Professional Statements, Guidance Notes and Laws Flashcards
Level 1 APC
What is a balance sheet?
It is shows the assets and liabilities of a company at a certain period of time, usually at the end of a financial year.
What is a profit and loss account?
It is a summary of a business’s income and expenditure transactions, prepared usually on an annual basis. It is also known as an income statement.
What is PACT?
Professional Arbitration on Court Terms - a scheme offered by RICS as a form of alternative dispute resolution for lease renewal disputes. PACT offers a quick, efficient and cost- effective solution to your commercial lease renewal dispute.
What is the difference between an Arbitrator and an Independent Expert?
Arbitration is suitable for disputes where the evidence is less straight forward or legal issues are more complex. An Independent expert’s determination is quicker and cheaper, specialist knowledge (valuation or construction defects etc).
Arbitrator can award costs as he wishes, there’s a limited right to appeal. Arbitrator cannot be liable for negligence and cannot be sued, has full power sof disclosure. Acts within the Arbitration Act 1996. Acts on evidence provided. The outcome is called an award.
Independent expert can award costs in accordance to the lease terms. No right of appeal. Can be sued (liable for damages as result of negligence), no powers of discloses. Can use its own knowledge and expertise to reach its decision and does not have to simply consider only the evidence provided.
Outcome – called a decision.
What are the main principles for GDPR?
General Data Protection Regulation’s implementation and UK / Jersey Data Protection Act 2018 states:
Fair and lawful processing;
Purpose limitation;
Data minimisation and
Data retention.
How do you ensure an inclusive environment?
Adhere to the Equality Act 2010 and it’s main principles:
Do not discriminate due to Age, Disability, Sex, Race, Religion etc
What does RICS do to ensure diversity and inclusion?
RICS has a scheme called ‘inclusive Employer Quality mark’ to improve diversity and inclusion. The scheme requires employers to pledge their commitment to adopting and continually improving against the following six principles:
Leadership and vision
Recruitment
Stall Development
Staff retention
Staff engagement
Continuous improvement
How do you handle a complaint?
PwC’s complains procedure: The complaint is logged in the complaints handling log, escalated to my director, if the issue remains it is further elevated to the partner who is the complaints handling offices for the form.
How do you ensure sustainability in valuations?
EPC minimum standard E in the UK. B in 2023.
JEPA’s to be introduced in 2026.
UK’s government to reduce carbon emissions level to 100% by 2050 to a 1990 base level or 78% in 2023.
How do you ensure integrity?
I comply with the Bribery Act 2010 and my firms policies on receiving gifts.
The main principles being:
Principle 1: Proportionate Procedures.
Principle 2: Top Level Commitment.
Principle 3: Risk Assessment.
Principle 4: Due Diligence.
Principle 5: Communication (including Training)
Principle 6: Monitoring and Review.
What are the four main offences defined by the Bribery Act 2010?
Bribing another person. …
Being bribed. …
Bribing a foreign public official. …
Failure by commercial organisation to prevent bribery.
What is RICS Rules of Conduct?
Act with Integrity
Always provide a high standard of service
Act in a way that promotes trust in the profession
Treat each other with respect
Always take responsibility
What does RICS professional statement say about countering bribery, corruption and money laundering?
- Zero tolerance
- Compliance with laws and regulation in your jurisdiction
- Risk management
What can you tell me about PII?
Firms must ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity cover that meets the standards approved by RICS.
It’s on a every claim basis. Run-off cover of 6 years is required.
How did you handle a conflict of interest?
Immediately disclose the potential conflict of interest to both the seller and the buyer. Transparency is crucial to maintaining trust and professional integrity.
Provide written disclosure to both parties detailing the nature of the conflict and how it might affect the transaction.
Advise both clients to seek independent professional advice from another surveyor outside the firm before proceeding with the instruction.
If the clients wants to proceed - Set out proposals for dealing with the conflict (Information barrier).
Obtain written consent from both the seller and the buyer acknowledging the conflict of interest and agreeing to proceed with the transaction despite the potential conflict. Ensure that both parties understand the implications and their rights
What difference conflict can occur?
