Randoms Flashcards

1
Q

Upcoming changes to the RICS governance structure? - as a result of the Bichard Review 2022
(4)

A
  • The governing council is to be advised by a ‘public interest panel’ as a result of the Bichard Review 2022
  • Establishing the ‘knowledge and practice committee’ (reports to the RICS Board). Aim = to develop and improve knowledge and professional practice of surveyors.
  • Introduction of Professional Group Panels (6 related to difference service lines e.g. commercial) which enables a great role and voice for each discipline –> report into the knowledge and practice committee.
  • Merging the Remuneration Committee and the Nominations Committee to make the ‘Nominations and Remuneration Committee’.
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2
Q

What is the purpose of PII?

A

To protect against professional negligence claims

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3
Q

How is PII calculated?

A

Minimum amount outlined by the RICS - must be given by an approved insurance provider:
Min limit based on turnover:
£100k or less = £250k
£100-200k = £500k
£200k+ = £1mil
Firms normally have more than the minimum to protect them against big jobs

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4
Q

What is the difference between PII and Public Liability Insurance?

A

PII is professional indemnity insurance to protect against claims of negligence from a client in professional work carried out.

Public liability insurance protects against claims arising from interactions with members of the public.

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5
Q

Who sets a liability cap and is it negotiable?

A
  • C&W set it (usually a multiple of the fee charged) (for vals it is higher - lesser of £25mil or 25% of MV)
  • Try to charge a higher fee when a client wants a higher cap.
  • Have to seek approval for higher cap via the BTR and they may/may not grant approval (and may put some conditions on the grant)
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6
Q

What is an accrual?

A

Recorded as a liability on a balance sheet - an expense that has been incurred by a business but not yet paid for (e.g. you have good from a supplier but are yet to be invoiced for them)

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7
Q

Rule 1 and example

A

Members and firms must act with honest and integrity and comply with their personal obligations, including their obligations to the RICS.

e.g. I was undertaking a valuation and the client put pressure on me to increase the value. They provided no extra evidence that could support this so I maintained integrity and reported my opinion of value.

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8
Q

Rule 2 and example

A

Members and firms must maintain professional competence and ensure services are provided by a competent individual with the necessary expertise.

e.g. When undertaking valuation work I ensure that my work is always peer reviewed and signed off by two registered valuers.

If I suspect there are structural issues with a property I inspect I will recommend they consult a specialist/building surveyor as it is not within my area of competence

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9
Q

Rule 3 and example

A

Members and firms must provide a good-quality and diligent service

e.g. providing good client care/channels of communication in agency

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10
Q

Rule 4 and example

A

Members and firms must treat others with respect and encourage diversity and inclusion

e.g. outreach groups going to talk about surveying in schools
C&W allows people from other religions to swap bank holidays like xmas with ones that are important for their religion

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11
Q

Rule 5 and example

A

Members and firms must act in the public interest, take responsilibity for their actions, act to prevent harm and promote trust in the profession.

e.g. reporting a data breach to the ICO (or just complying with DPA’18 to prevent harm)

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12
Q

what is the purpose of a liability cap?

A

It is a contract that prevents clients being able to claim the full PII that CW may have

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13
Q

Max uninsured excess amounts

A

Turnover less than £10mil = lesser of 2.5% of sum insured of £10,000
(done to prevent small firms getting lower pii policy due to a high uninsured excess they cannot pay)
More than £10 mil = no limit

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14
Q

What is the Bribery Act 2010

A

The act is in place to prevent bribery and corruption. To ensure that businesses conduct their work fairly and transparently.

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15
Q

What are the 6 principles of the Bribery Act?

A
  1. Top level commitment
  2. Due diligence
  3. High level risk assessment
  4. Proportionality (procedures should be proportional to risks)
  5. Communication
  6. Monitoring and Review
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16
Q

Limitation Act 1980 - What are the current limitation periods for negligence?

A

Contract = 6 years from date of negligent act. Section 14a provides a 3 year period from knowledge of damage (15yr longstop)

Tort = 6 years from the date the claimant suffered loss.

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17
Q

Difference between tort and contract?

