Core Submission questions Flashcards
1
Q
What is your understanding of RICS professional statement ‘Conflicts of Interest’ 1st edition (effective January 2018).
A
Relates to 3 conflicts:
1. Party conflicts
2. personal conflicts.
3. Confidential information conflicts
2
Q
What are the RICS Rules of conduct
A
- Be honest and act with integrity.
- Maintain professional competence.
- Provide Good quality and diligent service
- Treat others with respect and encourage diversity and inclusion.
- Act in the Public interest
3
Q
What is your firms complaints handling procedure?
A
report complaint to line manager and head of division
- acknowledge complaint within 7 days and aim to resolve within 28,
- if not resolved refer the complains to RICS Dispute resolution service
4
Q
what steps do you take prior to visiting site?
A
Bidwells lone working procedure
suitable equipment (disto, PPE)
pre visit risk assessment
5
Q
what is a cashflow statement?
A
shows all actual receipts and expenditure including VAT
6
Q
What is an income statement?
A
profit and loss account: a summary of the businesses income and expenditure transactions, prepared on an annual basis
7
Q
What are the offences of the bribery act?
A
Do not give a bribe
Do not accept a bribe
do not bribe a foreign official
do not facilitate a bribe
8
Q
how do you implement the requirement of the equality act 2010 in buildings you manage?
A
don’t just mention wheelchair access, short of sight/hearing autistic etc
9
Q
what sustainability guidance are you aware of? and what is the implication on property?
A
MEES, Minimum Energy Efficiency Standards (MEES)
10
Q
what guidance do you follow when inspecting buildings?
A
RICS guidance note ‘Surveying Safely 2nd edition (November 2018)’.
11
Q
what are the IPMS basis of measurement?
A
IPMS 1 – Planning and building cost purposes (GEA)
IPMS 2 – Agency and valuation (GIA)
IPMS 3 – Agency and Valuation (NIA)
12
Q
how do you measure a building under IPMS 3?
A
- Measure the area of a building in exclusive occupation to the IDF on a floor by floor basis.
- Includes but stated separately covered galleries, balconies and generally accessible roof terraces
- Excludes standard facilities providing shared or common facilities e.g. stairs, lifts, WCs, cleaner cupboards
- include column widths
- include areas under 1.5m
13
Q
How did you measure the industrial unit in Oxford?
A
-measured on GIA basis
- I had scaled plans so checked layout and took relevant measures to the internal perimeter walls.
14
Q
how did you measure the office space in Mayfair?
A
in accordance with IPMS 3
- measured to the internal dominant face
- included areas under 1.5m
I also measure on an NIA basis to dual report
15
Q
what is the difference between IPMS 3 and NIA?
A
- IPMS 3 you measure to the internal dominant face
- do not exclude columns
- do not exclude areas under 1.5m
- measure but state separately roof terraces or balconies
16
Q
what is the internal dominant face?
A
Internal face of the wall comprising more than 50% of the floor to ceiling height
17
Q
why do you dual report with NIA and IPMS 3?
A
Transactional data available is still in NIA
IPMS 3 is not fully adopted by the marketplace yet
18
Q
what is your understanding of the UK supplemental update requirement on firms to implement a rotation policy?
A
5 years maximum per valuer, 10 years per firm. 2 years of grace for transition period
19
Q
Talk me through your portfolio valuation?
A
20
Q
Talk me through your valuation of the office building in Tunbridge Wells?
A
21
Q
why is the red book needed?
A
- To set a market standard and ensure consistency in valuation
- Protect Valuers and their clients against negligence claims
- Maintains regulatory and mandatory compliance
22
Q
what are the 5 methods of valuation? and where would you implement them?
A
- Comparable method, residential
- Residual Method, want to find the value of land
- Investment Method, where there is an income stream to value
- Profits Method, hospitality setting
- Contractors Method, used where there is a lack of data
23
Q
what is an assumption?
A
a supposition that is taken to be true without the need for specific investigation
24
Q
What is a special assumption?
A
is a supposition that is accepted as a fact, even though it is not a fact
25
What is outlined in VPS 1?
Terms of engagement
26
what is outlined in VPS 3?
what is included in a valuation report
27
What does VPS stand for?
Valuation technical and performance Standards
28
what do you include in a valuation report?
