35
Q

What must you include in your schedule of comparable evidence?

A
  • Address
  • Property type
  • Freehold/leasehold
  • Location details
  • Description of the property
  • Sq ft
  • Date
  • Analysis per sq ft
  • Source of info
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36
Q

Explain how you ranked your comparables

A

The Cloisters seen as a direct comparable

Pottle Walk was historic so i assessed that as Catagory B General Market Data as per the GN Comparable Evidence in Real Estate Valuation

Fernlea Grade A Direct evidence however only classed as ‘similar’ real estate due to luxury status therefore not ranked as high as Cloisters

Broadoaks again Grade A and a similar type however, considered the fact that it was slightly further away from our subject than the Cloisters.

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37
Q

What was the CIL rate and what is a CIL payment?

A

£82 per square METRE

CIL is a £psd rate applied across an authority.

A charge on new development in the area.

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38
Q

What is a s.106 agreement?

A

A mechanism which make a development proposal acceptable in planning terms, that would not otherwise be acceptable

Site specific mitigation of the impact of development

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39
Q

Summarise the s.106 agreement

A

Agreement between:

  1. Richborough
  2. BCP
  3. Bailey Family

Before first occupation

  • RP agreed for AH
  • SANG contribution paid to Council
  • Education contributions paid

SANG Landscape and Ecology Management Plan (LEMP) has been submitted to the Council for approval. before first occupation

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40
Q

What is the population of Wimborne?

A

15,500

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41
Q

How did you display team working?

A

Worked collaboratively across BNP departments and offices and also alongside the Promotor in relaying key information to interested parties

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42
Q

How did you display client care?

A

x

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43
Q

What was the VAT position of the site?

A

Purchasers to assume VAT payable on acquisition cost inclusive of SDLT

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44
Q

What agents did you speak to to clarify evidence?

A

Symonds and Sampson

Fisks

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45
Q

What conflict of interest checks did you do?

A

Check client details against BNP internal conflict system

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46
Q

Given there was such a range in comparable values, how did you reach your opinion of guide price?

A
  • I used Comparable Evidence in Real Estate Valuation 2019
  • Applied greatest weighting to schemes that were closest geographically and most recently completed
  • Interpreted each comparable in the contact of the subject to reach my opinion of guide price
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47
Q

What were the Schools requirements?

A

Maximise capital receipt whilst ensuring the legacy of their end of the site

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48
Q

Main benefits from splitting the disposal?

A
  1. Open the opportunity up to a larger market base (comparable evidence suggested that the market for <100 unit schemes was far greater than a 600 unit scheme)
  2. Attracts a local developer that has a greater understanding of Lady Wimborne style architecture
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49
Q

Why would a single entity disposal be simpler from a legal and practical perspective?

A

No need for multiple sales contracts

More straightforward with only one developer on site at any one time

50
Q

How did you stress test proposals during interview stage?

A

Requested further information on:

  • assumptions on timings
  • accommodation schedules
  • net densities per hectare
  • funding details
51
Q

What is the RICS Valuation Information Paper 12?

A

Covers entire process > site inspection, gathering site specific information, establishing planning potential, environmental due diligence

Assessing development potential > optimum planning position, timing and phasing issues, analysing market demand/supply
• Valuation by comparison method
• Valuation by residual method
• Assessment of market value of proposed development (using comps)
• Assessing site value
• Reporting the valuation which should include:

i. Comment on costs
ii. Viability of the proposed project
iii. Assumptions and sensitivity in residual
iv. Implications of cost over runs
v. Reflection of market conditions at date of valuation

52
Q

How did VIP12 assist you in undertaking a development appraisal?

A

Followed advice by verifying my estimation of guide price/GDV against a recent land comparable

Oakwood = £xx per net developable acre

St Leonards Ringwood.

  • £1.15m per net acre
  • August 2019
  • Homes England sold to Barchester
  • Outline consent for 210 homes and 80 bed care home
53
Q

What costing estimate had the Promotor undertaken? Were you prepared to rely on this?

A

Quantity surveyors estimate undertaken in July 2019

- estimates on services and utilities too

54
Q

What is GOOD evidence?

