Residential Valuation Quiz Flashcards
1
Q
What RICS guidance relates to valuing individual new-build homes?
A
- Guidance Note - Valuation of New Build Homes (3rd Edition)
2
Q
What key factors might affext the impact on the market of a large release of new build property?
A
- Appearance
- Density
- Popularity
- Price
- Tenure mix
3
Q
When was the Red Book last updated?
A
- With effect from 14 January 2019
4
Q
What guidance does the UK Red Book (2019 UK Red Book) give on mortgage valuations of residential property?
A
- Market value as per VPS 4 of the Global Red book.
5
Q
What basis of valuation shhould be used for new build residential property?
A
- Market value as per VPS 4 of the Global Red Book
6
Q
If market Value is assessed prior to or during construction, should the valuation reflect the evidence and market at the date of valaution or an assumed completion date?
A
- Date of valuation
7
Q
What is the general meaning of a new build premium?
A
- An allowance to replact the newness and any improved building standards.
8
Q
Is there a set discount for a newbuild premium?
A
- No - it depends on local market conditions.
9
Q
What do RICS say about sales incentives?
A
- Incentives do not add value to the property itself, but facilitate the transaction for the buyer.
10
Q
Should you reflect sales incentives in your valuation?
A
- On the CML ‘disclosure of Incentives’ form provided by the seller/builder etc
11
Q
Where would you find details of incentives?
A
- On the CML ‘disclosure of Incentive’ form provided by hte seller/builder etc.
12
Q
What are examples of Incenives?
A
- Payment of legal/surveyors fees.
- Reimbursement of deposit.
- Guaranteed rent for a specified period.
- Discount/reduction on more than one property.
- Part exchange.
- Payment of mortgage for a period.
- High level material gifts.
- Ground rent and service charge paid for a period.
13
Q
Which of these are ways to offer a home at a reduced price?
A
- Combination of tenure - Shared ownership
- Part ownership
14
Q
For houses with restrictions on occupancy by say income or job type, what is a typical discount used in the market?
A
- 33%
15
Q
What is a new build warranty?
A
- Insurance policy for new build homes - NHBC etc
16
Q
How long will a typical warranty last for?
A
- 10 years.
17
Q
If a property was built in the last 10 years and does not have a professional certificate or guarantee/warranty, would this affect value?
A
- Yes - it may not be considered to be suitable for mortgage purposes and the value would have to reflect a cash buyer
18
Q
In the UK Red Book, whjat is the basis of value for the purpose of possible repossession proceedings or the proposed sale of a repossessed property?
A
- Projected Market Value
19
Q
What are the two special assumptions relating to Projected Market Value
A
- During the marketing period the property has been occupied and all furnishings and fittings have been removed.
- The vendor(mortgagee) has to sell the property within a reasonable period to recover the secured debt.
20
Q
What are types of home finance products?
A
- Regulated Mortgage Contracts including lifetime mortgages.
- Sale and rent back (SRB)
21
Q
Who regulats valuations for home finance products?
A
- FCA (Financial Conduct Authority)
22
Q
What are the key differences between a lifetime mortgage and a conventional mortgage?
A
- Redemption date is not fixed but comprises the date of death of the mortgagor.
- No repayments of capital are made, and the interest is ‘rolled up’ and compounded over the length of the mortgage term.
23
Q
Would the amount of mortgage debt to be redeemed at the end of a lifetime mortgage term be less or more than that of a conventional mortgage?
A
- More
24
Q
What s home reversion?
A
- Occupant sells all or part of home to a reversion company or an individual. The occupant no longer owns the home but continues to live there rent-free for the remainder of their life.
25
What is sale and rent back?
* **Occupent sells property at a discount in return to rent property at a discount for a minimum term of five years on an AST.**
26
What is a home purchase plan?
* **Same as a regular mortgage but is structured in a way that is acceptable under Islamic Law.**
27
What are the bases of value for a registered social landlords hhousing stock for secured lending purposes.
* **Market Value**
* **Existing Use Value for Social Housing**
28
Which of these are the right Survey Levels?
* **RICS Level 1 - RICS Conddition Report - Focusses on conditon using a traffic light system and without a valuation.**
* **RICS Level 2 - Homebuyer Report Survey or Survey and Valuation.**
* **RICS Level 3 - RICS Building Survey - gives a more detailed information about the building structure and fabric, but does not provide a valuation.**
29
What does a Homebuyer Service HBS) comprise?
* **Inspection**
* **Report based on inspection**
* **Valuation (if requested)**
30
Do RICS provide any guidance on the HBS?