Personal Conflict of Interest: When a surveyor’s personal interests might influence their professional judgment or actions. For example, having a financial stake in a property being assessed.
Professional Conflict of Interest: When duties to one client conflict with duties to another, or when the surveyor’s professional obligations conflict with their personal interests.t.
What can you tell me about the Red Book?
RICS Global valuation standards 2021, effective 2022.
To promote and support high standards in valuation delivery worldwide. The publication details mandatory practices for RICS members undertaking valuation services.
What is the UK supplement?
Valuer’s rotation was introduced in May 2024. 5 years for individuals and 10 for firms of financial reporting valuations.
Was is the IVS? And what new chapters are included?
The International Valuations Standards Council (IVSC) develops and sets the international technical and ethical standards for valuations.
The latest version was published in January 2024 and will be effective January 2025.
In what is a significant update, the latest version includes new chapters on Data & Inputs, Documentation, and Financial Instruments.
What is VPS5?
5 valuation approaches
1. Comparative
2. Investment
3. Cost
4. Profit
5. Residual
What is VPS4?
Dictates the basis of value.
Market value
Market rent
Investment value
Fair value
Define Market Value
The estimated price in which a property should sell for in an arm’s length transaction, between a willing seller and a willing buyer, at the valuation date, after proper marketing, where the parties have acted prudently, knowledgeably and without compulsion.
Define Investment Value
Investment value is the value that an investor is willing to pay to obtain an asset or investment. It is based on the individual’s subjective goals, criteria, and opinion about the asset.
Define Fair Value
The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
Define Market Rent
The rent that would be received on the valuation date between a willing lessor and willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had
each acted knowledgeably, prudently and without compulsion.
What can you tell me about DCFs?
Discounted cash flow (DCF) is a valuation method that estimates the value of an investment using its expected future cash flows.
How do you undertake an inspection and what do you adhere to?
RICS guidance note for surveying safety, 2018.
Risk assessment - Assessing hazards and risks
Put the inspection in my open diary
Ensure I tell someone where I was going and for how long
Wear appropriate protective clothing (PPE)
Consider whether safe to inspect alone.
What do you adhere to when undertaking measurements?
RICS Property Measurement (2nd Edition) (2018) and International Property Measurement Standards (IPMS).
The Code of Measuring Practice is still relevant to certain types of property but is now a separate document.
What is IPMS1?
The sum of the areas of each floor level of a building measured to the outer perimeter of external construction features and reported on a component basis on each floor.
What is IPMS2?
The sum of the areas of each floor level of an office / residential building measured to the internal dominant face reported on a component-by-component basis for each floor of a building.
What is the difference between GEA (Gross External Area) vs IPMS 1?
Measures the total external area of the building, similar to GEA, but may include additional elements like balconies (but stated separately) and accessible rooftop terraces.
What is the difference between GIA (Gross Internal Area) vs IPMS 2?
Similar to GIA but provides more clarity for international comparisons by excluding external walls and emphasising the use of internal floor space for specific functions (e.g., office vs. industrial). Includes Area occupied by the reveals of windows when measured and assessed as the internal dominant face if more than 50% of the wall.
What is IPMS3?
The floor area available on an exclusive basis to an occupier, but excluding standard facilities and shared circulation areas, and calculated on an occupier-by-occupier or floor-by-floor basis for each building.
IPMS 3 vs NIA
Very similar to NIA but is more standardised for global use. It also excludes shared spaces, focusing on the area available exclusively to the tenant.
What 5 standards do you adhere to when undertaking a letting?
Real Estate Agency and Brokerage 2016
UK Commercial Real Estate Agency 2016
Estate Agency Act 1979
Code for Leasing Business Premises in England and Wales 2023
Unfair trading 2008
Tell me about Real Estate Agency and Brokerage 2016
Members must:
1 Conduct business in an honest, fair, transparent manner.
2 Carry out work with due skill, care and diligence
3 Ensure that clients are provided with terms of engagement which are fair and clear. These should meet all legal requirements including reference to complaints-handling procedures
4 Do the utmost to avoid conflicts of interest and, where they do arise, deal with them openly, fairly and promptly.
5 Not discriminate unfairly in any dealings.
6 In all dealings with clients, ensure that all
communications are fair, clear, timely and transparent.
