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KB RICS APC Valuation Pathway > KB Case Study > Flashcards

KB Case Study Flashcards

1
Q

What is the legislation that governs Check, Challenge and Appeal for the 2017 Rating List?

A

Check, Challenge, Appeal: Non-Domestic Rating (Alterations of Lists and Appeals)(Amendment)Regulations 2017

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2
Q

What are the statutory timelines for submitting/settling CCA

A

Check - To ensure factual matters are resolved and agreed as far as possible.

VOA must settle Check within 12 months or the IP has right to challenge

Upon the settlement of a check case the IP can only submit a challenge within 4 months of being issued a decision notice

Challenge - Allows ratepayers to dispute valuation matters and resolve any outstanding factual matters

VOA must settle Challenge case within 18 months or the IP has the right to appeal and the VOA will probably be barred

Upon the settlement of a challenge case the IP can only submit an appeal within 4 months of receiving a decision notice.

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3
Q

What are the grounds for which a Challenge can be submitted under?

A

MCC
Compiled List Error
RV is wrong
Effective day is wrong
Deletion
Split or merger
Address is wrong
Description is wrong

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4
Q

What must a Challenge proposal include for it to be ‘lawful’?

A

Name of IP
Address
Contact details
Grounds of proposal
Evidence
Explanation
Identify alteration sought
effective date
date proposal served

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5
Q

What is the Appeal stage?

A

Allows ratepayer to to appeal to valuation tribunal England (VTE)

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6
Q

What happens during the appeal process?

A

Both sides (VO) and ratepayer presents their arguments to the tribunal. Tribunal then provides a binding result.

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7
Q

What are the fees payable for VTE?

A

£150 for small proposer, £300 otherwise. No fee if VO missed 18 month deadline. If list altered, fee is refunded.

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8
Q

When is an appeal invalid?

A

When it does not include the VO, decision, copy of proposal/evidence discussed at challenge, fee for VTE or if appeal is made past statutory deadline.

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9
Q

What happens if any of the parties involved are unhappy with the outcome of the appeal?

A

Decision can be appealed to Upper Tribunal, followed by supreme court

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10
Q

How long does the VOA have to comply with a VT decision?

A

2 Weeks

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11
Q

What are the RICS rules of conduct?

A

Honesty, integrity, competence, service, respect and responsibility

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12
Q

Is rateable value covered by the redbook?

A

No because RV is a statutory valuation

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13
Q

What are business rates?

A

A tax on properties used for commercial purposes in the United Kingdom.

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14
Q

How are rateable values and business rates linked?

A

Rateable value is multiplied by a multiplier set by the government to calculate the annual business rates bill.

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15
Q

What are the current business rate multipliers?

A

For the 2024–2025 financial year, the standard multiplier is 54.6 pence and the small business multiplier is 49.9 pence

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16
Q

Who was your main client?

A

At the time it was the Department for Levelling Up, Housing and Communities (DLUHC) now known as the ministry of housing communities and local government (MHCLG)

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17
Q

When is the small business multiplier applicable?

A

The small business multiplier is used for properties with a rateable value below £51,000, even if the business doesn’t qualify for small business rate relief.

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18
Q

Who is the Minister for your main client?

A

James Murray MP is i.e the Exchequer Secretary to the Treasury and Departmental Minister for HMRC and the
Valuation Office Agency

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19
Q

What is the RICS Guidance regarding rating consultancy?

A

RICS rating consultancy code of practice, UK, 4th edition, March 2017

sets out the standards of practice that rating consultants must adopt in all
cases where they are either seeking instructions, or are approached by a new or existing client,
to provide advice in relation to non-domestic rating matters. It has mandatory application in
relation to rating consultancy work.

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20
Q

Are you aware of the VOA agent standards? How do these interact with the RICS ethical standards?

A
  • The VOA sets out standards and expectations for agents who represent clients in matters relating to business rates and other property valuations
  • The standards set out by the VOA align with the RICS ethical standards with emphasis placed on aspects such as honesty and integrity and professional conduct.
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21
Q

Who was the most important stakeholder?

A

HMRC

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22
Q

How do you approach a case with an unrepresented ratepayer vs an agent?

