Valuation Flashcards
Construction pathology
Who are the CEDR
Centre for Effective Dispute Resolution
What must be obtained in writing where there’s conflict or potential conflict
Informed consent
Who runs the independent redress service for RICS
Centre for Effective Dispute Resolution
What is the average height of a UK house
8m
What is the name of the lung disease caused by bat fungus
Histoplasmosis
Which Act protects animals, plants & habitats
The Wildlife & Countryside Act 1981
What are the 3 types of potential conflicts of interest
A party conflict
An own interest conflict
Confidential information conflict
What are the 5 principles of the RICS rules of conflict
Proportionality Accountability Consistency Targeting Transparency
What is the BCIS
British Cost Information Service
What is a TPO
Tree Preservation Order
How long is planning permission valid for
3 years
What is a special assumption
Assumed facts that differ from the actual facts on the valuation (mainly used for new developments)
What is an assumption
Where specific investigation is not required to prove something is true
What are the VPGA
RICS Valuation Practice & Guidance Applications - Advisory
Who are the LPA
Local Planning Authority
What is the TCPA
Town & County Planning Act
What is IFRS
International Financial Reporting Standards
What is FRS
Financial Reporting Standards
What is UK GAAP
UK & Ireland Generally Accepted Accounting Practice
What is VPS
Valuation Technical & Performance Standards
What is the definition of market value
The estimated amount a property should exchange for, on the date of valuation between a willing buyer and a willing seller. In an arms length transaction after proper marketing, where the parties each acted knowledgeably, prudently and without compulsion. The MV must be documented in a clear and transparent manner.
What is the IDF of a building
Internal Dominant Face
What does Pluvial flooding relate to
Surface water
What does Fluvial flooding relate to
Rivers & seas
What is the CoMP
Code of Measuring Practice
The 5 ethical standards
Treat others with respect
Act with integrity
Act in ways that promotes trust in the profession
always Provide a high standard of service
Take responsibility
Lenders 5 key areas of concern
Dampness Movement Timber failure Health and safety Cost & impact on value
What are the intangible effects on property value
Micro & macro economic forces
What are the 5 tangible effects on the property value
Condition Location Amenities Size Tenure
Who are the CML & BSA
Council of Mortgage Lenders
Building Societies Association
Define IVS
International Valuation Standards
What is the max inclination of stairs
42°
Define Radon percentage indices
Percentage of properties found above the 200 becquerels action level
What is the BGS
British Geological Servey
What do FENSA certs cover
Windows and doors
What causes Radon gas
Radioactive decay of small amounts of Uranium
Where can you find a boiler’s energy efficiency
SEDBUK Index: Seasonal Efficiency of Domestic Boiler's in the UK
What is a linked detached
Residential property that doesn’t share any common walls but is usually “linked” by a garage
Which Act covers the proper disposal of JK waste
Environmental Protection Act 1990
Which 3 Acts can be used to prosecute failing to control JK
- Wildlife & Countryside Act 1981 (amended 2010)
- Environmental Protection Act 1990
- Anti-Social Behaviour Crime & Policing Act 2014
What is the valuation tolerance for a standard residential property
5%
How do you calculate the area of a triangle
Area = height x (.5 x base)
How do you calculate the area of a trapezium
Area = .5 x (a+b) x height
How do you calculate the area of a semi-circle
Area = 1/8 x pie x d x d
Or
Area = (r2 x pie) /2
Inelastic Supply in property is demonstrated by?
The supply of products cannot be increased in the short term
In the context of a valuation when would you consider the concept of Substitution?
Comparable analysis
If the subject property has serious movement that needs further investigation, what should you do in the valuation box on the mortgage report for most lenders
Leave the box blank and make a comment in the General remarks
What is the RICS terminology for Value that should be used for a standard mortgage valuation?
Market Value
What does Mosaic measure?
Geodemographics
What happened to High Loan to Value lending from 2008 to 2013?
High lending ratios have fallen off significantly relative to 2007
What is the “Tone of Value”?
Range of values in a given area near the subject property
Which mortgage product took a dive in demand in the mid 1990s?