* ID of asset to be valued
* ID of client
* ID of valuer
* Purpose of valuation
* Basis of value
* Valuation date
* Restrictions/consents on publication
* Assumptions / special assumptions
* Nature and source of information relied upon
* Extent of investigations
* Red Book / IVS compliance statement
* Report date
* Valuation approach and reasoning
* Valuation figure
29
What do you include in a valuation terms of engagement?
* ID of asset to be valued
* ID of client and any other intended users
* ID of valuer
* Purpose of valuation
* Basis of value
* Valuation date
* Assumptions / special assumptions
* Extent of investigations undertaken
* Reference to Ccompliants Handling procedure
* Liability cap / details of PII
* Fee basis
30
what is a reversionary yield?
The yield that reflects the relationship between market rent and capital value, expressed as a percentage.
31
What is an equivalent yield?
The equivalent yield is a weighted average between the initial yield and reversionary yield, depending on the timing of the income.
32
what is a discounted cash flow
an investment appraisal technique used to establish the IRR based on explicit assumptions modelled in to the cash-flow.
33
what is an equated yield?
Also known as IRR: a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.
34
what is the difference between a residual valuation and a development appraisal?
A residual valuation uses market standard inputs and is bound by the red book, development appraisal is a tool to assess the viability of a scheme based on explicit assumptions to produce a profit figure
35
talk me through your development appraisal of the development site in Sutton?
36
Was there a requirement for affordable housing in your sutton residential development?
yes, the London plan dictated any development over 10 dwellings required 35% affordable housing provision.
37
how did you value the affordable housing component in your sutton residential development?
50% of the market rate of the affordable housing component
38
What were the build costs on the sutton residential development appraisal?
£175
39
What finance rate do you apply to development appraisals?
1. whatever the client can get, however in the absence of that Bank of England interest rate plus a percentage. at the moment between 8% and 9%
40
what do you include in professional fees for a development appraisal?
6.8%, 1% agency, 0.5% solicitors, VAT on professional fees and 5% Stamp duty.
41
what build costs did you apply to your mixed use development in corn market street Oxford?
light touch retail refurb was only £50 psf but Office to Grade A spec was £275
42
how did you value the student accommodation aspect in your oxford development appraisal?
I discussed with a member of my firms capital markets team who is a specialist in this area of property, they advised the applicable market valuation is a fixed per room capital value of £250,000.
43
what is a development appraisal?
A tool to financially assess the viability of a development scheme
44
what proportion of the development did you apply the finance rate to?
* Site purchase – (Including purchasers costs) Compounded interest on a straight line basis
* Total construction costs – Calculated on a S curve taking half the costs over the length of the build period.
* Holding over costs – (rates, service charge, interest) compounded interest on a straight line basis
on an S curve basis, applying half the finance rate to reflect when monies would be drawn down
45
what guidance do you refer to when conducting a letting?
RICS Professional statement: Code for leasing business premises, 2020.
Estate Agents Act, 1979
46
what are the aims of the Code for leasing business premises, 2020?
* Objective is to improve the quality and fairness of negotiations on lease terms.
* Promotes the use of a new set of Heads of Terms to make drafting leases more efficient
47
what are the mandatory requirements of the Code for leasing business premises, 2020?
* Negotiations must be approached in a constructive and collaborative manner
* An unrepresented party must be advised about the existence of this code and its supplemental guide and be recommended to obtain professional advice.
* Agreement of terms of a lease of vacant property must be recorded on written heads of terms, stating ‘subject to contract’
48
What are the key points of the Estate Agents Act, 1979
- outline terms of the agency
- honesty and accurate
- agree liability for costs
- declare conflicts of interest
- absence of discrimination
- legally obliged to report all offers to client
- keep clients money seperate
49
did you put a board up on 22 high st?
no, as per the town and country planning control of advertisements, regulations 2007 it was a listed building so a board could not be put up.
50
what are the requirements related to boards outlined in Town and Country Planning (Control of Advertisements) (England) Regulations 2007 ?
- flat boards must not be over 2 m square, v boards no larger than 2.3m
- must not protrude more than 1m from face of the buildings
- must not be more than 4.6m from the ground
- planning consent required for illuminated boards/boards on listed buildings
- must be removed 14 days after completion
- must have permission of building owner
51
what is capital return?