7 Ensure that all advertising and marketing material is honest, decent and truthful.
8 Ensure that all client money is held separately from other monies in appropriately designated accounts and is covered by adequate insurance.
9 Have adequate and appropriate professional indemnity insurance or equivalent in place that complies with the RICS Rules of Conduct. Having proper cover is a key
part of managing your risk.
10 Ensure that it is made clear to all parties with whom you
are dealing the scope of your obligations to each party.
11 Where provided as part of the service, give a realistic
assessment of the likely selling, buying or rental price,
associated cost of occupancy or of the likely financial
outcome of any issues, using best professional
judgment.
12 Ensure that all meetings, inspections and viewings are
carried out in accordance with the client’s lawful and
reasonable wishes, having due regard for
What are the compliance requirements of the Estate Agency Act 1979?
The requirements cover set fees, how costs are calculated, additional charges, etc. The Act also requires estate agents to declare any personal interest in a transaction and the services provided to the other party.
What is the Code for Leasing Business Premises in England and Wales 2023 and its requirements?
The Code for Leasing Business Premises in England and Wales by the Royal Institution of Chartered Surveyors (RICS) represents commercial landlords and commercial tenants. It is in place to try to:
encourage fair commercial leases for both landlords and tenants;
ensure a clear head of terms;
ensure that parties adhere to the lease;
make landlords and tenants more aware of typical property issues; and
help commercial tenants negotiate good deals in commercial property space.
In addition to an introduction, the Code consists of three parts:
mandatory requirements for commercial landlords;
best practice for landlords;
appendices with a heads of terms template, a checklist and guide for landlords and tenants on commercial leases.
What is the UK Commercial Real Estate Agency 2016 and the responsibilities for a commercial agent?
The Professional statement sets out the responsibilities of commercial property agents to ensure they are working to the highest ethical and professional standards.
1 Conduct business in an honest, fair, transparent and professional manner.
2 Carry out work with due skill, care and diligence, and ensure that any staff employed have the necessary skills to carry out their tasks.
3 Ensure that clients are provided with terms of engagement which are fair and clear.
What is the Unfair Trading Regulations Act 2008?
They impose a general prohibition on traders in all sectors from engaging in unfair commercial practices with consumers. Specifically, they protect consumers from unfair or misleading trading practices and ban misleading omissions and aggressive sales tactics
What do you adhere to when undertaking property management?
RICS Service Charge in Commercial Property 2018 (reissued 2023)
and Commercial Property Management in England and Wales 2011
What can you tell me about RICS Service Charge in Commercial Property?
This document was reissued in September 2023 as a professional standard from 2018.
The aims and objectives of this professional standard are to:
- improve general standards and promote best practice, uniformity, fairness and transparency in the management and administration of services charges in commercial property
- ensure timely issue of budgets and year-end certificates
- reduce the causes of disputes and to provide guidance on resolution, and
- provide guidance of service charges in the negotiation, drafting, interpretation and operation of leases, in accordance with best practice.
What can you tell me about Commercial Property Management in England and Wales 2011?
This guidance note details best practice in the management of commercial property, with particular emphasis on how the person(s) in control of a building should manage, communicate and control income and expenditure.
Chartered surveyor managing agents should adhere to these key principles:
- Manage the property on behalf of the landlord
- Manage third party suppliers to carry out those operations that property managers do not do themselves
- Provide a primary duty of care to the landlord, secondary responsibility to the occupiers and, in some cases, a duty of care to parties providing finance for the properties being managed
Commercial property managers’ core duties include?
Liaising with and reporting to the landlord
Collecting monies
Clients’ accounts
Dealing with defaulting occupiers
Service charges
Deposits held
Managing the building(s) and policies
Insurance relating to the property
Liaising with occupiers
Energy management
Building management systems (IT)
Health and safety/fire safety
Management fees
What is the difference between Residual and Development appraisal?