Endowment
What in legal terms is a Right of Way over property?
An easement
What is the RICS publication on Asbestos?
Asbestos Legal Requirements And Best Practice For Property Professionals And Clients, 4th Edition 2021
What are the Asbestos regulations
Control of Asbestos Regulations 2012 (CAR)
Who are DEFRA
Department for Environmental, Food & Rural affairs
What is the valuation tolerance for a one-off property?
10%
What is the valuation tolerance for a property with exceptional features
15%
What are ‘professional standards’?
Mandatory RICS standards: PS1 Compliance standards & PS2 Ethics, competency, objectivity and disclosures
What is ‘VPS’?
Mandatory: Valuation Practice Statement: Valuation technical and performance standards
What limitations does RICS Red Book impose on ‘assumptions’
- Reasonable and relevant
- Agreed with client
- Appropriate
What is ‘rotation policy’?
Whereby a firm will change the valuer due to familiarity of the asset or client
What is ‘PMV’?
Projected Market Value: The estimated amount for which an asset is expected to exchange at a date AFTER the valuation date and specified by the valuer, between a willing buyer and a willing seller, in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion
What are the different requirements for a ‘possession valuation’?
- exchange at a future date after the valuation date specified by the valuer
- The property has been unoccupied, and all furnishings and fittings have been removed
- The vendor (the mortgagee) has to sell the property within a reasonable period to recover the secured debt.
What is an ‘Independent Valuer’?
Possesses the necessary qualifications, ability and experience to execute a valuation, independent from the credit decision process.
What is AIB?
Asbestos Insulating Board
What is the land use requirement for a regulated mortgage contract? (Red Book UKVS 3)?
40% of the land must be used in conjunction with a dwelling
To provide a RICS Homebuyer report with a valuation. What two things are required?
Must be a registered valuer and comply with RICS standard
When would a residual valuation be relevant?
- There is no comparable evidence available
- Calculation of the potential profit in a proposed development
- Valuing a plot of land with planning permission
When will you most likely need to use a residual method of valuation?
When assessing the value of the land for a proposed development.
What statement best describes the residual method of valuation?
A valuation/appraisal of a development based on a deduction of the costs of development from the anticipated proceeds. The residual is normally either development profit or land value.
Is a UK Finance Disclosure of Incentives form (DIF) required for the sale of a conversion?
Yes
Who can undertake a valuation of a charity asset? (as per UK VPGA 8)
Qualified surveyor
What is Hope Value?
The value based on the expectation that land will get permission for development in the future
Where a charity wishes to dispose of an interest in land how many years does the term need to exceed?
7 years
Where should you obtain your comparable evidence for the valuation of a new build property?
On-site, off-site new builds and resale/second-hand evidence
Where a new property is not yet constructed, according to the RICS guidance ‘Valuation of individual new-build homes’ 3rd edition on what basis should it be valued?
A valuation can be provided on the special assumption that the property has been satisfactorily completed at the date of inspection
What are appropriate sources for new build assumptions?
- A similar, or partly or fully completed unit
- Developers specifications or working drawings of the subject unit
- Show home of the unit.
What is NOT be considered to be a Resale benefit in accordance with the RICS guidance ‘Valuation of new-build homes’ 3rd edition?
All snagging works satisfactorily completed
What can AVMs be used for with artificial intelligence?
Appraise weightings of the results
What is an AVM?
Automated Valuation Model
Under Schedule 13 of The Leasehold Reform, Housing and Urban Development Act, 1993 – What is the landlord’s share of the Marriage Value?
50%
What is the Act that gave leaseholders of flats the ability to extend their lease?
Leasehold Reform Housing & Urban Development Act 1993
Under how many years remaining on the lease does Marriage Value become payable?
80 years
What is the maximum allowable skylight protrusion beyond the plane of the roof?
150mm
How many years ownership of a property before you have the right to extend the lease?
2 years
What is a UK DIF?
UK Finance Disclosure of Incentives form
In the RICS guidance note ‘Valuation of individual new-build homes’ 3rd edition, what does the term ‘first-owner benefit’ relate to?
