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APC Hard Questions > General > Flashcards

General Flashcards

1
Q

What are the penalties for non-compliance with MEES?

A

o Commercial:
 Less than 3 months = 10% of RV or £5k max

 More than 3 months = 20% of RV or £10k max

o Residential:
 Less than 3 months = £2k

 More than 3 months = £4k

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2
Q

What can you tell me about the RICS UK Residential Real Estate Agency ‘Blue Book’?

A
  • Professional Statement
  • Provides:
    o Legislation
    o Standards and Ethics
    o Marketing
    o Acting for the vendor
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3
Q

What can you tell me about RICS UK Commercial Real Estate Agency 2016?

A
  • Professional Statement
  • Provides key information on areas:
    o AML checks
    o Marketing the property
    o Methods of Sale etc
  • List of Core Principles for Agents:
    o Act in honest, fair and transparent way
    o Due diligence and care
    o Provide clients with terms of business
    o Avoid conflicts of interest
    o Do not discriminate
    o Client Money Handling Procedure
    o PII
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4
Q

What is the RICS document for Clients Money Handling and what can you tell me?

A
  • RICS Clients Money Handling Professional Statement

Areas of good practice:
- Holding clients money
- Providing information to clients
- Compliance

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5
Q

What are the sections of the Landlord and Tenanct Act 1954?

A

Section 24 = Holding over

Section 25 = Landlord notice to end or seek new lease

Section 28 = Agreement to renew

Section 30 = Grounds for refusal of a new lease (7 grounds – must be proved to court)

 Breaches of tenancy
 Owner occupation
 Redevelopment

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6
Q

When can business rates relief be applicable?

A

Temporary exemptions for vacancy:
o 3-months offices and retail
o 6-months industrial
o If occupied for 6 weeks again then becomes available for relief once vacated

Exemptions:
o Vacant listed buildings
o Charities
o Companies in administration

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7
Q

What can you tell me about the performance on the Leeds Industrial market?

A

o Prime Rent = £8.25 psf
 Pegasus at Logic 30,000 sq ft - £8.75 psf (brand new)

o Vacancy Rate = Very Low driving increasing rent

o Doncaster and Sheffield slightly lower rents

o Speculative developments increasing

o Average Yield = 4.7% (moved down from 7% 5 years ago)

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8
Q

What can you tell me about the performance on the Leeds Office market?

A

o Prime Rent = £36.00 psf (11+12 Wellington Place – Lloyds 125,000 sq ft)

o Out of Town = £24.75 psf

o Take up = Consistent

o Prime Yields = 5.75%

o Out of Town Yields = 6.75% (Knight Frank)

o Flight to Quality = smaller but better-quality space (over half of the deals are below 5,000 sq ft)

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9
Q

Case Study: What was your best comparable for establishing MR?

A

Comparable 5 – Hedon Road – 9.5-acre site with 86,000 sq ft unit (20% site density)

  • Series of similar type units
  • Holiday Home manufacturer (Willerby)
  • Similar location
  • £3.37 psf rent
  • Sale and leaseback however
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10
Q

Case Study: What did you learn from the comparables when establishing MV?

A

Yields comparables – 6% to 13.5% (provided on NIY)

Investment rates psf - £12 to £60 psf

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11
Q

Case Study: What was your best comparable evidence for reaching MV?

A

Comparable 5 – Hedon Road – June 2021, £33 psf and 9.4% NIY

Comparable 7 – Grimsby – July 2020, 13.55% NIY – let on 2 leases

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12
Q

Case Study: What was the turnover of the tenants?

A
  • Omar = £70M
  • Rettig = £80M
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13
Q

Why did you apply the same yields to both of the leases on the Term?

A
  • Both under-rented
  • Both similar covenant strengths
  • Omar =
    Worse condition
  • Rettig =
    Land-locked
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14
Q

You have identified a comparable at West Carr Business Park which is very similar. Why is the rate so different from £5.01 psf?

A
  • Far smaller unit
  • Quantum reflected for the difference in size of the property
  • Similar at Amsterdam Road
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15
Q

Your comparable at Seafood Village Grimsby has a Long Leasehold with ground rent of £75,000 p.a. How do you reflect this when assessing the comparable?

A
  • Deducting the ground rent from the income would create a profit rent
  • This is then reflected in the yield which will be altered
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16
Q

What do you know about demand from this type of tenant in this location?

A
  • Large quantity of caravan manufacturers in the location
  • Willerby Homes
  • Europa
  • Delta
17
Q

Are Rettig and Omar connected?

A
  • Not connected
  • Checked on Companies House
18
Q

Why did you adopt a void period of 9 months to the Rettig reversion?

A
  • Both 9 months
    Landlocked… however:
  • Better quality unit than the other (more attractive)
  • Less maintenance works to be done
19
Q

How would you account for dilapidation’s in your valuation?

A
  • LL has potential liability over dilapidation’s
  • Lease stated to be returned to condition of occupation
  • Some roof works to undertake
  • Valuation reflects this in the yield
  • Assume return to condition
  • Building Surveyor for further investigation into dilapidation’s
20
Q

How does the shared access route work? Who is responsible for it?