A residual is based on the valuer’s inputs and is for a practical purpose. A development appraisal will be on costs provided by your client. You are able to play around with the costs to achieve your desired profit levels. Development appraisal is usually based on the clients inputs.
How do you value a development property and what do you adhere to?
I adhere to RICS Professional Standard valuation of development property 2018 and the red book.
The two main valuation methods are the comparable and residual methods. Ideally, both methods should be used to ensure that the end value is cross-checked appropriately.
The Guidance Note explores the due diligence required for development property valuations, ensuring that appropriate assumptions and special assumptions can be made.
It also discusses how to assess development potential, including seeking advice from external specialists, e.g. planning consultants.
A development property is defined in IVS 410 as?
‘interests where redevelopment is required to achieve the highest and best use, or where
improvements are either being contemplated or are in progress at the valuation date and
include:
a the construction of buildings,
b previously undeveloped land which is being provided with infrastructure,
c the redevelopment of previously developed land,
d the improvement or alteration of existing buildings or structures,
e land allocated for development in a statutory plan, and
f land allocated for a higher value use or higher density in a statutory plan.’
What are the four main options for development property which are likely to influence the valuation approach and outcome?
To develop
Develop in phases
Sell or dispose
Defer or wait.
What should be included when carrying out valuations for commercial secured lending purposes?
Any previous (past 2 years) current or anticipated involvement with the perspective borrower or the property to be valued must be disclosed to the lender. Or a statement that the valuer has no involvement.
Current marketability of the property
Current market trends
Whether the property is suitable for mortgage purposes
Any special assumptions made
Any matters that might affect the valuation.
Valuation methodology used.
Potential alternative uses or changes of use.
Assumptions and recommendations regard future repairs / disrepair.
How do you undertake a secured lending valuation and what do you adhere to?
the Red Book and the provisions in VPGA 2, Valuations for Secured Lending.
Provides guidance on valuations specifically for secured lending, i.e., when a property is used as security for a loan.
2. Instructions and Terms of Engagement
Valuers must receive clear, written instructions from the lender, outlining the purpose, scope, and terms of the valuation.
The terms of engagement should specify the basis of value, assumptions, special instructions, and the extent of investigations.
3. Basis of Value
Market Value (MV): Most commonly used basis for secured lending, reflecting the estimated amount the property would sell for on the valuation date.
Other bases of value, such as Market Rent (MR) or Fair Value, may be used if specified and agreed upon.
4. Assessment of Risk
The valuer must assess any risks that may affect the property’s value, such as market conditions, property condition, legal issues, or economic factors.
Special attention should be paid to factors that could impact the property’s ability to generate income or be sold in the event of a loan default.
5. Valuation Assumptions and Special Assumptions
Clearly distinguish between standard assumptions (e.g., property is free of defects unless otherwise stated) and special assumptions (e.g., assuming a lease is in place).
Any assumptions made should be explicitly stated and justified within the report.
6. Property Inspection
An adequate inspection must be carried out to understand the property’s condition, layout, and any factors that might affect its value.
The level of inspection should be appropriate to the nature of the property and the lender’s requirements.
7. Valuation Approach and Methodology
Use appropriate valuation methods, such as the comparison method, income approach, or cost approach, depending on the property type and available data.
Justify the choice of methodology and ensure it aligns with the property’s characteristics and market context.
8. Report Content and Format
The report must be clear, comprehensive, and tailored to the needs of the lender.
It should include details such as the basis of value, methods used, supporting evidence, risk assessment, and a statement of compliance with the RICS Red Book.
9. Compliance and Ethics
Valuers must comply with the RICS Red Book standards, relevant regulations, and ethical requirements.
The report should include a statement confirming compliance with RICS standards and the qualifications of the valuer.
10. Confidentiality and Data Protection
Maintain confidentiality of all information provided by the lender and other parties involved.
Ensure compliance with data protection regulations when handling sensitive data.
What do you adhere to when undertaking real estate consultancy?
I have been part of a wide range of consultancy work, such as Employer’s Agent Services for the new IFC building I adhered to RICS standard form of consultant’s appointment 2022.
What is the role of RICS?
Three main roles:
1. Maintain highest standards of education and training
2. Protect consumers through regulation and standards
3. A leading source of information and independent advice on property
Who is the current RICS president?
