Case Study Questions

Question 1

What was the date of valuation?

Answer 1

Valuation date is the date on which the opinion of value applies.

Question 2

What is market rent?

Answer 2

the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’

Question 3

What was contained within the Terms of Engagement?

Answer 3

• Client
• Purpose
• Subject
• Interest to be valued
• Type of Asset or Liability
• Basis of Value
• Valuation Date
• Disclosure of Material Involvment
• Identity of Valuer
• Valuation Assumptions
• Special assumptions
• Statutory Obligations
• Nature and Extent of Valuer’s Work
• Information Relied On
• Publication
• Exclusion of Liability
• Compliacne with Standards
• Competency
• Format
• Quality Control
• Fee
• Complaints
• Terms of Buisness
• Date of Inspection
• Valuation Uncertainty
• Limit of Liability and Contracting Entity

Question 4

What was the age and construction of property?

Answer 4

The building is of traditional construction with timber joists supporting a flat asphalt roof.

The entrance is full height and width with roller shutter doors. The condition of the building is fair, albeit the suspended ceiling is in a state of disrepair.

Question 5

What source of errors are associated with using a laser measuring device?

Answer 5

• Human error – not using the device appropriately i.e. not measuring a horizontal distance
• Systematic error – devices should be regularly checked for accuracy of calibration by checking a known distance and recording the results in a log

Question 6

What did you include / exclude from your GIA measurement of the garage?

Answer 6

Gross Internal Area (GIA) is the area of a building measured to the internal face of the perimeter walls at each floor level

Exclude: Perimeter wall thickness and external projections

Question 7

What is an effective full repairing and insuring (FRI) lease?

Answer 7

• Tenant has responsibility for internal non-structural repairs
• Landlord takes on the responsibility for the repairs to the structure and outside parts of the building but recovers costs of doing so from the tenant
• Landlord will also maintain insurance and recover cost of premium from the tenant

Question 8

When were you instructed to undertake the lease renewal?

Answer 8

May 2021

Question 9

What is the use class of the Property

Answer 9

The use class of the Property is E (g)(iii)1, which was previously known as B1c.

Question 10

What is the rateable value?

Answer 10

£18,000

Question 11

What PPE did you wear on the inspection

Answer 11

Non slip shoes
Face mask

Question 12

What is the service charge?

Answer 12

£0

Question 13

What insurance does the property have?

Answer 13

Building
Terrorism

Question 14

What is the EPC?

Answer 14

E

Expires: 21.10.29

Question 15

How did you rank the comparable evidence?

Question 16

Where did you get the comparable evidence from?

Answer 16

Red Book Valuation Draft report from late July 2021

Question 17

Where did you source general market data for the valuation?

Answer 17

Market reports

Question 18

How did the general market data affect affect the valuation?

Question 19

What PPE did you wear on the inspection?

Answer 19

Face mask

Question 20

Did you inspect the roof of the property?

Answer 20

Not on that inspection day

Question 21

How does the fact that the comparable leases are three times longer than the assumed length of a new two-year lease effect the valuation?

Question 22

How does the fact that most of the comparables were on the market for an extended period of time effect the valuation?

Question 23

What was included in your market rent valuation report?

Question 24

What are the section 30 fault grounds?

Answer 24

Under ground (a) of section 30(1), if the tenant has failed persistently to repair and maintain the property, then the court can rule that the tenant ought not to be granted a new lease due to the state of the property resulting from the tenant’s failure to comply with its repairing obligations.

Ground (b) allows a landlord to oppose a lease renewal if the tenant has **persistently delayed in paying rent **(more than one quarter).

Ground (c) allows a court to decide that the tenancy should not be renewed if the tenant has committed substantial breaches of its obligations under the current lease.

Question 25

You said the suspended cieling was in a state of direpair, isn’t this covered under ground a?

Question 26

What is section 30(e) ground?

Answer 26

Ground (e) is rarely relied upon, as it requires the property to have been sublet and for the landlord to be able to show that if it were able to let the property as a whole that would be more beneficial than the current subletting scenario.

Question 27

What is section 30 (g) ground?

Answer 27

Ground (g) is “owner occupation”. If the landlord has owned the property for five years or more then it can oppose a lease renewal request from the tenant on the grounds that it is going to occupy the property for business or residential purposes.

Question 28

What is a Deed of Surrender?

Answer 28

A Deed of Surrender allows the early termination of a lease upon the agreement of both parties.

This legal document will list the obligations that need to be fulfilled by both parties, before the rights and interests under the lease can be extinguished.

Question 29

What is a Part 36 offer? How do you undertake one?

Answer 29

Part 36 offers to settle in the prescribed form aim to encourage parties to try and settle a dispute. They set out the costs and other consequences that a party will face if it refuses a reasonable offer to settle.

Question 30

What is a Calderbank Offer?

Answer 30

A Calderbank offer is written ‘without prejudice save as to costs’.

A Calderbank offer provides greater flexibility than a Part 36 offer because it is not governed by strict court rules. This is a great advantage because it allows the party making the offer (the ‘offeror’) to be creative when making their offer.

The price for flexibility is that Calderbank offers, if accepted, create a binding contract between the parties.

Typically for rent review negotiations.

Question 31

Why did you use Calderbank offer rather than a Part 36 offer?

Question 32

What basis is a claderbank offer?

Answer 32

“without prejudice save as to costs” basis.