The change in capital value of the portfolio, less any capex incurred, expressed as a percentage of capital employed.
52
why do you make unrepresented parties aware of the existence of the code for leasing business premises?
Ensures fair and transparent negotiations. Improves the quality and fairness of negotiations. Ensure all parties are informed.
53
What do you include in heads of terms?
* Subject to contract and board approval
- Landlord
* Tenant
* Property
* Lease length and start date
* Break options
* LTA Act protection
* Rent deposits
* Guarantors
* Rent
* VAT
* Rent Free period
* Rent reviews
* Assignment and subletting provisions
* Service charge
* Repairs
* Schedule of condition/hand back procedure
* Use
* Alterations
* Insurance
* Solicitor details
* Agents details
54
What is total return?
The change in capital value, less any capex incurred, plus net income, expressed as a percentage of capital employed over the period, as calculated by IPD
55
What is the Internal Rate of Return?
IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.
56
what is a DCF?
Discounted Cash Flow: an investment appraisal technique used to establish the IRR based on explicit assumptions modelled into the cash-flow
57
what is the industry benchmark used to index investments?
MSCI, formerly the Investment Property Databank Index (IPD Index)
58
what is the current interest rate?
5.25%
59
how did you establish the rental value for the science and tech letting conducted on Oxford Science Park?
Direct comparable evidence on the same floor, conducted 6 months prior. same size, spec of labs so a small upward adjustment for market changes in the time period. £62.50 - £65
60
How did you account for the prohibitive lease terms on the open yard letting conducted in Croydon?
downward adjustment to rental amount, comparable evidence was hard to find direct comparable due to the size and prohibitive lease terms
61
how did you measure the office space in Mayfair?
IPMS 3, and dual reported with NIA
62
what factors are driving rents in Mayfair?
The insurance and finance sector has been driving demand and comprises 35% of take up in Q4 2023
63
what is the difference between outline planning permission and full planning permission?
outline planning confirms the nature of a development is acceptable and only has reserved matters to fulfill prior to development, I accounted for these with a set costs for planning to fulfill these reserved matters
64
How do you set up a service charge?
- look at previous years budget
- take into account any new services/contracts
- check cost effective
-look at PPM document
- benchmark against other service charges
65
what was the service charge at the Sherard building at?
£22 psf
66
what are the timelines that you provide a service charge budget and reconciliation to tenants?
Provide a budget 1 month prior to start of the period, and a reconciliation within 4 months of the end of period
67
what guidance do you consider when dealing with service charges?
RICS Professional Statement – Service Charges in Commercial Property, 2018
68
How did you apportion service charges? what are the alternatives?
* Floor area
* Fixed percentages
* Rateable value
* Weighted floor area – (mixed uses within a service charge) department store in a shopping centre
69
why did you advise the client to document alterations at the Walmer Castle via a license to alter?
- It protects the landlord at lease expiry
- documents the alterations and ensures compliance with statutory requirements
70
what advice did you give your client when the tenant at 50 New Inn Hall Street fell into arrears?
I outlined the options for dealing with rent arrears:
- talk to the tenants
-check if there was an AGA or guarantors in place (section 17 notice to the guarantor within 6 months)
- serve a statutory demand
- draw down from rent deposit
- CRAR
- court proceedings
- Forfeiture
however as there was a moratorium on Commercial rent recovery during the pandemic in place at the time CRAR and forfeiture were not an option.
71
what is the difference between assignment and sub-letting?
Assignment creates a relationship directly with the landlord, whereas a sub lease has a relationship with the tenant
72
Why did you not recommend implementing an AGA on the assignment at 22/24 New Inn Hall Street?
the existing tenant was not of suitable financial standing that an AGA would be worthwhile, in addition a rent deposit was being provided by the assignee.
73
Why would a landlord grant a tenancy inside the LTA Act 1954?
they are not looking to occupy or develop the unit in the future, or they are not concerned about the capital value of the unit.
- Leases inside the act typically demand an increased rent
74
what are the standard assumptions and disregards in a rent review clause?
Assumptions are:
-Covenants are being adhered to
-property is available for immediate occupation
- let on the open market
- use as per the lease
Disregards are:
-goodwill attached to the property
-goodwill attached to the tenants occupation
-tenant improvements if documented with the landlord
75
talk me through your lease renewal at 20 New Inn Hall St?
