Mentioned in submission

Question 1

What Professional Statement did the RICS release to incorporate the International Property Measurement Standards?

Answer 1

RICS Property Measurement, 2018

Question 2

What does IPMS 3 - Offices include and exclude?

Answer 2

Measures the floor area of an office available on an exclusive basis to an occupier but excluding the standard facilities and shared circulation areas. Measured to the Internal Dominant Face

Include but state separately:
* Covered galleries and balconies and roof top terraces in exclusive use

Exclude:
* Standard facilities providing shared or common facilities such as stairs, lifts, motor rooms, WCs, cleaners’ cupboards, plant rooms etc.

Question 3

When you’re measuring industrial / retail warehouses on a GIA basis, what do you include and exclude?

Answer 3

Include:
* Columns
* Lift wells
* Mezzanines with permanent access
* Loading bay

Exclude:
* Canopies
* Fire escapes
* Covered ways

Question 4

What are the steps for carrying out an inspection?

Answer 4

(1) Before inspection I consider my personal Health and Safety and my firm’s policies on inspection, I then would consider the (2) local area, the (3) external aspects of the property, and then the (4) internal aspects of the property.

Question 5

What should you consider in the immediate surrounding area of the property when conducting an inspection?

Answer 5

• Location / aspect / local facilities / public transport / business vibrancy
• Contamination / environmental hazards / flooding / high voltage power lines / electricity substations
• Comparable evidence / local market conditions / agents’ boards

Question 6

What should you consider when conducting an external inspection?

Answer 6

• Method of construction
• Repair and condition of the exterior
• Car parking / access / loading arrangements
• Defects / structural movement
• Check site boundaries with OS map and / or Title Plan

Question 7

If inspecting a property for property management purposes, what would you be looking out for?

Answer 7

Policing the lease -
Occupied: check the lease compliance, statutory compliance, state of the building, requirement for repairs/redecoration, user and details of the actual occupier

Unoccupied: check statutory compliance, state of the building, repair and maintenance issues, security arrangements, landscaping, risk of vandalism and damage to the building

Question 8

What are the FIVE main methods of valuation?

Answer 8

Comparable method
Investment method
Profits method
Residual method
Depreciated replacement cost method

Question 9

Describe the Traditional Investment Method of Valuation

Answer 9

A rent capitalised at a yield (or multiplied by a year’s purchase). Growth is implicit

Question 10

When is the Profits Method of Valuation Used and How does it Work?

Answer 10

Used to value property on the basis of a business/trading potential. Used commonly for the valuation of pubs, petrol stations, hotels, and healthcare properties. Value is determined by the profitability of the operation within the asset.

It uses the EBITDA (Earnings Before Interest Tax Depreciation and Amortization).

Question 11

What is the difference between a development appraisal and residual valuation?

Answer 11

A development appraisal assesses the viability of a project for a specific developer. It can assume site value or calculate it for a given developers profit requirements.

A residual valuation looks to the market for assumptions to appraise the value of a piece of development land. A residual valuation is a one moment in time valuation for a specific purpose.

Question 12

When should you use the depreciated replacement cost method of valuation? And how is it calculated?

Answer 12

It should be used when there is limited availability of market evidence. It is calculated:

(1) Value of land, with existing use planning permission in place.

+

(2) Cost of replacing the building, with an allowance for depreciation. (BCIS)

Question 13

What does the Red Book say about the DRC Method of Valuation?

Answer 13

The Red Book says that the method should not be used for loan security valuations, but may be used for valuations to form part of a financial statement.

Question 14

What is the Red Book Called?

Answer 14

RICS Valuation Global Standards (2022)

Question 15

What are the FIVE situations in which a valuation does not have to be Red Book Compliant? According to RICS Valuation Global Standard 2022?

Answer 15

If supplied in written form, all valuation advice given by members is subject to at least some of the requirements of the Red Book Global Standards – there are no exemptions

(1) When providing an Agency or Brokerage Service (During an Instruction, in an Expectation of Instruction, or Evaluating a Bid)

(2) When Acting as An Expert Witness (Because they will have to follow the specific procedures of the Court)

(3) Performing a Statutory Function (Tax Return for example)

(4) Providing Valuation to a Client for Internal Purposes (Situation in which the valuation will be without liability outside the client)

(5) When valuation is for Negotiation or Litigation purposes (As written valuation advice may extend to matters beyond value such as tactics etc.)

(AESIN)

Question 16

According to VPS1 What are the Minimum Requirements to be Confirmed in Writing Prior to a Red Book Valuation Commencing?

