Vals Flashcards
What is the full title of the red book?
RICS Valuation Global Standards
When did the current edition of the red book come into force?
31st Jan 2022
Who are the international valuation standards council?
Not for profit organisation that sets global standards for valuation practice and standards dominated by accountancy firms
What editions of the Red Book have been in effect during your apc training period?
The RICS Valuation Global standards, 2019 effective 31st Jan 2020 and RICS Valuation Global standards 31st Jan 2022
What is the purpose of the Red Book?
Ensure constituency, transparency, objectivity.
Does no instruct on how to value, it gives how best practice
What is the purpose of the uk national supplements?
Supplements the red book (global standards) does not replace it
To what valuations does the red book apply?
All valuations unless valuation is listed as exception
What valuations are exceptions to the red book?
Internal purposes, estate agent marketing, statutory function, acting as expert witness, negotiations
Name some valuations that are carried out for a statutory function?
Where legislation tells us what to do.
rating, compulsory purchase, lease renewals, leasehold enfranchisement
What is the difference between VPS and VPGA
Compliance for VPS is mandatory to comply to,
VPGA is compliance/best practice for advised for
What are the possible consequences if a valuer does not comply with a VPS?
Personal liability
Lost rics membership
Fined
Put in disciplinary pages
Possible consequences if a valuer does not comply with a VPGA?
Sued for negligence
Describe how departure from the red book mandatory requirements may be possible? VPS
If there is good reason, special circumstances where considered inappropriate to comply.
Most common departure is carrying internal inspection.
What info would you require from a telephone enquirer who asked if you can do them a valuation?
Who are you?
What is it?
Where is it?
When do u need it?
Is there a conflict of interest with seller?
Professional fees?
What do your valuation files contain?
Conflicts of interest check
Terms of engagement
Planning and rating searches
Inspection and investigation notes
Comparable evidence
Valuation calculations and rationale
Valuation report
Copy of invoices for fees
What are main contents of the terms of engagement for a valuation?
21 headings -
Identity of client and valuer and asset
Valuation date
Purpose of valuation
Basis of value
Extent and limitation of investigation
Departures (if any)
Assumptions
Special assumptions
Fee
Complaints handling
How would you respond to a request to value a property from a pavement assessment only?
Accepted in reasonable restrictions m
Must be mentioned in report
Floor plan and lease needed
Name the red book global bases of value
Market rent
Market value
Investment value
Fair value
Name the UK specific bases of value
Existing use value
Existing use value for social housing
Projected market value
What is the difference between basis of value and a method of valuation
Basis - red book definition to value
Method - procedure, technique calculation to arrive at figure
Three assumptions that are made in producing a valuation?
Good condition
Free from encumbrance
No hazards
Good title
Planning permission has been granted
What is a special assumption?
Sale in 6 months
Situations when it would be appropriate to make a special assumption?
Property is fully let
Property is vacant
Property is changed in specific way
Property has planning permission
Development has been completed
What is market value?
Value of a property between a willing buyer and willing seller in an arms length transaction with proper marketing
Arms length transaction?
Parties have no connection / relationship
Synergistic value?
Synergistic Value is the result of a combination of two or more assets or interests where the combined value is more than the sum of the separate values.
What is Marriage Value?
An additional value created by the combination of two or more assets or interests where the combined value is more than the sum of the separate values. Difference in valuation ways.
Up to 2017 synergic and marriage were the same - they then separated these
Special purchaser?
A particular buyer for whom a particular asset has a special value because of advantage: from its ownership that would not be available to other buyers in a market.
When is Market Rent not appropriate as a Basis of Value in providing a report on the rental value of a property and why not?
Not appropriate for rent reviews where the definition of rent is taken from the rent review clause.
Or lease renewal when need to check this under Section 34 landlord and tenant 1954 act
When is fair value the appropriate valuation basis?
Valuations for company accounts
What is regulated purpose valuation?
A valuation which the public of third parties rely upon.
Investment schemes/mergers and takeovers
What is an asset valuation?
A valuation of a company’s assets for financial reporting/ company accounts
When is existing use value the valuation basis?
Basis of value of local authority and government financial reporting
What is the fundamental difference between market value and existing use value?
Market value - highest, best use of an asset
Existing value - current value
When is DRC used in asset valuations?
For specialised property - property that would not sell other than as part of business in occupation. football stadium would only sell if part as a football club
Three situations that can adversely affect the certainty of valuations?
Unusual characteristics
Unstable market
Lack of market transactions (economic)