A

I would avoid the use of rating / valuation jargon and be open to explaining fully any rating principles necessary

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23
Q

If you worked in the private, what would you include in your ToE (name 4). How would you structure your fees

A

-Description of services
-Limitations and -exclusions
-Information provision
-Conflict of interest
-Complaints handling procedure

  • Fees can be calculated on a fixed fee, hourly rate or percentage basis.
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24
Q

If you were an agent, how would you mitigate your client’s rating liability?

A

Clients business rates liability can be reduced through;

  • Small business rates relief
    -Enterprise zone relief
    -Empty building relief
    -Deletion
    -Split/merger
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25
Q

Why were the factual matters not settled at the Check stage

A

The factual matters were complex as it included a zoning dispute (a valuation matter) and therefore required detailed investigation.

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26
Q

Can you clarify did you serve a DN or did you come to an agreement?

A

I issued an agreement offer to the ratepayers representative.

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27
Q

How did you determine this was a tertiary parade?

A
  • The area was not a prime retail location
    -The footfall in this area was generally driven by local residents rather than visitors or shoppers from other areas
    -Types of businesses in the area were independent retailers, corner shops, takeaways and other small, locally focussed businesses.
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28
Q

What is A5 planning use? What would the planning use be now?

A

-A5 use class is for the sale of hot food for consumption off the premises

-Use class is A5 as planning permission has been secured for the shop to introduce a takeaway service.

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29
Q

Mode and category of the subject?

A

The mode and category of the subject is a shop

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30
Q

Is planning use determinative of the Mode and Category? Case law on this?

A

No, Fir Mill Ltd v Royton and Jones (1960) established that a property should be valued as its mode and category, a shop as a shop but not particular kind of shop.

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31
Q

You have stated A5 use but the photos in your submission show a dry cleaners. Can you explain?

A

My desk based review revealed that the subject property existed as a restaurant as at the material day.

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32
Q

There appears to have been some changes to the property since the material day. What would you consider if the property had undergone improvements?
Would any relief be due?

A

-The material date is when we consider the physical state of the property any physical changes after this date I would ignore.

-I would advise the client that for the 2017 list no reliefs are due for improvements. However as of 1st April 2024 improvement relief has come into effect.

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33
Q

What do you know about small business rates relief

A

No business rates payable on properties with RV of £12,000 or less, relief phased from £12,001 to £15,000.

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34
Q

Was the IP a small proposer? What would you consider a small proposer? How would it affect the way you approached this project?

A

-Yes, the IP was a small proposer
-A small proposer is one with RV’s below £51,000
-Small business rates multiplier would apply which is 49.9p for the 2024-25 financial year (54.6p for RV’s above £51,000)

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35
Q

Were the IP undergoing financial hardship? If there were, how would you handle this?

A

As part of the VO’s KPI’s cases where the IP is undergoing financial hardship are prioritised with the aim to resolve any such cases within 3 months (90 days) of receipt.

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36
Q

Types of conflict of interest?

A

-Financial interest
-Personal interest
-Commercial relationship
-Acting on both sides of conflict

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37
Q

RICS Guidance on conflicts? How did you adhere to this guidance?

A

-RICS Global Professional Statement on Conflicts of Interest 2017

  • I adhered to the guidance by not advising the client whereby a conflict existed without obtaining informed consent from all parties affected.
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38
Q

If you had identified a Conflict of Interest in your case study, what would you have done?

A
  • Note down conflict
  • Make all parties affected aware of conflict
    -Try and obtain informed consent if proceeding is the interest of all who may be affected
    -Otherwise I’d advise the case to be allocated to another colleague.
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39
Q

How did you determine if the proposal valid?

A
  • The proposal included all of the requirements set out in the CCA Non-domestic rating regulations 2017

Must include
-Name
-Address
-Contact details
-Grounds of proposal
-Evidence

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40
Q

What would you have done if the proposal was not lawful and complete?

A
  • I would have issued a notice of refusal.
  • Advised the client why their proposal was unlawful or incomplete.
    -If proposal is incomplete then proposer may submit a second attempt within the balance of the time left from the original 4 month challenge window starting from the date on which the challenge was incomplete.
    -If proposal is unlawful the client can submit a new check case if they still wish resubmit their proposal.
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41
Q

If there is a rent passing yet because the proposer had several properties they disclose a rent which is wrong by a couple of pounds, would this be invalid?

