Random Q’s

Question 1

What is empty rate relief for Offices/Retail & what about for Industrial?

Answer 1

3 month offices
6 month industrial

Question 2

What are the five methods of valuation?

Answer 2

Comparable
Contractors
Investment
Profits
Residual

Question 3

What are the five methods of valuation?

Answer 3

Comparable
Contractors
Investment
Profits
Residual

Question 4

How do you calculate AWULT?

Answer 4

Multiply the annual rent paid by each tenant by the number of years remaining on their lease.

Add them all up - to get the overall.

Divide this total by the sum of annual rents paid by all tenants to find the AWULT.

Question 5

What void costs did you apply on different examples?

Question 6

What makes up Purchaser costs?

Answer 6

Agent Fee 1.0%, Legal Fee 0.5% and Stamp Duty (we have an in house calculator)

Question 7

Cap rate vs yield

Question 8

What is a NIY? What are the limitations of referring to NIY’s when analysing comps?

Question 9

When will the new red book become effective? What changes will be issued?

Answer 9

Effective from the 31st January 2025

-Revised structure and increased focus on ESG, Data and valuation modelling;
-Consider evolving tech such as AI and automated valuation models;
-VPS 1-5 changes to VPS 1-6. This will involve VPS 5 being split up. Becoming VPS 3 - Valuation approaches and methods and VPS 5 - Valuation Models

Question 10

What is currently happening with mandatory RICS Professional Standard - Property Measurement, 2nd edition, 2018?

Answer 10

Currently being updated.
RICS firms and surveyors should adopt appropriate measurement’s from IPMS: All Buildings of RICS Code Of Measuring Practice.

Expected:
COMP - Retail / Industrial
IPMS - Offices / Residential

+Document if you deviate from IPMS

Working on new Code of Measuring Practice 7th edition which combines COMP and IPMS

Question 11

What is the Bank of England interest rate?

Question 12

How has the autumn budget impacted on the built environment?

Answer 12

-Assigning £46 million to boost capacity and capability in local planning authorities;
-Specific to me they are securing delivery of the transpennine route upgrade and marinating progress on Northern Powerhouse Rail;
-SDLT on second homes go from 3% to 5%;
-Inheritance tax up to one million will have tax relief, past that it will be 50%.

Question 13

How are the RICS Valuation Global Standards structured?

Answer 13

Introduction
Glossary
Professional Standards (PS): 1-2
Valuation technical and performance standards (VPS): 1-5
Valuation Practice Guidance Applications (VPGA): 1-10
International Valuation Standards

Question 14

Types of sensitivity analysis?

Answer 14

Simple sensitivity - analysis of key variables (yield, GEV, build costs and finance)

Scenario analysis - change scenarios for the dev timing/costs, such as modifying the its design

Question 15

People in your company - complaints, health and safety, Responsible Principle…

Answer 15

H&S - David Baldwin
Complaints - Usha De Souza
Responsible Principle -

Question 16

DCF

Answer 16

Growth explicit investment method of valuation. Form of income approach.

Used for short leasehold interests and properties with complex income voids and tenures. Also, for non-standard investments.

Methodology -

Estimate cash flow for an agreed period.
Estimate the exit value
Select the discount rate
Discount cash flow at discount rate
Value = the sum of the completed discounted cashflow to total NPV
Should show if then be able to establish if the IRR is positive or negative.