76
what is the hierarchy of evidence when you search for comparable evidence?
Open market lettings
Lease renewals
Rent Reviews
Independent determinations
sale and leaseback
inter company transactions
77
what did you include in your report to the client on the lease renewal?
Landlord
tenant
property
previous lease reference
term
LTA 1954 provision
Lease expiry
current rent
use class
floor areas
factors affecting value
valuation of market rent
recommendation to client
78
Talk me through your reasoning for agreeing a 12 month rent inducement at Regent Park?
79
how did you calculate the net effective rent for your comparables in your lease renewal example?
Took comparable deals, calculated the headline rent over the term certain and took away any incentives, disregarding 3 months for fit out from the incentives.
80
What are the requirements of a lease?
- exclusive occupation
-in exchange for rent
- for a term of years
- if the term of years is over 3 years it must be documented as a deed
81
What did you consider when you received the request for assignment?
* READ THE LEASE
* Undertaking
* Is the proposed MR the same as the passing rent? COLBP 2007
* What is the effect on the investment value?
* What do the terms of the lease say? Are there reasonable grounds for withholding consent? Look at the user clause, usually stricter.
* Rent deposit or AGA clause?
* Report your recommendations & obtain clients approval
* Licence to sublet or assign
* Progress with sub lease or Deed of assignment
82
What case do you observe when regarding whether it is a lease?
Street v Mountford,1985
83
What is an AGA?
Authorised Guarantee agreement,
Means the outgoing tenant will act as guarantor for the party to whom they are assigning their lease (guaranteeing that the assignee will comply with the terms and payments).
84
What process did you undertake when you received an application for a license to alter?
* READ THE LEASE! – Is landlord’s approval needed?
* LTA 1927 – landlords consent must not be unreasonably withheld or delayed
* Ask for full set of plans and specification
* Obtain an undertaking for legal and surveyors costs
* Licence to Alter
* Check long term impact on the property (if the tenant defaults)
* Necessary planning permissions and building regs
* Check equality act 2010, CDM 2015 compliance, RAMS and Public Liability Insurance.
* Provide recommendation and obtain approval
* Solicitors to prepare LTA
* Inspect completed works
* Consider COLBP 2007 – clauses should not be over restrictive.
85
what are the three schedules of dilapidations?
* Interim Schedule – served with at least 3 years remaining
* Terminal Schedule – served in final 3 years of the lease
* Final Schedule – served at or past expiry of the lease
86
what would you do if a tenant is in breach of a repairing covenant?
- Serve a repair notice
- Serve an interim schedule of dilaps
-Do the work and charge the tenant
- Forfeit the lease
87
What are the differences between a lease and a license?
- A lease can be assigned, a license is typically personal
- A lease provides an interest in the land, a license is only permission to use the land
- A lease can only expire at the end of the term, whereas a license can typically expire at any time
88
What are the main assumptions and disregards at Rent Review?
4 usual assumptions: (COPA)
* Covenants observed
* Open Market
* Property use as per the lease
* Available for immediate occupation
3 usual disregards: (TG)
* Tenant improvements
* Goodwill from tenants occupation
- Goodwill attached to property
89
What is the notional term of the lease at rent review?
if this is silent in the lease then assume it’s the remaining length of the term
90
What is the hierarchy of evidence?
- open market lettings
- lease renewals
- rent reviews
- independent determinations
- sale and leaseback
91
What is a calderbank letter?
I do not have experience dealing with Calderbank letters however I am aware that they are a mechanism for influencing costs and negotiations in rent reviews as the losing party will have to pay the other sides recoverable costs.
92
What are the contents of a rent review memo?
* Name of landlord and tenant
* Property
* Date of lease and rent review
* Confirmation of new rent agreed
* Signed and dated by both parties
93
what is the difference between an arbitrator and an independent expert?
ACEDIB
Appeals:
Costs:
Evidence:
Discovery:
Immunity:
Powers:
Arbitrator
Only appeal on the basis of bias or a point of law
Can set their own costs
Acts on the evidence presented to them
Has power of discovery
Has immunity/Can’t be sued
Arbitration Act
Independent witness
No right to appeal
Determines as per the lease
Makes own investigations to the evidence
Does not have power of discovery
Can be sued for negligence
Guided by lease
94
What does Section 23 of the act outline?