A

Yes, this would be invalid as the proposer would have

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42
Q

What type of significant alterations? Again, did you not check the planning history?

A

Planning history showed that the property had to renovations to be converted from a restaurant into a dry cleaners.

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43
Q

Were there any settlements in the previous 2010 list?

A
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44
Q

What other preliminary research did you do?

A
  • I identified the contentions of the proposal.
  • Consulted the RICS standards to ensure I understood the ethical and procedural standards that must be upheld in resolving this dispute.
    -Looked at market reports to understand market trends for retail units in the area.
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45
Q

What is the RICS guidance note on risk management?

A

RICS Surveying safely 2nd edition 2018

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46
Q

Risk assessment steps?

A
  1. Risk identification
  2. Risk analysis
  3. Risk evaluation
  4. Risk mitigation and management
  5. Implementation of risk controls
  6. Monitoring and review.
  7. Communication and documentation
  8. Regular reassessment
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47
Q

How would you manage a risk if you found one?

A

After identifying a potential risk I would take the following steps;

Risk analysis - analyse the identified risks to understand their nature, cause and potential impact.

Risk evaluation - Prioritise the risks based on their potential impact and likelihood.

Risk mitigation and management - Develop strategies to mitigate or manage the risks

Implementation of risk controls - Put in place controls or actions needed to manage the risks effectively

Monitoring and review - continuously monitor the risks and the effectiveness of the risk management strategies

Communication and documentation - Document all the steps taken during the risk assessment process and ensure clear communication with all stake holders.

Regular reassessment - Ensure that new risks are identified and managed and existing risks are reassessed for their current relevance.

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48
Q

What preparations did you make prior to your inspection?

A
  • Arranged inspection date with ratepayers representative.
  • Notified line manager of upcoming inspection and updated my calendar accordingly
  • Carried out pre-inspection checks (risk assessment).
    -Checked asbestos register
  • Calibrated laser measure
    -Made sure lone working device is operational
    -Planned journey
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49
Q

What health and safety did you consider when inspecting?

A

-Ensure any necessary Personal protective equipment (PPE) is available and word
- Check for structural instability such as cracks in walls, sagging roof or compromised floors
-Be aware of any fire hazards
-Following lone working protocols

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50
Q

Describe the age and construction of the subject property?

A
  • Mid terraced building built pre-1900s
  • Traditional masonry construction with solid brick elevations and cement rendering
    -With pitched slate tiled roof
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51
Q

How did you determine the age?

A

-Looking at the architectural style and building materials
-Checked planning records for permits/plans submitted when property was originally constructed.
- Used property age recognition software

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52
Q

Typical features of this type of property?

A

-Solid brick walls
-Flemish bond pattern
-Timber framing
- Slate roofs

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53
Q

Typical faults with a property this age?

A
  • Rising damp due to absence of deterioration of damp proof course
  • Mould caused by poor ventilation
    -Subsidence and settlement causing cracks
    -Sagging roofs due to weight of roof covering and deterioration of timber
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54
Q

How did you determine it was solid brick construction?

A

Exposed brickwork revealed stretcher and header pattern

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55
Q

What is the EPC rating?

A

D

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56
Q

What is the minimum EPC rating required from a commercial property?

A

-As of April 1, 2023 the minimum energy performance certificate rating required for a commercial property is E.

-This means that landlords cannot legally let or continue to let a commercial property if it has an EPC rating of F or G.

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57
Q

What is the planning history of this property?

A
  • Property was previously a restaurant that was turned into a dry cleaners
58
Q

Talk me through your inspection?

A
  • I first carried out an external inspection of the property.
  • Once inside the property I measured from behind the skirting to the structural wall using my laser measure (using a surveyor’s rod when appropriate)
    -I noted down any value significant features and defects on my inspection template
    -Took internal photographs
59
Q

What did you note down from your inspection of the locality?

A

-Type of businesses nearby
-Accessibility and transport links
-Local amenities
-Parking facilities

60
Q

How did you assess footfall?

A

-Review shops annual trade over a number of years
-Compare the shops footfall with similar shops in the area
-Consider location factors

61
Q

What value significant factors did you note? Did you use a template? RICS Guidance?

A

-Location
-Footfall and accessibility
-Frontage and depth
-Usable floor space
-Ceiling height
-Condition

62
Q

What tools did you use on your inspection?