Answer 16

SCARFPIN BIB IIVV
(a) Identification and status of the valuer

(b) Identification of the client

(c) Identification of any other intended users

(d) Identification of the asset being valued

(e) Valuation currency

(f) Purpose of the valuation

(g) Basis of value adopted

(h) Valuation date

(i) Scope of work

(j) Nature and source(s) of information upon which the valuer will rely

(k) All assumptions and special assumptions to be made

(l) Format of the report

(m) Restrictions on use, distribution and publication of the report

(n) Confirmation that the valuation will be undertaken in accordance with the IVS

(o) The basis on which the fee will be calculated

(p) Where the firm is registered for regulation by RICS, reference to the firm’s complaints handling procedure, with a copy available on request

(q) A statement that compliance with these standards may be subject to monitoring under RICS’ conduct and disciplinary regulations

(r) A statement setting out any limitations on liability that have been agreed.

Question 17

What is the key RICS Professional Statement on leasing/letting practices?

Answer 17

RICS professional statement Code for leasing business premises, 2020

Question 18

What is the aim of RICS Code for leasing business premises, 2020?

Answer 18

The professional statement is mandatory and was created to:

improve the quality and fairness of negotiations on lease terms and encourage the use of the new HoT to make the legal drafting of leases more efficient.

Question 19

What does it mean to ‘assign’ a lease?

Answer 19

Transfer the lease to another party who takes over occupation and responsibility for the lease obligations

Question 20

What is a ‘schedule of condition’?

Answer 20

• Record the condition of the property
• Written description of the property or a set of photographs or both
• Referred to in the lease and attached to it or kept with it

Question 21

What must be included in a set of marketing particulars?

Answer 21

According to the RICS Professional Statement on UK Commercial Estate Agency (2016), marketing particulars should be prepared by someone who has personally inspected the property and must include:

Accommodation/sizes
Date
EPC rating
Accurate representation of price (if stated)
Confirmation of tenure
Reference to business rates
Disclaimer

Question 22

What are the main differences between a lease and a licence?

Answer 22

Lease is an interest in land, a licence makes legal what would otherwise be illegal
Term certain
Exclusive possession
Rent
Demise…specific
Street v Mountford and Clear Channel v Manchester City Council
Lease often assignable, licence personal

Question 23

What are the different types of agency you can agree?

Answer 23

Sole selling rights – one agent has complete control of the sale and is entitled to a fee however property is sold – 8% fee, 15% joint sole letting rights

Sole agency (joint) – fee to whoever introduced the purchaser within terms of instruction. No fee if L sells it himself.

Ready willing and able purchaser - If the client pulls the plug at the point of exchange. If the purchaser is ready willing and able you should get a fee. Can also
include abortive fees if the client pulls out.

Question 24

What is in your companies disclaimer within marketing particulars?

Answer 24

Notes that the company are not authorised to make or give any representations or warranties in relation to the property. These particulars do not form part of any offer or contract and must not be relied upon as statements or representations of fact. Measurements/distances are provided as guidance and should be checked

Question 25

What is the purpose of the Estate Agents Act 1979?

Answer 25

The Estate Agents Act 1979 regulates work as an estate agent. Its purpose is to make sure that an agent works in the best interests of your clients, and that both buyers and sellers are treated honestly, fairly and promptly.

Why this information is important

If you don’t comply with the law, you could be banned from working as an estate agent
If you ignore a ban, you could be prosecuted and fined

Question 26

Mentioned in submission
Can you give me an example of the effect of the Estates Agents Act 1979?

Answer 26

Specifies information agent must give to the prospective client before entering into an agency contract – in writing

When the client will become liable to pay remuneration.
Amount of agent’s remuneration.
Particulars which don’t form part of agent’s remuneration e.g. marketing exp.
Nature of instruction (eg sole)

Question 27

Mentioned in submission
Can you give me an example of the effect of the Estates Agents Act 1979?

Answer 27

Specifies information agent must give to the prospective client before entering into an agency contract – in writing

When the client will become liable to pay remuneration.
Amount of agent’s remuneration.
Particulars which don’t form part of agent’s remuneration e.g. marketing exp.
Nature of instruction (eg sole)

Question 28

What is the purpose of the Consumer Protection from Unfair Trading Regulations 2008

Answer 28

They protect consumers from unfair or misleading trading practices and ban misleading omissions and aggressive sales tactics

Question 29

What is the purpose of the Business Protection from Misleading Marketing Regulations 2008?

Answer 29

prohibit misleading business-to-business advertising and impose further restrictions on how businesses compare their products to rival products from other companies.

Question 30

How would you satisfy your obligations under the:

Consumer Protection from Unfair Trading Regulations 2008?

What is the purpose of the Business Protection from Misleading Marketing Regulations 2008?

Answer 30

To satisfy your obligations under the CPRs and BPRs, you need to treat consumers, business customers and competitors fairly. It will help if you can show that you act diligently, in keeping with any professional standards and taking reasonable steps to avoid committing a breach

Question 31

What is a Statutory Declaration?

Answer 31

A statutory declaration is a formal statement made affirming that something is true to the best knowledge of the person making the declaration.

It has to be signed in the presence of a solicitor, commissioner for oaths or notary public.

Question 32

What is the contracting out procedure?

