CPD Flashcards
What key Items did you take away from the RICS professionalism module In August?
Ethics is the study of moral right and wrong in human character and behaviour. It aims at identifying underlying principles which can help explain our ordinary ethical thinking.
Thinking about ethics helps us do the right thing, particularly in difficult situations where what is right isn’t obvious because different principles conflict. It has made me reflect on my own principles and morals.
How have you Incorporated these Into your daily role?
After the completion of a letting for a restaurant, I was invited to a courtesy tasting dinner. I respectfully declined as this would be against my company’s policy on receiving gifts and hospitality which complies with the Bribery Act 2010. Our policy is not to accept gifts over the value of £5.
Talk me through your key learning objectives from a recent formal CPD event you have attended.
Certificate in Asset Valuation
Learning outcomes: I attended this online distance course and I learned the purpose of Asset Valuations is to provide clear information about the authorities finances. What the authority’s assets are.
I learned about the main asset categories, investment properties (which provide and income), assets held for sale, property plant and equipment ( toilets and community buildings, council dwellings - operational) and heritage assets.
I learned about the importance of data, keeping accurate records and audit trails.
I learned about valuation approaches and how the categories of asset determines the basis of measurement for example:
PPE is DRC for specialised assets - community buildings museums
PPE non specialised assets is EUV - based on income or rate per sq ft
Social housing is EUV through the beacon approach - comparable method
Investment property is Fair value using the income approach
What Is your understanding of EUV valuations In the public sector?
Market transaction information forms
the basis for valuation to EUV. However, EUV is an assessment of
what constitutes replacement at
least cost of the asset’s remaining
service potential for continued
delivery of the current functions that
are being provided by use of the
property at the valuation date. The estimated amount for which a property should exchange on the valuation
date between a willing buyer and a willing seller in an arm’s length transaction
after proper marketing and where the parties had acted knowledgeably,
prudently and without compulsion,
UK VPGA 6 Local authority and central government accounting: existing use value (EUV) basis of value
assuming that the buyer is granted vacant possession of all parts of the asset
required by the business, and disregarding potential alternative uses and any
other characteristics of the asset that would cause its market value to differ from
that needed to replace the remaining service potential at least cost.’ example is West Wing operational building valued to EUV. based on floor area. seperate category for University of southampton valued under fair value.
Talk me through the legislation on energy performance In commercial properties.
As of 1st October 2008 it became a legal requirement to obtain an EPC whenever a property is built, or placed on the market for sale or rent, unless a property is exempt and therefore a valid exemption had been registered
An EPC is valid for ten years from the date of registration. A new EPC can be registered at any point in time, and this would automatically replace the original one.
The most significant of the measures established in the regulations was the introduction of the Minimum Energy Efficiency Standards (MEES), which were measures relating to the minimum energy performance standard a property should have.
As of 1 April 2018 it became unlawful to grant a new lease to a new or existing tenant for a business premises that did not reach the minimum energy efficiency standard of band ‘E’
In 2019 the government launched a public consultation on proposals to amend the Private Rented Sector Regulations to raise MEES to EPC band ‘B’ or ‘C’ by 2030 for all rented non-domestic buildings where it is cost effective to do so.
How are you required to adhere to this In your role?
I have been involved in an exercise or recording all of the EPC’s registered in our portfolio to identify those which are below an ‘E’ rating, which properties have expired EPC’s in comparison with lease renewals. When letting a property the EPC is checked to see if its within the requirement and valid. If the EPC fails we undertake the repairs necessary to pass the EPC to let the property.
the Council has 113 investment properties that are required to have an EPC. 92 properties that have a valid EPC, there were 21 properties where the EPC had expired, and it was identified that these still comply with the MEES provisions due to the following reasons:
An EPC is valid for ten years from the date of registration, and once it reaches the ten year point and expires there is no automatic requirement to produce one, until triggered by a lease event, such as a lease renewal.
The property was let with a valid EPC (at the time of letting).
The new minimum band C requirement is set for 2027 where you will not be lawfully allowed to continue letting the property after 1st April 2027.
What recent property law updates were highlighted at the 21st June 2023 Professional conferences?