A
  • Laser measure
  • Surveyors rod
    -Torch
    -Tape measure
63
Q

Did you consider any ESG factors during your inspection? RICS Guidance?

A
  • EPC rating
    -Sustainability features
    -BREEAM
    -Health and safety
    -Customer accessibility

-RICS guidance is RICS guidance note sustainability and ESG in commercial property valuation and strategic advice 3rd edition December 2021

  • Guidance effective from 31st January 2022
64
Q

Did you consider any diversity and inclusion issues on your inspection?

A
  • No ramps for wheel chair users
    -Narrow doorways limiting accessibility
  • limited employee diversity
    -Layout of shop makes it difficult for customers to navigate comfortably
65
Q

How did you inspect safely?

A

-Carried out preliminary risk assessment before visiting site
-Checked asbestos register
- Asked ratepayers representative if any PPE should be worn
-Adhered to the VOA’s lone working policy

66
Q

Did you find any P&M during your inspection? If you did find P&M, how would you treat it?

A
  • Yes the P&M noted were LED lights, air conditioning, CCTV cameras and fire alarms.
  • I valued the rateable P&M (aircon and CCTV) by considering the cost of replacement then adjusted for age, condition and obsolescence.
67
Q

How did you calibrate your laser?

A

Took check measurements against a known measurement

68
Q

How often are they calibrated? Pros and cons of a laser tape?

A

-Laser should be calibrated at least once a year

Pros
-Provide precise measurements
-Ensures ease of use
-Offers quick measurements

Cons
-Not effective on reflective surfaces (i.e. windows)
-Not effective in bright sunlight
-Less effective in crowded areas and poses health and safety risk

69
Q

Why measure to NIA?

A

It falls in line with industry practice where rental values of retail units are commonly assessed using NIA which makes it easier to compare like for like.

70
Q

What would you consider an acceptable level of measuring tolerance?

A

+-1% to +-2%

71
Q

Can you talk me through your measuring of the subject property?

A
  • I measured the usable space within the shop
  • I measured from behind the skirting to the structural wall and utilised my surveyors rod where necessary
72
Q

What did you include and exclude in the NIA?

A

Included
- Areas occupied by skirting
-Areas occupied by perimeter trunking
- Built in cupboards

Excluded
-Toilets
-Space occupied by air conditioning

73
Q

How would you measurements differ if you were measuring to IPMS?

A
  • No exclusions for areas with headspace below 1.5m
    -Measurements taken to internal dominant face
    -All columns are included
74
Q

Can you explain the differences between your measurements and the agent’s? What were the discrepancies and why?

A
  • The agent failed to measure from behind the skirting board to the internal structural
75
Q

Did the agent subject these incorrect areas ‘knowingly’, ‘recklessly’ or ‘carelessly’? Did you flag these incorrect areas for a penalty? If not, why not

A
76
Q

Did you encounter any challenges whilst measuring?

A

-It was difficult to get behind the skirting to measure with my laser so I deployed my surveyors rod where necessary.

-It was difficult to measure storage room as there was no lighting in there so I had to utilise my torch.

77
Q

Your plan indicates that your property widens slightly in the Zone B? Can you explain how you determined the property was 0.03m wider just from the Zone B?

A

The slight discrepancy between the zone A and B width is simply due to differences in precision when I was using the laser measure.

78
Q

Why did you use a zoned approach?

A

-The zoned approach is a recognised industry standard for rating retail spaces, ensuring consistency across assessments.
-This consistency helps in making comparisons between different retail properties.

79
Q

Can you explain how you zoned the property? How would you explain the zoning principles to the ratepayer?

A
  • I applied a zone depth of 6.1m based on the location of the shop
  • Zoning ended at the internal structural wall
  • I would explain to the ratepayer that zoning is a valuation technique whereby the front of the shop carries the most value due to it being the area that attracts customers therefore the floor area is analysed as such halving in value at 6.1m increments.
80
Q

What other external sources of data did you look at when considering third party plans?

A

-Local authority planning portal
-Essential information group (EIG)
-Letting websites

81
Q

How did you determine from the neighbouring property plan that the internal wall was structural and load bearing?

A

-On the plan the wall was the same thickness as known load bearing walls (exterior walls)
-The wall appeared in the same location on multiple floors which suggests its part of a continuous structural system.