The ‘newness package’ associated with a new build purchase
Building regulations have applied to all replacement glazing since?
1 April 2002
In accordance with the Leasehold Reform Act 1967, what is Marriage Value?
The increase in the total value of the property after a lease extension
What is the correct order of listed building grades are currently scheduled in England?
1) Grade I 2) Grade II* 3) Grade II
What is a regulated (aka sitting or secure) tenancy?
A tenant, pre the 15th January 1989, who pays a ‘fair value rent’ and normally has the right to remain in the property as a tenant until they decease.
If a bribery attempt is made, what must the RICS member do?
Report to the relevant authorities.
Which is NOT a factor with a material impact on valuation from UK VPGA 11.4?
access to leisure facilities or communal buildings
Is a valuer allowed to do a valuation without an internal or physical inspection of the property?
Yes - Such a request may be complied with, but the consequential limitations on the valuer’s liability need to be drawn to the attention of the lender.
What is a P.M.V?
Projected Market Value
What is the primary difference between the Occupiers Liability Act 1957 and the Occupiers Liability Act 1984?
The 1957 act gives the owner a duty of care for lawful visitors, the 1984 act gives the owner a duty of care for unlawful visitors.
What is the normal % tax rate (after the tax-free limit) of inheritance tax?
40%
What is VPS1?
Terms of Engagement
What is a Tort?
A civil wrong
Who can bring a claim for private nuisance?
Someone with propriety interest in a property.
What is the profits method of valuation?
Gross profits minus all expenses except rent = amount of capital to be shared between tenant and landlord. Often used for commercial properties such as public houses
The owner of a leasehold flat has the right to purchase an extension of lease at peppercorn rent of how many years?
90
The owner of a leasehold flat has the right to purchase an extension of lease at peppercorn rent if they have owned the property for a minimum of how many years?
2
The owner of a leasehold flat has the right to purchase an extension of lease at peppercorn rent under which act?
Leasehold Reform Housing and Urban Development Act 1993.
With regard to new build properties (Valuation of individual new- build homes 3rd edition, December 2019), what are resale benefits?
benefits that can be sold on to the next owner, i.e. permanent features.
At what point in time does the ‘marriage value’ impact the costs associated with extending a lease
80 years
If all other qualification criteria are met, the landlord cannot refuse the sale of a freehold if
Over half of the leaseholders form part of the collective
Is a freehold flat acceptable to the majority of mainstream lenders?
No, most mainstream lenders will not lend on a freehold flat
A Section 20 notice is also known as a..
major works notice
What are the terms in relation to the statutory lease extension process?
The remaining term is extended by 90 years. ground rent is reduced to peppercorn contribution. Leaseholder pays the associated costs
What key issue do you need to consider on a leasehold property where the ground rent is over £250pa (£1,000 in London)?
The value of the ground rent makes the lease an AST (assured shorthold tenancy) in law.
When is stamp duty land tax payable on a rental property?
Where the net present value (NPV) for the term of the tenancy is greater than £125,000.
What is the role of the valuer to the lender?
To advise on the property and factors revealed that are likely to materially affect its value, the market value and issues of serious disrepair or hazards
Which act refers to freehold tenure of a multi occupancy building?
Commonhold and Leasehold Reform Act 2002
Which Act covers adverse possession for registered land?
Land Registration Act 2002
How long do you have to wait before applying for possession of registered land?
10 years
Where a charity wishes to dispose of an interest in land how many years does the term need to exceed?
7 years
The RICS information papers describes AVMs as
…one or more mathematical techniques to provide an estimate of value of a specified property at a specified date, accompanied by a measure of confidence in the accuracy of the result, without human intervention post-initiation.
What is the minimum original lease term on a new build flat (or second hand flat built post 2000)
125 years
What is the minimum original lease term on a new build house (or second hand house built post 2000)
250 years
What is the maximum ground rent at the start of the lease term
0.1% of the property value or £500 a year whichever is the higher
What is NPV?
Net Purchase Value