Answer 32

The landlord serves a warning notice on the tenant, with specified content, explaining that the tenant’s rights are being waived.

The tenant makes either a simple or statutory declaration to acknowledge that it understands the consequences of contracting out. A simple declaration can only be made if the tenant has received the warning notice at least 14 days before the grant of the lease.

The lease includes an endorsement referring to the landlord’s notice and the tenant’s declaration and the parties’ agreement that the relevant provisions of the 1954 Act are to be excluded from the lease.

Question 33

What is a licence of alterations? What does it include?

Answer 33

Often in Commercial Property, a tenant may require certain alterations to the property they occupy under a lease.

To carry out these alterations, the tenant will likely need the consent of the landlord.

This consent will come in the form of a document called a ‘Licence for Alterations’.

Question 34

What are the effects of London College of Business Ltd v Tareem Ltd 2018?

Answer 34

The effect of a parties’ arrangement in practice was more important than any labels attached to it by the parties.

Question 35

What is the timeline for a letting?

Answer 35

Receive instructions from the client
Check competence / independence / conflicts of interest / money laundering
Issue Terms of Engagement to the client and request confirmation in writing
Inspect in accordance with the RICS Guide to Surveying Safely (guidance note). There are 4 stages of inspection
Measure in accordance with IPMS / the Code of Measuring Practice (NIA / GIA)
Note agents boards and get comparable evidence
Market Rental Valuation (NOT Red Book as this is for Agency purposes)
Report to the client and put together draft letting particulars in accordance with legislation
Carry out viewings and deal with enquiries
Receive offers and advise clients accordingly
Bear in mind rent, lease length, covenant strength
Draft heads of terms and circulate
Assist client’s solicitor on pre-contract enquiries

Question 36

Describe a Typical Development Appraisal of an office property from Start to Finish: (Assume you are paying X for a piece of land and the Y is the target (Profit/Return).

Answer 36

Describe a Typical Development Appraisal of an office property from Start to Finish: (Assume you are paying X for a piece of land and the Y is the target (Profit/Return).

A
(1) Acceptance of the instruction, COI check, terms of engagement, understanding of the key requirements of the client, crucially for the appraisal: Profit desired (or profit on cost, or ROCE) I.e. what they are trying to achieve, build costs based on contractors quotes received, timing, cost of finance – the inputs that may be more specific to them and qualified with quotes / previous experience of the developer.

AND what you are targeting – are you trying to establish how much they should pay for a site, or how much profit you would be able to make.

(2) Calculation of Gross Development Value (MR * Cap Rate)

your MR would come from comparable evidence
your cap rate would also come from comparables – cap rate would be described as a NIY or All-risk yield (implicit in the yield are all factors).
(3) Establish full costs of the development:

Cost of the Land inc acquisition costs
Cost of construction.
Contingencies
Professional Fees
Cost of Finance (Straight line compound for the development land, but S-Curve construction costs because of the timing of the drawdown)
Cost of sales agent
Letting fees (10% of Y1 rent)
Void/Holding Cost
(4) Calculate profit on cost of the development, and then make and report an assessment of viability on the site.

Question 37

What document has RICS published on Design and Specification?

Answer 37

RICS guidance note on Design and Specification 2013

Question 38

What is the RIBA Plan of Work?

Answer 38

The RIBA Plan of Work organises the process of briefing, designing, delivering, maintaining, operating and using a building into eight stages.

Question 39

What are the stages of the RIBA Plan of Work?

Answer 39

Strategic Definition
Preparation and Briefing
Concept Design
Spatial Coordination
Technical Design
Manufacturing and Construction
Handover
Use

Question 40

What is a specification?

Answer 40

Specifications describe the products, materials, and work required by a construction contract.

They do not include cost, quantity, or drawn information, and so need to be read alongside other information such as quantities, schedules, and drawings.

Question 41

What is a perscriptive specification?

Answer 41

A perscriptive specification is where the design is already complete.

Prescriptive specifications typically contain detailed descriptions of the following components:

General requirements relating to regulations and standards.
The type of products and materials required.
The execution and installation methods required.

Question 42

What is a performance specification

Answer 42

A performance specification gives the contractor and suppliers more scope to innovate and adopt cost effective methods of work, potentially offering better value for money.

Question 43

Can you give me some examples, pros and cons of MMC?

Answer 43

CLT

Pros: high strength-to-weight ratio, timber is a carbon sink - sustainable

Cons: Less thermally efficient than concrete

Offsite modular building

Pros: Building offsite within a controlled factory environment minimises risk, resulting in a faster build programme, assured quality control and enhanced build performance standards.

Cons: Offsite manufacturing requires a large investment up front and returns over the long term, so you need a stable market

Question 44

Why will the sale of fluorescent lights be banned in the UK from September 2023?

Answer 44

Restriction of the use of Hazardous Substances directive bans the sale of fluorescent lights from 1 September 2023