82
Q

When was this neighbouring unit last inspected? If the plans were historic, how can you trust these plan?

A
  • last inspected in March 2010
  • I did not rely solely on these plans, I carried out my own inspection in order to verify the nature of wall in dispute.
83
Q

How did you determine what was “below” the wall in dispute? Was there a basement?

A

There was nothing below the wall in dispute.

84
Q

How did you determine what was above? How many storeys are there in total?

A

-I inspected and obtained plans for the residential flats above the shop the structural wall appeared in the same location across all the floors.
-3 storeys

85
Q

Did you inspect the flats above? When were the flats last inspected?

A

I was granted access to the flats above on the date of inspection.

86
Q

If you could not trust the subject property’s plans from 2005, how could you trust the plans for the flats above?

A

I was allowed up the stairs and was able to inspect the layout of the flats above.

87
Q

Is relying on this information in line with VPS 2?

A

The inspection was for the assessment of rateable value which is a statutory valuation therefore, I did not rely on guidance from the redbook.

88
Q

How thick was the wall in question? 1 brick thick?

A

-215mm thick

89
Q

Case law for structural wall (or considering minor changes / valuing rebus)?

A

-Hoare (VO) v National Trust (1998)
-Case concerned a historic building that was in a state of disrepair, and whether it should be valued based on its potential once repaired or in its dilapidated state.
-Lands tribunal ruled that property should be valued in its current state, underscoring that the assessment must reflect the actual physical condition on the material date

90
Q

Would you be able to determine whether the removal of walls would comprise the structural integrity? How would you do this? What calculations would you make?

A

-No as this is beyond the scope of my expertise.
-I sought the advice of internal building surveyors to understand how the walls of the shop impact its structural integrity.

91
Q

Typical foundations for this age of property?

A

-Shallow strip foundations
-Rubble foundations
-Stepped foundations
-Lime mortar foundations

92
Q

Is this not outside your area of competence? Would you not instruct a building surveyor or a structural engineer regarding is sues of structural integrity?

A

-Yes
-I did consult our internal building surveyors regarding the structural integrity of the property.

93
Q

Why did you first look at settlements? Is that the starting point for weighting evidence in rating?

A

-I looked at settlements to find out how similar challenges (if any) had previously been settled.
- Also to establish whether any precedents had been set.
-In accordance with the principles of lotus v delta the subject rent is the starting point.

94
Q

What guidance did you refer to regarding your comparable evidence? How did you apply this guidance?

A

-RICS Comparable evidence in real estate valuation 1st edition
-Used to identify properties that are similar to the subject in key aspects such as location, size, condition and use
-Ensure comparables chosen where somewhat close to the valuation date

95
Q

Are you aware of what Category B and C evidence are, and have you ever used them?

A

-Category B is evidence that is not directly comparable to the subject property (I.e.: similar to subject but different location).
-Category C considered least reliable. includes data that are indirectly related to the subject property and require substantial adjustment and analysis to be useful.

96
Q

What makes a good comparable?

A

According to RICS comparable evidence for real estate valuation a good comparable is one that is;

  • A similar property type
  • In a similar location
    -Close to the valuation date
    -Arms length transaction
    -Complete and accurate
    -Appropriate for valuation purpose
97
Q

You mainly referred to internal VOA evidence so how did you verify these transactions?

A

-I cross referenced these transactions against 3rd party sources (EIG, Costar, Land registry)

98
Q

What do you mean by “best” evidence?

A

“Best evidence”
-Similar age
-Construction
-Style
-Location
-Lease terms
-Proximity to valuation date

99
Q

What are the 6 propositions of Lotus & Delta v Culverwell (VO) & Leicester city council (1976)

A
  1. If the subject property is let that should be the starting point.
  2. Apply more weighting to the subject rent if it closely aligns with the definition of rateable value
  3. Consider comparable rents to confirm or otherwise the level of actual rent indicated by the hereditament.
  4. Consider assessment comparables.
  5. In light of all the evidence an opinion of value can be formed through weighting
  6. If no comparable rents are available then it is difficult to reject subject rent.
100
Q

Briefly explain Lotus & Delta v Culverwell (VO) & Leicester city council (1976)

A

Background - The dispute in Lotus & Delta v Culverwell concerned establishing the proper method of determining the rateable value of a commercial property

Decision - The court established that the correct approach to determine rateable value was to consider what rent the property would command in the open market between a hypothetically willing landlord and tenant.