A

Ranked as per Comparable Evidence in Real Estate Valuation 2019

Grade A - Direct
Grade B - General
Grade C - Other

55
Q

Why were Poole and Bournemouth vastly different markets?

A
  • Attracted a different target market
  • Higher density housing
  • University cities
56
Q

How would you attribute a premium for the Poole and Bournemouth should you have decided to analyse these markets?

A

I would have analysed comparable evidence from similar property types between these more urban locations and the likes of Wimborne and determined any trends related to location.

57
Q

Which would you rank higher than the other - second hand or historic?

A

Although Comparable Evidence in Real Estate Valuation 2019 does not specifically refer to second hand data, I deem it as:

Grade C - Other
- ‘transactional evidence from other real estate types and locations’

Therefore ranked lower than Grade B - Historic evidence

58
Q

How does Right Move obtain its data?

A
  • Agents
  • Lenders
  • Land Registry
59
Q

Why did you use a blended figure across the site?

A

This was £365 for the apartment units only

At this stage as we were at outline stage, a detailed unit by unit appraisal was uneseccary as assumptions could well change

60
Q

How did you verify findings with your local office?

A

Before reporting to the client I provided them with a draft marketing report and appraisal.

I wanted to check that my estimation on guide price and sales rates was reasonable and in line with their knowledge of the market

61
Q

How did you establish guide price for Lot 3 (Care Home)

A

I did not

An appraisal was undertaken by our Alternative Markets team who specialise in the retirement living sector

62
Q

What was in your Expressions of Interest letter?

A

Detailed information on sales process

Expectation for contents of any bids

63
Q

How many bids did you receive?

A

12

64
Q

What were the salient details in your bid matrix?

A
  • Capital sum offered
  • Finance arrangements
  • Payment profile

Assumptions on;
- SANG delivery

65
Q

How did you establish net present value

A

Used a discount cash flow

Spread over however many number of years of payment

Used a discount factor agreed with my client (x%)

66
Q

How was it evidenced that Parties 1 & 2 had undertaken the most due diligence?

A

Evidenced by activity in the dataroom

Both developed a strong line of communication with Promotors design and planning teams

Had a far more frequent line of communication with us throughout

67
Q

How had Party 1’s proposal not complied with the Design Code

A

In the Canford Magna end they had offered on the basis of a higher dwelling PH than the Design Code prescribed

68
Q

How were you aware that Party 1 possessed an adequate build quality

A

Were presented case studies at interview stage of similar projects completed

69
Q

Why would it be beneficial to your Client for Party 1 to pay through cash reserves?

A

Not relying on funding to align for completion or first payment

70
Q

What is an overage clause?

A

Arrangements for sharing extra receipts over and beyond originally expected levels

In line with a pre agreed formula

71
Q

How can one structure an overage agreement?

A
  • Turn (flip land)
  • Planning (additional square footage)
  • Sales (any additional GDV)
72
Q

What were your clients Key Performance Indicators

A

Minimum of 5 bids on the site

73
Q

What was the reasoning behind your advice to postpone marketing

A
  • Ongoing dialogue with the parties
  • Aware from knowledge across the market and from board members at respective business that there was increasing market uncertainty
  • Because of the lot size we considered the decision
  • Decision due to feedback in the market
  • Parties land buying activity was put on hold
  • I was continually in dialogue with all a parties and my Client throughout hiatus
74
Q

How did you build a good relationship with the various parties?

A

Remained in constant communication

As an agent, I endeavoured to respond to any queries they may have throughout the sales process in a timely manner

75
Q

How did you measure the Site?

A

Promap

I referred to Land registry title plans to ensure accuracy

76
Q

What was the scale of your site plan?

A

1:5000

77
Q

Why was the construction cost for Canford Magna parcel the same as your affordable rate?

A

Units were considerably larger than the main site

Assessed via BCIS and confirmed by a quantity surveyor

78
Q

Why were there no marketing costs in your appraisal?

A

These were included in the sales fee in this instance

79
Q

Why did you appraisal not include CIL?

A

-

80
Q

How would you carry out the instruction differently in todays market?