Nick french discussed the proposed 23 updates to the Red Book following the valuation review for the rotation policy and explicit discounted cash flow models on investment properties (with growth) then discounted. Leslie Webber covered Old Street retail V GB Healthcare of a 1954 Act lease renewal with only the new rent to be decided, should the new rent be reduced to reflect the absence of fitting out. decision:
* Tenant’s occupation is required to be disregarded when calculating the new rent
* The new tenant is assumed not to be a sitting tenant
* The new tenant would strike a bargain that would include a rent free period – here
six months
* The comparable evidence must be discounted for that period
* That discount would cover both incentive and fitting out elements of the rent free.
Green leases:
- 1 April 2018 – minimum EPC rating E for new lettings
*1 April 2023 minimum EPC rating E for existing lettings
*1 April 2025 by this date all let properties to be registered
(start of first compliance window)
*1 April 2027 minimum EPC rating C for all let properties
(or valid exemption registered) – or later?
*1 April 2028 by this date all let properties to be registered
(second compliance window)
*1 April 2030 minimum EPC rating B for all let properties
(or valid exemption registered)
*Penalty is upon Landlord under MEES Regulations
cost effective improvements the works will pay for themselves in 7 years
penalty £5k or 10% of rateable value up to £50k (3 months)
10K or 20% of rateable value up to £150k (+3 months
What were the key learning objectives In your certificate of asset valuation?
This course takes up a large part of your formal CPD hours, how have you utilised the knowledge you gained?
I facilitated in organising the data for the external valuers for the asset valuations 22/23, this consisted of checking through the workbooks for accuracy in rental income and lease terms. I also provided an audit trail for changed between the 21/22 valuation and this years to assist in identifying large changes which indicate errors in reporting. I am currently looking into the procurement and tendering of the 23/24 asset valuations.
How was the Carbon Literacy Training relevant to your role?
The carbon literacy programme was designed to empower people to take action and be accountability in reaching the organisational target of becoming carbon neutral by 2030. personally I have recently added an extra layer of 200mm loft insulation to help with our energy bills and we are with Green Energy as a supplier who the UK’s only supplier of 100% green gas & renewable electricity. It is my role I ****
What did you learn during the 2 Winnall Valley Road third party determination?
The property consists of an acre plot with a three storey 1980’s industrial building. The rent review is for a ground rent of 5% of the rack rent for the property on an 125 year lease, rent passing £4,500. The tenant was unrepresented and provided her own report the in independent expert and relied on marketing advise by a local agent at a NIL increase. I learned that anyone can make a presentation to the expert, the expert conducts their own investigations. Part of the award referred to the standard lease length for industrial units being a 5 year term or longer with a tenants break. the subject lease provided for 10 yearly rent reviews which would be an assumption in the hypothetical lease. The expert stated the standard adjustment to reflect this tenant advantage would be 2.5% and 5%. am aware that some surveyors in the vicinity have been using a formula for many years which is based upon an overage of 0.67% per additional year over the typical 5 yearly review pattern, as follows: -
5 years overage x 0.67% = 3.35%
The case was awarded 3.35%
I also learned about building coverage and excess yard, building coverage varies between 40 and 50% based on the GIA, any yard area in excess of this would require additional rental.
The rental determination was £8,394pa.
The representation made by my colleague was for £11,300 and a caulderbank was issued at £8,250. the expert determined an equal share of the of fees and expenses.
what is the beacon approach
Is where you take a type of property, for example a detached house, and group them together into an archetype group of similar properties, then the variants are identified, 2,3,4 bedroomed properties and these are valued as blocks.
EUV and MV may differ significantly
Where the existing use value and market value are significantly different (higher
or lower), market value (that is, the valuation does not disregard alternative uses)
is to be reported in addition to the existing use value. A statement should be
made that no account has been taken of issues such as reducing the service
potential or disruption, and the associated costs that would be incurred in
achieving that alternative use.
Depreciated replacement cost (DRC)
Depreciated replacement cost (DRC) is a method of valuation which
provides the current cost of replacing an asset with its modern equivalent
asset less deductions for all physical deterioration and all relevant forms of
obsolescence and optimisation.” RICS Guidance
Depreciated replacement cost
method of valuation for
financial reporting
1st edition, November 2018