101
Q

What is the main principle in Garton v Hunter (VO) 1969?

A

We admit all relevant evidence. The goodness or badness of it goes to weight, and not to admissibility.

102
Q

Briefly explain Garton v Hunter (VO) 1969?

A

Background - The case addressed how to assess the rateable value of a television transmitter site owned by the BBC.

Decision - The decision established that for unique specialised properties where there is no clear rental market, the rateable value can be assessed using the contractors test.

103
Q

You have adjusted the subject rent to £15,098 / 36.66 = £411.84

A

The adjusted subject rent PA was actually £13,576 instead of £15,098,

104
Q

If you analyse this using your agreed areas this equals an analysed rent of £411.84m2

A

£13,576/37.71m2 = £360/m2

105
Q

Does the analysed rent not suggest the subject property is undervalued?

A

No because the adjusted subject rent PA is £13,576

106
Q

This would still need to be adjusted for growth unless you are saying the market was actually declining and the subject would have gone from £411.84/m2 to
£350/m2 i.e. this would be a -15.02% decrease.

A

I initially wrote the wrong subject rent per annum which is why my initial analysis appears to be incorrect.

107
Q

What legislation governs FORs?

A

-Commissioners for revenue and customs acts 2005
-Applies to all HMRC officers. Act expressly provides duty to keep information confidential, with criminal penalties for wrongful disclosure.
-Section 18 permits disclosure of information outside VOA/HMRC in line with our function. Must be proportionate and necessary.

108
Q

How did you adhere to relevant legislation regarding data security?

A

Data Protection Act 2018 - I kept the data safe by storing it in secure file storage system. Any correspondence was uploaded and shared online in a place both myself and the IPs could access.

109
Q

There is no location map, why? Would you usually not provide one in a professional report to a client?

A

Due to its omission in my case study I have included a location plan on page 8 for the benefit of my presentation.

110
Q

Did you see the subject lease? Was there a service charge? Was there an insurance rent?

A
  • Yes, I saw the subject lease
  • There was no service charge mentioned in the lease agreement.
  • There was no insurance rent
111
Q

The property is multi-let, did you see if the offices above were effectively FRI?

A

The storeys above are residential flats so a commercial lease did not apply.

112
Q

Why did you adjust for 5% and 3.5%?

A

-5% for external repairs
-3.5% for building insurance
-These percentages are industry practice and established through comparable evidence.

113
Q

Did you consider growth to or from AVD? What was the market like at AVD? Typical lease terms? Yields? Inside or outside the 1954 Act?

A
  • I did consider the fact that the market showed growth closer to the AVD
    -At AVD headline rents around £371/m2 in this area
    -Typical lease terms were 10 years with 5 yearly reviews on IRL leases which were typical of this area
  • However this growth generally speaking was negligible
    -Inside the act
114
Q

What happened to the market post AVD?

A

-The market showed steady increase after the AVD

115
Q

In your opinion, do A5 occupiers pay a premium over A1 occupiers?

A

-Based on my basket of rental evidence the A5 occupiers do pay a premium over the A1 occupiers in this location.

116
Q

Level and direction of footfall?

A

-Prime rents were at around £371/m2 ITZA.
-148,000 footfall a week
8mil a year
-47 min tourist dwell time
-72 units

117
Q

Any anchor tenants?

A

-Tesco
-Greggs
-Morrisons
-Iceland

118
Q

What is the prime part of the parade? How did you determine this?

A

-Junction connecting Leyton high road and Clapton
-Benefits from greater footfall due to busier trafficked areas and proximity residential neighbourhoods and good public transport links.

119
Q

Did you inspect these comps? If not, why not?

A
  • Carried out external inspections of the comparables
  • I obtained sufficient information from external inspection and our internal database
120
Q

Why would you weigh a NL as the best evidence?

A

According to RICS comparable evidence for real estate valuations new lettings are the best for of comparable evidence because they;

-Provide the most up to date reflection of current market conditions
-Often involve properties that are in similar condition to those that are being valued
-Are free from distortions that may be linked to historical agreements
-Are often reflective of open market negotiations

121
Q

What other evidence could you consider other than FORs?