Tina Paillet
Are you aware of any RICS guidance that applies to RICS members when using social media?
RICS introduced Guidance note ‘Use of Social Media: Guidance for Members Version 1’ effect from June 2021. Still adhere to the Rules of Conduct when using social media
What does good governance mean to you?
The need to ensure that there is clear transparency amongst all stakeholders and a structured process for decision making.
What do you understand by the term self-regulation?
Self-regulation means that an organisation can operate within its own published regulatory framework, rather than being legislated by the government.
What is the purpose of Professional Indemnity Insurance?
Protect insured member pr firm against liability to pay damages.
Can you tell me about the RICS requirements in relation to PII?
All firms must have PII.
All policies must be underwritten by a RICS approved insurer.
What would you do if you received a notice of a PII claim from a client or their solicitor?
Follow my firm’s complaints handling procedure and Inform insurers immediately.
How do you undertake anti-money laundering checks?
Requesting individuals’ ID and proof of address or confirmation of a business’s details. Copies of this documentation must be kept for five years from the end of the business relationship or completion of the transaction.
What is negligence?
Failure to provide services with the standard of skill and care that would be expected from a reasonable body of the professional’s peers.
What are Terms of Engagement?
Every single client instruction must be formalised in writing, using terms of engagement. These set out the key terms agreed between the client and surveyor, in addition to limitations on liability and other caveats applying to the instruction.
What is the limitation Act 1980?
Outlines the limitation periods for negligence: Contract - 6 years from date of negligence. Tort - 6 years from date the claimant suffered the claim.
What H&S Legislation are you aware of? And how do you comply with it?
H&S at Work Act 1974 - duty of every employer to ensure so far as reasonably practicable the health and safety and welfare at work of all employees.
I undertake Risk Assessments prior to going on inspections. Comply with my firm’s health and safety procedures. I have the relevant PPE required.
What is Personal Protective Equipment (PPE)?
PPE is protective clothing, helmets, goggles, gloves, high vis to protect the body from injury.
Tell me something you understand from reading RICS Surveying Safely Guidance 2018?
it provides advice on personal safety and requirements for firms to provide a safe working environment.
1. I undertake risk assessment prior to leaving
2. I inform a colleague of where I am going and update my outlook calendar
3. I wear appropriate clothing
What is a risk assessment and what does it include?
It is a legal requirement for organisations employing more than 5 people. Must carry out documented health and safety risk assessments of all significant hazards.
- Identifying any potential hazards.
- Decide who might be harmed and how.
- Evaluate the risks and decide on control measures.
- Record your findings and implement them.
- Review your assessment and update if necessary.
What is the difference between a risk and a hazard?
A risk is the probability that someone will be harmed. A hazard is anything that has the potential to cause harm.
What is asbestos?
Asbestos is an insulating material which can cause serious health problems and fatal diseases.
What do you understand by the Control of Asbestos Regulations 2012?
The Control of Asbestos Regulations 2012 placed legal duties on duty holders to manage asbestos in non-domestic properties and prevent risk exposure to employees who carry out works in a building; Anyone involved in the management or maintenance of buildings have a duty to manage asbestos; and They are required to undertake a management survey.
Who is the duty holder?
The duty holder is the owner of the premises if vacant or a tenant if holding a repairing lease.
Q. What are the two types of asbestos survey?
- Management survey – to locate and assess asbestos during normal occupation ; 2. Refurbishment/demolition survey – samples of materials expected of containing asbestos are taken and analysed.
Tell me about your understanding of fire safety?
Regulatory Reform order 2005 and the Fire safety act 2021. Following Grenfell there has been a significant importance that all owners, landlords and managers of properties have robust fire assessments.
When was asbestos banned?
1999
Who is a responsible person?
Employer if workplace is under their control; The person in control of a premises; and Where person has tenancy obligations to repair.
What is your understanding of a corporate structure?
Different types of corporate structures include: Hierarchical Structure, Flat Structure, Functional Structure, Team-Based Structure.