A
  • The access is not within the demise of either tenant and is a communal area
  • Therefore the Landlord charges a service charge to maintain the shared yard
  • The rent I have capitalised is net of costs
  • Yield reflected the condition of the property and site
  • Can’t capitalise or profit from a service charge
21
Q

What RICS document is there for conflicts of interest?

A
  • RICS Conflict of Interest Professional Statement 2017
    o Conflicts checks
    o Informed consent
    o Information Barriers
    o Guidance on record keeping
22
Q
  • When can conflicts not be managed?
A

o Confidential Conflict
o Prohibited by law
o Prevents competent service
o Individual undertaking both services

23
Q

What do you know about the RICS Countering Bribery and Corruption, Money Laundering and Terrorist Financing professional statement (1st edition, 2019)?

A

Bribery:
- Must not accept or offer anything constituting a bribe
- Must report any breaches

AML:
- Not facilitate money laundering
- Firms must have systems to prevent

Guidance:
- Encourage transparency by having e.g. a gift register
- Provide training for employees

24
Q

What is included within an Annual Return?

A
  • Type of business and staff details
  • Name of Responsible Principal
  • Statutory Regulated Activities – such as financial services
  • Nature of Clients
  • CHP and records
  • PII details
  • Whether clients’ money is held
25
Q

What do the RICS publish regarding Social Media?

A

Use of Social Media Guidance Note

  • Members damaging the reputation of the RICS and profession online
  • Discrimination
  • Hate
26
Q

What guidance is there on dealing with confidentiality?

A
  • Mentioned within the RICS Bye Laws
  • Estate Agency Guidance Notes
27
Q

What are RICS Bye Laws?

A
  • 10 bye laws
  • Set out requirements of RICS members
28
Q

What is a piece of case law for negligence?

A

Yianni v Edwin Evans (1981) - residential valuer liable for mortgage

29
Q

What are the thresholds for the level of PII cover required, and excesses?

A

PII Thresholds:

Turnover below £100,000 = PII £250,000
Turnover below £200,000 = PII £500,000
Turnover above £200,000 = £1M

PII Excess:

Turnover below £10M = £10,000
Turnover above £10M = set own level

30
Q

Who can members contact with ethical dilemmas?

A

RICS Regulation Confidential Hotline

31
Q

What do you look for on inspection?

A

Locational factors
Market
Physical

32
Q

What do you know about the RICS Contamination, the Environment and Sustainability?

A
  • 2010 Guidance Note
  • Surveyors must know their obligations
  • Generally, the polluter pays for damages
  • Desktop studies to research history, planning etc
  • Contamination arises from heavy metals, radon, methane and oil/chemicals
  • Look for evidence of subsidence, chemicals or oils (drums etc)
33
Q

What is the RICS document for development appraisals?

A
  • RICS Valuation of Development Property 2019 : Guidance Note
34
Q

Timeline of sales instruction? (apply to one of your examples)

A
  1. Receive Request
  2. Check conflicts
  3. AML checks vendor
  4. Statutory enquiries
  5. VAT status of property (generally exempt – no VAT to be paid by purchaser. Elected if = within 3 years old or owner elects. Can be recovered – decision lasts for 20 years and new purchaser gets choice to elect or not)
  6. Inspect property (only special circumstance when wouldn’t)
  7. Send Instruction and Terms of Engagement
  8. Receive agreement by client (required by Act)
  9. Confirm position on fixtures and fittings (dilapidations – returning the property to the state it was in when you took occupation, based on the lease wording)
  10. Prepare Marketing Report including valuation (non formal/ non red book – should put in writing)
  11. Prepare Particulars and attain approval (required)
  12. Undertake marketing
  13. Viewings
  14. Receive Offers – (must show to client unless instructed not to)
  15. Negotiate Sale – AML checks
  16. Heads of Terms
  17. Instruct Lawyers
  18. Monitor process
  19. Issue invoice upon completion
  20. Remove board once completed
35
Q

What are the penalties for breaching the Estate Agents Act 1979?

A
  • Warning Order- written
  • Negative Licensing
  • Prohibition Order
36
Q

What do you know about the Consumer Protection for Unfair Trading Regulations 2008?

A
  • Prohibits unfair practices by traders
  • Policed by Trading Standards
  • Agents must declare all good and bad elements of property
  • Offences:
    o The General Prohibition – Acting without due diligence
    o Misleading Action – Providing false information
    o Misleading Omission – hiding material
  • Can’t put pressure on purchaser
  • Can’t disclaim against this regulation
  • Defences:
    o A mistake
    o Reliance on third party information
  • Penalty:
    o Prohibition Order
    o Fine - compensation also can be due
37
Q

What are the three bases for the judgement of liability as set within case law?

A
  • Foresee-ability = was it foreseeable?
  • Proximity = are the parties closely related enough?
  • Fairness = is it reasonable?

APC Hard Questions (1 decks)

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