A

Contract = when 2 parties enter into an agreement and one person doesn’t do their obligations

Tort = when one party commits a wrong against another (societal duty)

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18
Q

What is the RICS assigned risk pool

A

if a Member or Firm can’t get PII cover

19
Q

RICS client money handling document
(6)

A

‘Client Money Handling 2019’ professional statement.

sets out 6 main areas of good practice
- holding client money
- providing info to clients
- receipts of clients money
- payments from client account
- accounting records and controls
- compliance

20
Q

RICS regulatory review visits

A

inspection can be undertaken by RICS regulated accountant on a 3-yearly basis

21
Q

What happens to unclaimed client money? - if not claimed within 3 years

A

Donated to charity

22
Q

Definition of Bribery

A

The giving/offering/receiving of an advantage in return for something illegal or that is a breach of trust

23
Q

How to avoid negligence?
(6)

A
  • Establish client’s objectives in advance
  • Clear ToE outlining the relevant scope
  • Clear channels of communication throughout the job
  • SUK (competence)
  • Cap the PII in the ToE
  • Detailed notes
24
Q

How long does AML information need to be held for?

A

5 years

25
Q

What are the assumptions in a rent review?

A
  1. Vacant possession
  2. Fit for occupation
  3. fit out at expense of the tenant
  4. willing lessor or lessee
26
Q

Two methods of agency (selling rights)

A

Sole Selling Rights (fee during term for any purchaser and after if introduced during term)
Sole Agency Rights (fee only during term only if introduced)

27
Q

Margin of Error

A

Exceptional Features = 15%
One off commercial = 10%

28
Q

SDLT Boundaries

A

£0-£150k = 0%
£150-250k = 2%
£250k+ = 5%

29
Q

How would you value a property with a ‘green premium’

A

Hard to quantify
Look at comparables
Would refer to Sustainability and ESG in commercial property valuation and strategic advice - when reporting clearly state whether the property meets what would be expected ESG wise of the asset and how this would impact value.
Statement of opinion on relationship between value and sustainability factors and benefits/risks
Opinion of impacts and risks to property over time.

30
Q

High Alumina Cement - why used?

A

Developed strength rapidly so was fast to manufacture.

31
Q

HAC - what was it prone to?

A

Crystalline re-arrangement (conversion) –> reduced strength and chemical reactivity (leading to cracking) –> structural failures

32
Q

Calcium Chloride - what is it used for?

A

Hydroscopic so can speed up the concrete setting process.

33
Q

Issues with Calcium Chloride

A
  • Highly corrosive to metals - can accelerate corrosion process of steel reinforcements.
  • Increased shrinkage and cracking - can cause increased stresses in the concrete due to rapid setting
34
Q

Profits Method

A

Work out the fair maintainable operating profit and X by an investment rate.

35
Q

DRC

A
  • Value the land for the existing use (assuming planning permission exists)
  • Add cost of replacing building + fees and adjust for obsolesence/depreciation
36
Q

Residual

A

Assessing the value of development land and development projects.
- Factor in building costs, contingency, finance, sales costs to work out the value

37
Q

DCF pros

A
  • Can input more variables - more comprehensive
38
Q

What is a DCF?

A

Discounted Cash Flow
Explicit method
Cash flow over holding period, exit value at the end of the period. Cash flow discounted back to the present day at rate of return.

39
Q

DCF Cons

A

Subjectivity and assumptions (e.g. growth rates, investors return)
Sensitivity to inputs –> can affect price a lot
Limited

40
Q

Latent vs Inherent Defect

A

Latent = Hidden defect that is not known about at time of purchase or occupation cannot reasonably be discovered (e.g. water leak behind wall)
Inherent = a flaw with the property’s design that may become known over time (e.g. poor ventilation built in)

41
Q

welsh stamp duty commercial

A
42
Q

England purchasers costs

A

6.8%
5% as SD
1% agent fee
0.5 legal fee
0.3% VAT

43
Q

Welsh purchasers costs

A

0-225k = 0%
225-250k = 1%
250k-1mil = 5%
1mil = 6%