PwC operates under a networked corporate structure, which is common among large professional services firms. PwC is organized as a partnership rather than a corporation. This means that the firm is owned by its partners, who share in the profits and responsibilities of the business. Each partner typically has a stake in the firm and plays a role in its governance.
PwC operates as a global network of member firms, each of which is a separate legal entity. These member firms are locally owned and managed but are united under the PwC brand and adhere to common standards and policies. This structure allows PwC to maintain a strong local presence while benefiting from the resources and expertise of a global network.
PwC’s services are divided into several key functional areas.
What forms of taxations are you aware of in work?
SDLT – paid on completion of a purchase – know basic rates / VAT – value added tax on goods and services – 20%, GST in Jersey / Council tax – banded per property / Inheritance tax – property purchasers – date of death
How do you determine the covenant strength of a tenant?
- References
- Ask an accountant to check at least 3 years of audited accounts
- KYC - check JFSC register and google the members
Why do you need Business planning?
To achieve corporate objectives, identify new business opportunities, improve existing business etc.
How would you avoid a conflict?
Clear and concise documentation and terms; Managing expectation; and Careful negotiation
Tell me what you understand about Complaints Handling Procedure?
It is mandatory and must be approved by the RICS. Must be within the ToE and issued in ToB. Firms must include an RICS approved Alternative Dispute Resolution method. Complaints to be acknowledged in 7 days and investigated within 28 days.
What is an ADR and why would it be used?
Alternative dispute resolution – if falls outside litigation. Advantages – speed, less cost, more opportunity for negotiation.
What does GDPR applies to?
GDPR applies to personal data
What is the meaning of non-disclosure agreements?
Used to protect against the disclosure of sharing of any confidential information. Prior to the confidential data being shared with a recipient, clients will typically request that the recipient signs up to an NDA. They are often used when confidential, sensitive, innovative or intellectual property information is being shared to prevent this information being used by competitors.
What is unconscious bias and how can you reduce it?
Unconscious bias is where one person favours another person due to them having similar characteristics or traits as them. To reduce it: Be aware: 1) Recognize that you can have unconscious biases and try not to let them affect your decisions or behavior. 2) Question your perceptions: Re-evaluate your experiences and consider how you’re reacting to a situation. 3) Avoid assumptions: Don’t assume you know best or rely on your gut instinct. 4) Look for facts: Be open to seeing and hearing what’s there.
What is the principal system to measure sustainability in the UK and global? What is the highest rating?
BREEAM or EPC, LEED globally.
Outstanding and A
Which RICS guidance covers carbon assessments?
RICS whole life carbon assessment (WLCA) standard, 2nd edition in full effect from 1 July 2024. A standard for consistent and accurate carbon measurement in the built environment to deliver a net-zero future for the built environment.
What are the methods of valuation?
Comparative / Residual / Investment / Profits / DRC– Depreciated Replacement Costs
How do you value using DRC?
The DRC method is used to value specialised properties with no comparable sales data. It involves the following steps:
- Value land in its existing use
- Add current cost of replacing the building (BCIS)
- less a discount for depreciation and obsolescence / deterioration (BCIS)
How do you value using investment method?
Investment method is used when there is an income stream to be valued, rental income is capitalised.
How do you value using profits method?
- Calculate NOI
- Less tenants / share
- Adjusted net profit capitalised by the appropriate yield
How do you value using residual method?
Residual method is used for developments to find the land value. GDV minus costs & profit
What is the statutory due diligence for a valuation?
Used to check there are no material matters which could impact valuation: Asbestos; Contamination; Environmental issues; EPC rating; Fire Safety; Legal Titles and Tenure – boundaries, ownership, Rights of way.
What is included in a term of engagement for a valuation?
Client name, property address, valuer, date of valuation, bases of valuation, fee, any special assumptions, PII insurance.
What must be ensured before starting a valuation instruction?
Competence. Independence ( C of I) and Terms of Engagement.
When did the new Red Book come into effect – what are the key differences?
2021 - Effective Jan 22. Changes regarding ESG and Sustainability changes to inspection and reporting regarding ESG and Sustainability factors for LSV – ESG and sustainability should form an integral part of valuation.