A
  • Consider virtual or socially distant tours
  • Rhetoric of rural locations becoming increasingly popular in new-age of living playing greater role in marketing material
81
Q

How can s.106 agreements be used by a planning authority?

A
  • Require a sum or sums to be paid to the authority
  • Restrict the development in any specified way
  • Require specified activities to be carried out
  • Require the land to be used in any specified way
82
Q

What could have impacted the availability of good comparable evidence?

A
  • Limited no. of comps
  • Special purchaser
  • Historic evidence
83
Q

What does Comparable Evidence in Real Estate Valuation 2019 say in regards to Development Land in particular?

A

Comparable approach sensitive to small changes in valuation inputs eg:

  • density of the permitted development
  • assumed value of the completed development
  • ground conditions
  • development costs
  • allowance for risk.
84
Q

How did you use Land Registry Price Paid data (0.8% between 2018-2019) to consider historic evidence?

A

Historic evidence at Pootle Walk was considered fairly low down when ranking our comparable evidence.

Was able to use price paid data per annum as a barometer of what this might have equated to in 2019

85
Q

Why didn’t you consider asking price data?

A

Quarter Jack Park by Bloor Homes was in the process of construction in nearby Ringwood however:

  • No apartments
  • Hadn’t realised pricing information until we had began marketing the site

No other comparable asking prices outside of Bournemouth and Poole

86
Q

What does Comparable Evidence in Real Estate Valuation GN (2019) say in regards to second hand data?

A

It does not explicitly refer to it however;

My interpretation is that it is Category C i.e. evidence from ‘other real estate types’

Grade C = ‘might provide broad indications of value’

87
Q

Why did you advise to split the site and then to sell as a single lot?

A
  • Aware of problematic nature of the restrictive covenant
  • Committed to securing highest value for my client
  • So happened that our top bidders for all three lots individually bid on the lots
  • Therefore advised to progress with a single party prior to Covid-19 who had presented an incredibly strong proposal for Lot 2

This said
- Split lot remains an option post-Covid as Client and School yet to agree on a preferred purchaser

I am confident that taking a split lot approach presented the strongest chance of maximising value to our client and forced larger developers to think more carefully about their proposals for this lot

88
Q

What were your assumptions for the care home parcel on a split lot disposal scenario?

A

Alternatives team invited bids from active care operators in the area

89
Q

What was your assumptions for the care home parcel in a single lot disposal scenario?

A

We anticipated that the purchaser would sell this themselves.

So transpired that a number of developers had entered into discussion with care providers themselves and made prelimary agreements to sell them a serviced parcel some time in the future

90
Q

Why was there such a difference between your estimation of GDV and bids?

A

My residual valuation was appropriate for the market at the time of appraising

First round of bids reasonably in line with my guide price

Competitive tension drove bids up in best and final round

Party 1 bidding on the assumption of future market values

  • £420 psf unprecedented and unseen
  • I would not have felt comfortable advising on these levels
91
Q

What did you base your assumptions on affordable housing on when advising on GDV/guide price?

A

Had advice from an RP

or

Specialist affordable housing team

92
Q

What are the different types of Affordable Housing?

A

Affordable rented

  • the main type of new housing supply
  • let by local authorities or registered providers (RPs) of social housing to households who are eligible
  • capped at 80% of local market rent levels
  • Designed for lower income levels

Intermediate
- prices are above those of social rented housing but below market housing prices or rents

Intermediate tends to generate a higher value

93
Q

What is Affordable Housing?

A

Housing for those whose needs are not met by the market.

Eligibility is determined with regard to local incomes and local house prices

94
Q

Why did Richborough Estates purchase land?

A

Necessary for the making up of SANG contribution

Allowed them to become involved in the collaboration agreement

95
Q

Difference between Collaboration Agreement and Land Pool Trust

A

Collaboration

  • most commonly used form of land pooling agreement
  • multiple owners agree in advance how land sale proceeds will be split
  • agreement will bind each to act collaboratively in the common good

Land Pool Trust

  • Owners transfer their landholdings into a common Trust in which they each become trustees
  • This may give an initial requirement for SDLT but other tax advantages usually outweigh this.
96
Q

Why would the Landowners want to enter into a land pooling agreement?