Sets out the elements required to gain protection under the act:
1. It is a tenancy
2. The premises must be used for a business
3. Must be occupied by the tenant
4. Occupancy of more than 6 months
5. Must not be an excluded tenancy
6. Must be a competent landlord
95
What does Section 24 of the act outline?
A business tenancy does not expire by time, but only when one party serves a notice (holding over)
96
What does Section 25 of the act outline?
* Landlords notice served with no more than 12 months and not less than 6 months before the end of the tenancy
* Can be hostile or non-hostile
* Non-hostile: proposes terms of a new lease including the new rent
* Hostile: outlines ground for opposition of a new lease (ending the lease)
* Must outline the date for the termination of the current tenancy
97
What does Section 26 of the act outline?
* Served by the tenant on the landlord requesting a new tenancy no more than 12 months and not less than 6 months before the end of the tenancy
* Must state the tenants proposal for a new lease including the proposed rent
* If landlord opposes this a counter notice must be served in 2 months
98
What does Section 27 of the act outline?
* Tenant notice served on the landlord if they want to leave with a 3 month notice after the lease expiry date
* No notice required if the tenant moves out prior to the expiry date
99
What is included in a section 25 notice?
-Identity of the property
- reference to lease
- either grounds for opposition or terms of new lease
- date of notice
- date of which needs to respond/termination of the current tenancy
Double check with Alex Stevenson
100
What are the grounds for refusal of a lease?
1. Breach of a repairing covenant
2. Persistent delay in paying rent
3. Other substantial breach
4. Provide suitable alternative accommodation
5. Uneconomic subdivision (Compensation payable)
6. Demolition or reconstruction (Compensation payable)
7. Owner occupation (Compensation payable)
101
What do you include in a marketing particulars?
- Location
- Areas
- floor plans
- description of unit
- lease and term
- Rent
- Business rates
- legal costs
EPC
- contact details
- disclaimer
- date
102
What advise would you give to your client if you could not have agreed terms for the lease renewal at 20 NIHS?
I would outline the options for third party determination:
- Professional Arbitration on Court Terms (PACT)
- County Court
PACT is:
- Faster
- Flexibility and control
- Less expensive
- Decided by expert surveyor rather than a Judge
103
what guidance do you consider when dealing with a conflict of interest?
RICS Professional Standard, Conflicts of interest, 2017 (reissued in 2023 as a professional standard, previously a professional statement) *
104
what guidance do you consider when dealing with Asbestos?
RICS Guidance note, “Asbestos: Legal Requirements and Best Practices for Property Professionals” 2021
Control of Asbestos Regulations 2012
105
what guidance do you consider when dealing with Client money?
RICS Professional Statement ‘Client Money Handling’, 2019
106
What guidance do you consider when dealing with Clients Data?
UK General Data Protection Regulation and the Data Protection Act 2018*
107
What guidance do you consider when dealing with accessibility in buildings?
UK Equality Act, 2010: *
108
What guidance do you consider when dealing with Lettings?
RICS Professional Statement: Code for Leasing Business Premises, 2020 *
* Objective is to improve the quality and fairness of negotiations on lease terms.
* Sets out Heads of Terms to consider.
Estate Agents Act 1979
* Sets out clarity as to the terms and fees of the agency (Section 18)
* Declares any conflicts of interest (Section 21)
* Legal obligation to tell client of all offers received, prompt and in writing
Town and Country Planning (control of Advertisement) (England) Regulations, 2007
RICS Professional Statement: Real Estate Agency and Brokerage, 2016
Misrepresentations Act 1967
109
What guidance do you consider when dealing with management of buildings?
RICS Professional Statement - Real Estate Management 2016 *
110
What guidance do you consider when dealing with Service charges?
RICS Professional Statement – Service Charges in Commercial Property, 2018 *
111
What is the difference between a development appraisal and a residual valuation?
Development appraisal: establish the viability/profitability of a proposed development and helps developer choose from different sites
Residual valuation: establish the market value of the land and is based on mainly market inputs
112
What is Mezzanine funding?
It is additional funding over and above the normal loan funding
