Hot Topics 2023 Flashcards
What are the new RICS Professional Indemnity Insurance Requirements for 2022?
- The requirements for professional indemnity insurance were updated following the issue of the UK Professional indemnity insurance requirements Version 9 with effect from 1st April 2022.
- The new requirements introduced a change to the maximum uninsured excess of Professional Indemnity Insurance.
- There will be no maximum limit of uninusred excess for companies with a turnover in excess of £10m.
- For companies with a turnover of less than £10m, the maximum uninsured excess is the greater of 2.5% of the sum insured or £10,000.
What are the general requirements regarding PII set by the RICS?
- The policy cover must be made on an ‘each and every’ claim basis.
- The RICS sets out the minimum level of indemnity.
- The policy must be fully retroactive.
- The RICS sets out the maximum levels of uninsured excess.
- Run off cover must be in place.
- The policy should cover past and present employees, directors and partners.
What is the RICS Futures Report?
- In 2015 the future report was launched and highlighted key trends such as urbanisation, the disruption of big data and the climate crisis as presenting key challenges to the property and construction industries.
- Since 2015 the RICS have analysed these trends by engaging with the profession to keep its members best informed on how to address these key issues.
The resulting findings highlighted in the 2020 futures report include:
- Construction produces the second largest amount of data behind financial services however it is estimated that 95% of this is currently wasted. The RICS is setting up an innovation and technology hub to provide a centre of expertise on how data can be put to good use.
- The rapid urbanisation in China was also highlighted where formation of mega-cities is creating key challenges. The amount of land classed as urban has doubled since 2000 resulting in polluted, congested and expensive areas. The RICS aims to encourage its members working in these regions to adopt a more sustainable approach to development of these areas through utilisation of outer urban areas.
- The rapid increase in the use of drones within the industry was also highlighted as presenting key challenges in terms of compliance issues for surveyors taking into account current and emerging regulatory trends, national and international legislation standards. The RICS has developed online courses to support surveyors in this are to ensure the technology is being utilised efficiently, safely and legally.
Are you aware of some of the aims highlighted within the RICS Business Plan for 2021-2022?
Incorporating the Levitt Report Recommendations
* Following acceptance of the Levitt Report recommendations in full the RICS looks to:
1. Be more open and transparent with members and the public about the operations of the institution including decision makiing and finances.
2. Developing and implementing new, more effective, internal whistleblowing arrangements
3. Reviewing the arrangements for senior executive reward.
Immediate Financial Priorities
* Continue to support the profession as economies recover from COVID-19 and seek to minimise any increases in the cost of subscription levels.
* Utilise any surplus in cash generation to pay back furlough monies received via the UK government’s Coronavirus Job Retention Scheme.
* Reduce RICS’ need to access external financial support.
* Reduce any funding deficit in the closed Final Salary Pension Scheme.
What key challenges does the Global Economic Recession present to your area of surveying?
- Rising inflation rates have resulted in the Bank of England increasing the base interest rate which has subsequently caused a large increase in borrowing costs.
- The increase in the cost of borrowing has had a huge impact on developers, building owners and operators who are facing greater pressure on budget plans.
- The financial viability of new developments and ongoing maintenance programmes in many cases no longer stack up with borrowing, energy and labour costs all rising.
- The shift to home working and hybrid working has also resulted in a scaling back of office space requirements where projects for prime office space have now been repurposed or postponed.
- Greater demand for online shopping has led to a decline in high street retail and a growth in logistics space.
- Growth in tech markets has led to a increased demand for data centres.
- Rising inflation has resulted in a new reduction in fee income in real terms as clients demand fee levels are maintained.
What affect has the conflict in Ukraine had on the UK Property & Construction industry?
- Due to the high dependency that Europe has on Russian gas and oil, the conflict in Ukraine has resulted in significant energy prices increases.
- This means the cost of production of building products that require high energy input have also increased including:
- Steel
- Bricks
- Plastics
- Ceramics
- In summary the conflict in Ukraine has intensified an already turbulent market that was previously effected by Brexit, COVID-19, industrial strike action, rising energny, fuel costs and inflationary pressures.
- Impacts may also include delay and disruption caused by materials and goods shortages affecting deliveries, cost overruns and possible arguments around the triggering of suspension or even termination rights.
How has Brexit effected the UK Property & Construction industry?
Movement of Personnel
* Free movement between the EU and UK has ended and the UK has a new global immigration system.
* Employers need to register as sponsors to recruit from abroad.
* Foreign employees must meet certain job, salary and language requirements.
* Restricted labour supply has led to a labour cost increase.
Movement of materials
* Under the new trade agreement, most traders will not have to pay tariffs on entrance to the UK, but will have to comply with relevant Rules of Origin for their products.
* Prices will increase of goods coming across the border due to additional checks, in particular: steel, plastic components, cement and plasterboard.
Are you aware of any RICS Guidance notes on COVID-19?
- They published RICS ‘Covid-19 Guide to Surveying Services’ which contained a rnage of guidnce notes to work safely and in line with government guidelines through the pandemic.
- The provides specific guidance on:
- Physical Inspections for Residential Properties
- Physical inspections for non-domestic properties.
- Residential valuations and surveys
- Reopening of the housing market
What precautions do you take in your day to day surveying concerning COVID-19?
I practice inline with the RICS COVID-19 guide for Inspections and Visits for non-domestic properties which requires me to:
* Maintaining social distancing
* Minimising physical contact with building occupiers
* Ensuring I comply with the H&S procedures being operated by the site team.
* Securing as much information as possible from the client prior to the visit and as part of the pre-inspection research.
* Sanitise equipment in line with current Public Health Guidance, periodically and as often as practical.
What is the Paris Agreement?
- At the COP 21 meeting in Paris in 2015, the Paris Agreement was formed.
- Parties agreed to pursue efforts to prevent temperatures rising more than 1.5C above pre-industrial levels.
Explain your understanding of what happened at COP27 in 2022?
- COP27 took place in 2022 in Sharm El Sheikh, Egypt and highlighted the countries mostly affected by ‘loss and damage’ of extreme weather.
- A loss and damage fund was agreed where richer countries that have not delivered on previously agreed targets will be required to provide $100bn per year to the countries most in need.
- There was an explicit plan introduced to reduce use of coal which is responsible for 40% of annual CO2 emmisions.
- The was an agreement to increase the money given to developing countries to ope with the effects of climate change and switch to clean energy.
Are you aware of any impending changes to minimum energy efficiency standards?
- Yes I understand the government has recently proposed changes to the EPC requirements for commercial property and buy to let properties which are due to take effect from 2025.
- Currently the minimum required energy efficiency rating for domestic rental property requires an E rating however this is expected to increase to a C rating or above from 2025.
What are green mortgages?
- A mortgage that rewards someone for buying or owning an energy efficient home by offering favourable terms than as standard.
- They typically result in lower interest rates or receiving cashback when you take out the mortgage.
What is the ICMS3?
- The RICS is one of 49 globally prominent organisations to have contributed to the development of ICMS.
- ICMS stands for International Cost Management Standard which provides a framework for cost and carbon management in construction from concept to completion.
- The framework provides a format for defining, measuring, recording and presenting life cycle costs and carbon emmisions associated with construction projects and aims to decarbonise them in the most cost-effective way.