* **RICS Professional Statement Home Survey Standard (1st Edition)**
* **Red Book Global and UK Supplement**
31
Do you need a Copyright licence to use the RICS Homebuyer reprot forms?
* **Yes.**
32
Whatt pe of properties can a HBS be used for?
* **Conventional properties which are in a reasonable condition.**
* **Wider range of properties if you have sufficient knowledge and experienced.**
33
How does a HBS differ from a Building Survey?
* **Not as comprehensive.**
* **No tests undertaken.**
34
What should you ddo if you suspect a defect exists when undertaking a HBS inspection?
* **Follow the trail and recommend further testing/investigation, if required.**
35
What is the correct wording the three condition ratings?
* **1 - No repair currently needed. The property must be maintained in the normal way.**
* **2 - Defects that need repairing or replacing, but are not serious or urgent. The poroperty must be maintained in the normal way.**
* **3 - Defects that are serious or need to be repaired, repalced or investigated urgently, e.g. structural defects, dry rot, defective retaining wall or a safety matter.**
36
What is the impact of a condition rating 1 on value?
* **None.**
37
What is the impact of a condition rating 2 on value?
* **Generally none unless there is an accumulatiion of items with this rating that would increase costs to a point where there would be an impact.**
38
What is the impact of a condition rating 3 on value?
* **This would be reflected in the market value.**
39
What should you include in your overall opinion in your HBS Report?
* **Agreed/Suggested Price.**
* **Advice to client on whether it is reasonalbe to prceed with purchase or not.**
* **Key features.**
* **Resale.**
* **Elements with condition rating 3.**
40
What is a statutory valuation?
* **Where the valuation is o a basis defined in law or required for a specific legal purpose.**
41
What are examples of statutory valuations?
* **Capital Gains Tax.**
* **Inheritance Tax.**
* **Bankruptcy.**
* **Divorce or other legal proceedings.**
* **Council tax.**
* **Right to buy.**
42
Who is responsible for Council Tax valuations?
* **VOA (Valuation Office Agency)**
43
What are the council tax bands in England?
* **A to H**
44
What is the basis of value for Council Tax valuations?
* **Market Value subject to assumptions set by VOA.**
45
What are assumptionss made in Council Tax Valuation?
* **Sale was with vacant possession.**
* **Size, layout and character of the dwelling as well as its locality must be considdered as the actually existed at 1 April 1993.**
* **Interest sold was freehold except for flats when a lease for 99 yearss at a nominal rent has to be assumed.**
* **Dwelling had no potential for any building work or development requiring planning.**
* **Dwelling and common parts was in a reasonable state of repair.**
46
What is the Right to Buy?
* **Where occupiers of Local Authority or Housing Association Properties exercise their right to buy the property.**
47
What legislation related to Right to Buy?
* **Housing and Regeneration Act 2008**
48
Whhat is an AVM?
* **Automated Valuation Model**
49
What does an AVM do?
* **Provide a property valuation with human input.**
50
What will an AVM provide as well as a valuation?
* **Confidence level.**
51
When might a lender instruct a drive-by valuation?
* **When customer is experiencing financial difficulty and the lender ddoes not want the occupier to be aware of the inspection.**
52
What is the impact of the Rentcharges Act 1977.
* **Existing rentcharges will be extinguished on 22 August 2037.**
53
Until 22 August 2037 how should rentcharges be dealt with?
* **As an outgoing when valuing a freehold althhough they are generally not sufficient to have a significant effect on value.**
54
Is there any RICS guidance on comparable evidence?
* **Yes - A guidance Note.**
55
How many comparagbles should you ideally provide for each valuation?
* **At least 3 but as many as it takes.**
56
What are the requirements for a House in Multiple Occupation (HMO)?
* **At least 3 tenants live there forming more thann one household.**
* **There are shared toilet, bathroom or kitchen facilities.**
57
What are the requirements for a large HMO?
* **At least three stories high.**
* **At least five tenants live there forming more than one household.**
* **There are shared toilet, bathroom or kitchen facilities.**
58
From 1st October 2018, when does a HMO need to be licensed?
IIf it is occupied by five or more people forming two or more seperate households.
59
What is the impact of a HMO licence?
* **Landlords have to meet nationally prescribed standards.**
60
Whhat is thhe impact of an Article-4 Direction?
* **Planning permissionm is needed to change a house Class C3 to a HMO class C4.**
61
Within what general distance of a dwelling migh Japanese Knotweed have a material impact on value?
* **7m.**
62
What is a flying freehhold?
* **One part of the property extends over or under a neighbouring building.**
