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Valuation Quizzes > Residential Valuation Quiz > Flashcards

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)
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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
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3
Q

When was the Red Book last updated?

A
  • With effect from 14 January 2019
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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.
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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
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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
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7
Q

What is the general meaning of a new build premium?

A
  • An allowance to replact the newness and any improved building standards.
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8
Q

Is there a set discount for a newbuild premium?

A
  • No - it depends on local market conditions.
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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.
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10
Q

Should you reflect sales incentives in your valuation?

A
  • On the CML ‘disclosure of Incentives’ form provided by the seller/builder etc
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11
Q

Where would you find details of incentives?

A
  • On the CML ‘disclosure of Incentive’ form provided by hte seller/builder etc.
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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.
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13
Q

Which of these are ways to offer a home at a reduced price?

A
  • Combination of tenure - Shared ownership
  • Part ownership
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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%
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15
Q

What is a new build warranty?

A
  • Insurance policy for new build homes - NHBC etc
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16
Q

How long will a typical warranty last for?

A
  • 10 years.
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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
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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
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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.
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20
Q

What are types of home finance products?

A
  • Regulated Mortgage Contracts including lifetime mortgages.
  • Sale and rent back (SRB)
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21
Q

Who regulats valuations for home finance products?

A
  • FCA (Financial Conduct Authority)
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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.
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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
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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.
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25
Q

What is sale and rent back?

A
  • 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
Q

What is a home purchase plan?

A
  • Same as a regular mortgage but is structured in a way that is acceptable under Islamic Law.
27
Q

What are the bases of value for a registered social landlords hhousing stock for secured lending purposes.

A
  • Market Value
  • Existing Use Value for Social Housing
28
Q

Which of these are the right Survey Levels?

A
  • 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
Q

What does a Homebuyer Service HBS) comprise?

A
  • Inspection
  • Report based on inspection
  • Valuation (if requested)
30
Q

Do RICS provide any guidance on the HBS?

A
  • RICS Professional Statement Home Survey Standard (1st Edition)
  • Red Book Global and UK Supplement
31
Q

Do you need a Copyright licence to use the RICS Homebuyer reprot forms?

A
  • Yes.
32
Q

Whatt pe of properties can a HBS be used for?

A
  • Conventional properties which are in a reasonable condition.
  • Wider range of properties if you have sufficient knowledge and experienced.
33
Q

How does a HBS differ from a Building Survey?

A
  • Not as comprehensive.
  • No tests undertaken.
34
Q

What should you ddo if you suspect a defect exists when undertaking a HBS inspection?

A
  • Follow the trail and recommend further testing/investigation, if required.
35
Q

What is the correct wording the three condition ratings?

A
  • 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
Q

What is the impact of a condition rating 1 on value?

A
  • None.
37
Q

What is the impact of a condition rating 2 on value?

A
  • 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
Q

What is the impact of a condition rating 3 on value?

A
  • This would be reflected in the market value.
39
Q

What should you include in your overall opinion in your HBS Report?

A
  • 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
Q

What is a statutory valuation?

A
  • Where the valuation is o a basis defined in law or required for a specific legal purpose.
41
Q

What are examples of statutory valuations?

A
  • Capital Gains Tax.
  • Inheritance Tax.
  • Bankruptcy.
  • Divorce or other legal proceedings.
  • Council tax.
  • Right to buy.
42
Q

Who is responsible for Council Tax valuations?

A
  • VOA (Valuation Office Agency)
43
Q

What are the council tax bands in England?

A
  • A to H
44
Q

What is the basis of value for Council Tax valuations?

A
  • Market Value subject to assumptions set by VOA.
45
Q

What are assumptionss made in Council Tax Valuation?

A
  • 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
Q

What is the Right to Buy?

A
  • Where occupiers of Local Authority or Housing Association Properties exercise their right to buy the property.
47
Q

What legislation related to Right to Buy?

A
  • Housing and Regeneration Act 2008
48
Q

Whhat is an AVM?

A
  • Automated Valuation Model
49
Q

What does an AVM do?

A
  • Provide a property valuation with human input.
50
Q

What will an AVM provide as well as a valuation?

A
  • Confidence level.
51
Q

When might a lender instruct a drive-by valuation?

A
  • When customer is experiencing financial difficulty and the lender ddoes not want the occupier to be aware of the inspection.
52
Q

What is the impact of the Rentcharges Act 1977.

A
  • Existing rentcharges will be extinguished on 22 August 2037.
53
Q

Until 22 August 2037 how should rentcharges be dealt with?

A
  • As an outgoing when valuing a freehold althhough they are generally not sufficient to have a significant effect on value.
54
Q

Is there any RICS guidance on comparable evidence?

A
  • Yes - A guidance Note.
55
Q

How many comparagbles should you ideally provide for each valuation?

A
  • At least 3 but as many as it takes.
56
Q

What are the requirements for a House in Multiple Occupation (HMO)?

A
  • At least 3 tenants live there forming more thann one household.
  • There are shared toilet, bathroom or kitchen facilities.
57
Q

What are the requirements for a large HMO?

A
  • 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
Q

From 1st October 2018, when does a HMO need to be licensed?

A

IIf it is occupied by five or more people forming two or more seperate households.

59
Q

What is the impact of a HMO licence?

A
  • Landlords have to meet nationally prescribed standards.
60
Q

Whhat is thhe impact of an Article-4 Direction?

A
  • Planning permissionm is needed to change a house Class C3 to a HMO class C4.
61
Q

Within what general distance of a dwelling migh Japanese Knotweed have a material impact on value?

A
  • 7m.
62
Q

What is a flying freehhold?

A
  • One part of the property extends over or under a neighbouring building.

Valuation Quizzes (8 decks)

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