L3 Valuation Flashcards
What is a Certificate of Title?
A certificate for an individual property which shows its use class
What is a material clause? and explain?
A property disclosure within the Certificate of Title
- under S.106 properties will have particular provision and disclosures in their CoT
- What I look for is working relating to if a mortgage were to come into possession and if this would allow the property to be sold on the private market.
Why did the Housing Association remove the units with out this material clause?
The units for the valuation were stated as MV-T
The disclosures within some of the certificates of title stated that some units were in fact EUV-SH
These units would demand a lower value to the lender and could compromise Loan Security
How would the asset cover have been compromised by EUV-SH units?
I look for asset cover of at least 125% but I would normally want it to be higher
These units being EUV and not MV-T reduced the asset cover significantly enough that the asset cover was below this percentage
After conferring with the bank and the HA the HA decided to replace the units so that the appropriate asset cover would be met
What due diligence did you conduct?
Checked all units;
- Cladding / Balconies / High-rise (if flats)
- Tenure types
- Rents (assuring they were all weekly / not over LHA CAP)
- Certificates of Title
What was the make up of the portfolio (CoT example)
Properties consisted mostly of flats with some houses
- London Brough Tower Hamlets
- 2000s Build
- 2 / 3 stories
- Traditional brick and block cavity construction
What was your end valuation (CoT example)
EUV-SH - £12,720,000
MV-T - £34,490,000
MV-VP - £60,915,000
What was a strength from you S.W.O.T analysis (CoT example)
1) Demand should be sustainable in the medium to long term due to difference between property prices and the local average earnings
2) There is excess demand for affordable housing properties in this locality, 244,000 household on local authority waiting list
3) 45 house hold on the waiting list for every new property being built
What was a Weakness from you S.W.O.T analysis (CoT example)
1) Downward pressure on house prices in the medium term and falling transaction volumes could impact upon values going forward
2) Short term risks for RP’s incomes not supported by housing benefits and a greater number of voids and arrears
What was a Opportunities from you S.W.O.T analysis (CoT example)
1) Efficiencies by mergers between RPs
2) Rationalisation of RPs stocks allowing for more efficient asset management
3) Investment of REIT into the sector as a whole
4) Reactive changes to government policy regarding unit condition could drive further efficiencies in the sector
What was a Threat from you S.W.O.T analysis (CoT example)
1) Cost of living crisis could lead to Gov’t policy change such as rent freezes, further rent cuts, or changes to rent regime
2) Social housing sector is under extensive investigations and works around building safety and requited scope of such works could continue to change
3) Current high levels of inflation could have prolong effect on the cost of materials and labor required to carry out repairs and maintenance to existing stock
What is an Accounts Valuation?
A Valuation of a clients assets for reporting purposes
How does an Accounts Valuation differ from a normal valuation?
Valuation for Financial Reporting Purposes therefore;
- PII will be lower
- It is normally a whole stock valuation of all the property units owned by the company
What basis did you value on? (DT Annual Account Val)
In line with the clients request and scope of work I valued on the EUV-SH basis
How did you define a region for the purpose of this valuation and how many where there?
There were three regions
Defined by their UK Geographical region
- South East
- South West
- Midlands