A

-Rents from external sources such as CoStar
-Market reports
-Enquiries with letting agents

122
Q

You stated there are no Challenges 6 years into the list? Are you saying that the tone of the list has been established? Why? Case law? Explain your reasoning?

A
  • Ladies Hoisery case (research) v west middlesex assessment corporation
    -Not to accept uniformity
123
Q

Could you think of any reason why, in recent years, retail occupiers have not submitted Challenges? Do you consider a lack of a Challenge acceptance that the RV
is correct?

A

-Covid 19 reliefs

124
Q

Did you follow any (RICS) guidance when adjusting your rents?

A

-Comparable evidence for real estate valuations

125
Q

What method did you use to adjust your rents? Why?

A
  • I adopted the time value of money discounting approach
    -Method used to account for the time value of money using yields (discount rates) based on actual evidence at AVD
126
Q

Are you aware of any other approaches?

A
  • Straight line approach which sets out the total income and expenditure from lease without taking into account timing of cashflows
127
Q

Why did you use a yield of 6.50%? Is this quarterly in advance or annually in arrears? Why did you adopt one over the other?

A

-I arrived at this yield based on comparable evidence around the AVD
-Annually in arrears because it is consistent with industry practice

128
Q

What amortisation period did you use? Why? What does RICS Guidance say? Why didn’t you amortise over 4.75?

A
  • 5 years to the next lease event (lease renewal)
    -RICS guidance says that for leasehold properties the amortisation period typically mirrors the remaining lease term.
    -Amortised over 5 years because otherwise the annual rent would be higher due to rent free period
129
Q

Why did you adjust for all 3 months? Did you not consider some of this was for fit-out as it was a NL? What’s the market norm period for fit-out for retail in this locality?

A

-The subject lease specifically stated that this rent free period was an incentive.
-The norm period for fit-out for retail in this locality is 3 months

130
Q

Would you adjust for retail fit out? If so, how much? Case law?

A

-No
-R3 products Ltd v Salt (VO) 2017 established that internal fit-outs that were tenant specific and not a part of the general fabric of the building could be disregarded for valuation purposes in certain cases.

131
Q

What do you mean by “informal agreement” offer?

A

-I spoke to the agent on the phone and proposed a revised RV of £12,500 based on my evidence supported by my reasoning.

132
Q

How did you ensure good discussions with the agent?

A

I issued timely correspondence to both the agent and the ratepayer so they were both fully informed

133
Q

What negotiation techniques did you adopt?

A

Called agent and followed up with an email

134
Q

Did you do anything else i.e. a TR Cert for the revised areas? Are you aware of any changes regarding Transition for 2023 onwards?

A

-I issued a transitional certificate including a revised RV for the previous list based on the correct zoned areas
-From 2023 onwards there’s no more downward phasing
-Capping increases

135
Q

What is “ASI”?

A

Internal storage

136
Q

Why A/10 for the ASI? Why the lower rate?

A
  • Because it is a lower quality and therefore we adopt a lesser relativity than the zone a rate
137
Q

If the flats above were part of the same hereditament, how would you value the flats?

A

If the flats above were part of the hereditament I would value them using the comparable method of valuation using market transactions of similar flats above shops in the locality.

138
Q

What is the 2023 RV? How does this sit with your agreed value of £12,500?

A

-£16,000
-28% increase from my agreed value

139
Q

Why would you give the agent an opportunity to submit more evidence? Is this in line with the Regs? How do we treat new evidence?

A

-What I really wanted to say is that I wanted the agent to clarify some of the contents in the FOR for comparable 1

140
Q

Why no pictures of the wall in dispute? Surely, this was not affected by lack of lighting?

A

I took pictures of the structural wall on site and it was used as part of my evidence

141
Q

How did you exhibit your professionalism during this project?

A

I ensured transparency by maintaining effective communication with the agent and ratepayer

I dealt with the challenge case in a swift and timely manner

I resolved the challenge proposal within the appropriate timescales set out in statute

142
Q

During this project, what ethical standards did you apply?

A

I showed the agent respect in allowing for a discussion of all evidence and promoted inclusion and teamworking in seeking approval of my valuation.

I provided a diligent service in responding to the agent in a timely manner and dealing with the case swiftly.

I took responsibility to investigate the subjects lease to attain the correct information.

KB RICS APC Valuation Pathway (11 decks)

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