A

Any thoughts of ransom over one another will be set aside

Canford School were aware that development was envisaged for The Bailey land and wanted a share in the profits owning land adjacent

97
Q

Explain your advice for the Overage Clause

A

As Party 1’s offer was marginally over the compliant density per hectare for the Canford Magna Parcel, should they prove successful in obtaining a higher density in this area, I could negotiate for my client:

  1. Planning overage (sq ft’age)
  2. Sales overage (GDV)
98
Q

Are you aware of the new plans to reform the Planning system? White Paper

A

Zonal Planning

Centralised decisions

Local design codes

Makes it easier to build new build and commercial buildings

  • Land divided ‘growth’, ‘renewal’ & ‘protected’
  • Blocked from denying permission in ‘growth’ areas
99
Q

What are the tax advantages of an Collaboration Agreement?

A

I am not qualified to comment or advise on matters from a tax perspective.

I am not a professional tax adviser.

100
Q

Was there a ransom on the Canford Land

A

No, there was independent access from the Canford land.

101
Q

What was your marketing strategy?

A
  • Expression of interest
  • Dataroom
  • Site presentations

Progressed to informal tender marketing

102
Q

What basis of agency were you on?

A

Sole selling rights

Sole agency

103
Q

What were your fees for the instruction?

A

“Base fee” of approximately 0.5% up to a threshold, above which an “incentive fee” is paid.

104
Q

What are the 5 defining points of the Greenbelt?

A
  • preserve the setting and special character of historic towns
  • safeguarding the countryside from encroachment
  • prevent neighbouring towns from merging into one another
  • check the unrestricted sprawl of large built-up areas
  • assist in urban regeneration, by encouraging the recycling of derelict and other urban land
105
Q

What use class are care homes?

A

C2

C2a - Secure Care Home

106
Q

How would you value the Care Home?

A

Profits method

EBITDA x Appropriate Yield

107
Q

Why a Promotion agreement over an Option or Hybrid agreement?

A

Option agreement might need a higher discount in value (not on open market)

108
Q

What is a planning obligation? Provide an example too

A

Private agreements made between local authorities and developers and can be attached to a planning permission

  • make acceptable development which would otherwise be unacceptable in planning terms.
    e. g. s.106
109
Q

What is a planning condition? Provide an example too?

A

Details that need to be confirmed before the permission can be implemented

For example, approval of the materials to be used

110
Q

What is a Reserved Matters application?

A

Those aspects of a proposed development which an applicant can choose not to submit details of with an outline planning application

e.g. Access, Layout

111
Q

What was your Gross to Net in your appraisal?

A

75%

112
Q

What does the ability to apply for Affordable Housing come down to?

A

From discussions with my AH team, affordability comes down to peoples incomes.
- spending a proportion of your income on affordable housing

113
Q

What is shared ownership?

A

You buy a percentage of a property and pay for a mortgage on it.

Pay rent on the remainder

% amount depends per product

114
Q

Are you aware of Governments new First Homes scheme

A

Purchase of a unit at 70% of market value

115
Q

What does your iRR figure show in your appraisal?

A

This is a summary from an Argus appraisal and therefore I noted all outputs.

Primary return input was profit on cost

IRR can be useful for long scale developments - helps to compare it with other investments

116
Q

What is an acceptable IRR for a developer?

A

Depends whether it is a grown or ungrown IRR

Normally around 20%

117
Q

What shows risk in a development appraisal?

A
  • Profit on Cost
  • Sensitivity analysis
  • Contingency
  • Timescales
118
Q

Why didn’t you mention ground rents in your appraisal

A

x

Left ground rents out because the government is seeking to do away with these and the client wasn’t comfortable that by the time the development comes forward that we’d be able to secure ground rents anymore

119
Q

What recommendation does your application need to go to committee?

A

Officers report to committee members recommending it for approval or refusal based on their assessment

120
Q

Would the changes in Stamp Duty impact on your valuation?

A

Uncertain how long these Stamp Duty reliefs will be and therefore didn’t factor it in to our proposal

DJ (26 decks)

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