New case study questions Flashcards
Can you provide a brief explanation of why a sale independent of the adjoining landowner was ruled out?
We ruled out an independent sale because the building was half on land we owned and half on land the estate owned. Due to its listed status demolition was not an option so there was a clear marriage value present. Any purchaser might have been put off due to the risk of purchasing a property which partially lies on land they don’t own.
I didn’t quantify any marriage value because I didn’t believe it was a case of assess how much of an uplift a joint sale would achieve but more that if we didn’t sell jointly that it would dimmish value. So a joint sale was a clear option.
Was there any indication of the uplift in value that would be achieved by removing the equipment? Presumably it was less than £60k-£65k?
This was a question I considered. The advice that I got from Bell Ingram was that it would be a risky investment as we would likely only get a nominal increase in value. There would be a risk that the additional capital receipt might not cover the full costs of removing the tanks.
How were negotiations with the adjoining landowner approached?
I began with reviewing the different land holdings. Whittingehame Estate held a larger title area in comparison to Scottish Water however Scottish Water controlled the access to the site. As there was no other access route with the estates side being bound by the burn they could effectively be held to ransom. I also considered SW objectives, we wanted to achieve a quick disposal, and I felt keeping a good relationship with the estate would be key. I did not feel it was worth going in with a low offer. On that basis we went in with a proposal for a 50/50 split which was agreed by the estate.
What was the outcome of planning investigations?
We got an initial desktop planning review from our planning consultant who was off the opinion that planning would be supported under the guidance subject to the proposal not adversely affecting the historic character of the building in line with Policy CH1.
Any development to a grade A or B listed building requires the consultation with HES so we engaged with them, and they expressed that they would be supportive of a development subject to it not affecting the character. They advised that we need to submit a method statement of how any work would be carried out.
I then engaged with a contractor and arranged for a site visit with the planning consultant and them to discuss how the work would need to be done. A method statement was written up which detailed how the Northern Elevation would have to be excavated to remove the tanks.
A method statement was written up based on the contractors advise and submitted to HES. They came back to say they a structural engineer would need to provide comments on the work.
At this point I decided to review the costs, up until now we had only incurred planning costs based which were minimal. Based on level of work and quotes we received from the contractor I carried out and option appraisal which highlighted it would be best for Scottish Water to leave the machinery in situ.
How did the method statement detail the work to be carried out and what was the response of the council?
The method statement detailed that the northern wall would have to be excavated to remove the tanks whole one by one and dismantle them outside.
HES wanted more information and supporting information from a structural engineer.
Did you consider securing planning permission for change of use?
Yes it was considered and while I was off the opinion the alternative use would be residential I could not say that for certain.
We had the emails from the council suggesting they were supportive of a change of use subject to the correct method and the planning policy clearly supported it. This offered enough hope value.
I did not feel that applying for a change of use would have been of any benefit when we were not carrying out any of the other work.
Did you consider the development of the wider site?
Yes, I did consider this- while it is not work Scottish Water would carry out, I look at an enabling project when I was doing my residual valuation to check the EMV. Hypnotically the area to the east could be developed subject to planning. The area to the south behind the neighbour’s garden is populated with mature trees with a very steep embankment on one side, so I did not consider development here.
The costs associated with developing the wider site were high. There was significant remedial work needed to infill the 4 large tanks, the topography of the rest of the site would have to be levelled, ecological surveys would be required because of the proximity to the burn. The planning costs and build costs would be higher with it being in the curtilage of a listed building it would have to be finished to a higher standard. Based on all this developing the tank area did not offer any uplift.
Why do you think there was such a significant difference between the guide price and what the property achieved
I believe there could be a few reasons for this.
Firstly, I was working with the quotes that Scottish Water received from one of our framework contractors but as I highlighted with use of the sensitivity analysis any slight change in the puts had a significant impact in the residual value. I can only assume the purchaser was working with slightly more favourable variables that us.
We are also aware that the individual l who purchased the property is particularly well off so it might simply be the case that they were willing to pay over and above and were not concerned with making a profit.
How did you measure the NIA
I measured the NIA for valuation and marketing purposes.
I did so by measuring to the internal face of the perimeter wall to work out the usable floor area. I excluded the pillars, toilet and internal structural walls.
I included the hallway because it is not used in common and the stairs because they are located in usable areas.
What was the current use classification?
The building was currently use class 5 General industrial If we did consider a change of use to residential it would have been to Class 9 Houses
How did you go about obtaining contractors quotes?
A contractor was selected from our RAP framework based on skills and specialisms
How did you employee the BICS tables?
Bell Ingram provide a complete property service for us so I asked one of their surveyors to provide the BICS figures over the period since the original quotes to ensure my valuation was accurate.
Why was there a difference between the NIA area of the whole building you had measured compared to SVA’s?
SVA’s figure listed in the marketing material is the GEA (I assume it doesn’t actually say) and the figure I used in my residual valuation was the NIA (or part of it as only west wing was used)
Can you talk us through a complication you came up against?
Yes – there was an error in the title sheet of the neighbouring property. It was not something that was initially noticed from the plans report because it was not an overlap, so it was something I noticed a site visit later. They had the correct written of the ownership and access rights associated with the septic tank and gas tank however it referred to the wrong colours on the plan mixing the two up. I got legal advice on the matter, and they advise if we were to sell with a plan matching the register it would not show any conflict, but we would be selling with a title error. The other option was to sell it as is but disclose the error to purchasers with no guaranteed SW would rectify.
I opted for option two because of the time constraints. I did engage with the millers who were open to title rectification as they too wanted to correct their title. However, understandably they wanted to get independent legal advice on the matter and due to the time constraints, we were advised from our solicitors that it was unlikely to get resolved in time for auction.
I did not believe it was likely to put purchasers off as they were already taken on a significant project and in the grand scheme of things this was a relatively easy issue to fix we just did not have the time. Based on this we proceeded with option 2.
How did you identify the comparables use in the valuations?
I sourced comparables by looking on right move, zoopla and ScotLIS at recently sold properties in the areas. I also engaged with Bell Ingram to ask if they had any comparable evidence for 4-5 bed properties in the East Lothian area.
