Valuation

Question 1

Tell me what are the 5 methods of valuation.

Answer 1

• Comparable – most common method of valuation, used when there is suitable market evidence to use as comparable evidence
• Investment – used when there is an income stream to value
• Residual – used to value a site
• Profits – used when the value of a property is intrinsically linked to its use e.g. pub or hotel
• Depreciated Replacement Cost / Contractors– used for properties not frequently traded on the open market where no comparable evidence can be obtained

Question 2

Tell me about how you would value a building using the profits method of valuation.

Answer 2

Used when the value of a property is intrinsically linked with the profitability of the business that is run there. E.g. hotels, pubs, petrol stations. Use three years of accounts.
Annual turnover
– costs = gross profits
– reasonable working expenses = net profit
– operators renunciation = EBITDA
X capitalise at an appropriate yield

Question 3

Tell me about how you would value a building using the Depreciated Replacement Cost/ Contractors method of valuation.

Answer 3

Used for specialist properties that are not frequently traded on the open market.
Find the value of the land in it’s current form, add on the cost of replacing the building, take off value for deterioration and obsolescence.

Question 4

Tell me about how you would value a building using the investment method of valuation.

Answer 4

Investment
Used when there is an income stream to value. The rental income is capitalised by an appropriate yield to produce a capital value.
• Layer and hardcore – overrented property
• Term and reversion – underrented property
• DCF – discounted cash flow, growth explicit model – estimate cash flow over the holding period less costs, estimate exit value, select a discount rate, discount the cash flow, value is the sum of the completed discounted cash flow to provide the NPV.

Question 5

Tell me about how you would value a building using the comparable method of valuation.

Answer 5

This is the most common method of valuation and is the basis for all valuations. Search and select comparable evidence, verify the details, assemble in a schedule, adjust in relation to the subject property, analyse to form an opinion of value, report value.

Question 6

Tell me about how you would value a building using the residual method of valuation.

Answer 6

Used to value sites.
1. Find the Gross Development Value – for commercial property capitalise the market rent by an appropriate yield
2. Deduct purchaser’s costs – Stamp duty, agents and legal fees
3. Deduct development costs – construction costs, professional fees,
4. Deduct developer’s profit – usually around 15%
= Site Value

Question 7

What is PI Insurance (PII)? Why do surveyors need PII?

Answer 7

Professional indemnity insurance is designed for professional firms and people which covers them in the event of certain errors made during the course of their business. The policies available mainly cover professional negligence, errors or omissions, breach of professional duty and civil liabilities.
PI insurance will only cover your professional capabilities in certain areas. Rates for this insurance generally range from 0.25% up to 5% of fee income or annual turnover, depending on the usual risk factors and market competition.

Why?
To protect surveyors, clients and third parties against negligence claims where there is a duty of care breached and a claim for damages arises

Question 8

Tell me about the RICS requirements in relation to PII.

Answer 8

Appendix A: Professional obligations to RICS
Firms must ensure that all previous and current professional work is covered by adequate and
appropriate professional indemnity cover that meets the standards approved by RICS.

Question 9

What is run off cover?

Answer 9

Type of cover you need to cover a claim brought after a firm or member ceases to trade.

Question 10

What is the Red Book?

Answer 10

The Red Book is issued by RICS and it contains mandatory rules, best practice guidance, and related commentary for all members undertaking asset valuations

Question 11

Why does the Red Book exist?

Answer 11

Purpose:

1. Provide consistency, objectivity and transparency
2. Build public confidence and trust in RICS members’ valuations
3. Ensure valuers are working to the latest international standards
4. Provide an essential quality control check without the need for legislation

However, the Red Book does not instruct valuers how to value - it instead provides the framework for valuation to which each individual valuer will apply their own skills and experience.

Question 12

Tell me about a factor which may impact value.

Answer 12

Size, location, condition, previous rents, views, local infrastructure.

Question 13

What is your duty of care as a surveyor when undertaking a valuation?

Answer 13

Valuers owe a duty of care towards their clients, both in contract and in tort (for negligence). They may also owe a duty of care towards third parties, in certain circumstances.

Question 14

Why is independence and objectivity important when valuing?

Answer 14

To adhere to professional and ethical standards… To promote consistency, and ensure transparency, and to provide an unbiased true valuation.

Question 15

What challenges do valuers face?

Answer 15

Limited or infrequent transactions

Lack of up-to-date evidence

Evidence created by special purchasers, who may have paid more than the market because of an over-riding motivation

Lack of similar or identical evidence due to the complex nature of real estate

Lack of market transparency

Question 16

When was the Red Book last updated?

Answer 16

RICS Red book Global 2022 Update (January 22)

Question 17

When were IVS standards updated?

Answer 17

31st January 2022

Question 18

What changes were made in Red book 2022?

Answer 18

The aim of the update is to reflect changes to the International Valuation Standards 2022, as well as clarifying certain sections of the existing Red Book Global.Valuers need to amend any valuation templates or proformas used, including reports and terms of engagement to reflect below changes.

Emphasising the need to agree clear and unambiguous terms of engagement.

The terms quasi, partial or non Red Book should not be used in terms of engagement or reporting. Instead, the exception should be specifically stated and explained in the terms of engagement and valuation report.

Requiring more detailed commentary on sustainability/resilience and environmental, social and governance (ESG) matters in VPGA 8 Valuation of Real Property Interests.

Various amendments are made to the VPGAs, in particular VPGA 4 Individual Trade Related Properties and the reference to IVS 230 Inventory.

Question 19

What is the format of the Red Book?

Answer 19

Broadly, it is made up of 2 x Professional Standards and 5 x Valuation Professional Standards which are mandatory and 10 x Valuation Practice Guidance Applications which are not mandatory but are a guidance for best practice

1. Introduction
2. Glossary
3. Professional Standards (PS)
4. Valuation technical and performance standards (VPS)
5. Valuation applications (VPGA)
6. International Valuation Standards (IVS)

Question 20

Which do you follow – the latest IVS or the Red Book Global?

Answer 20

IVS are produced by the IVSC (council) which is an international body
RICS Red Book adopts the IVS and provides an implementation an application framework for members and firms

Question 21

When does the Red book apply?

Answer 21

The Red Book applies to written valuations, including the provision of an Automated Valuation Model (AVM) output. It does not apply to estimated replacement cost figures for insurance purposes. For oral valuation advice, the principles of the Red Book should still be observed as liability cannot be avoided in this way.

Question 22

Which sections of the Red Book are mandatory and which are advisory?

Answer 22

Mandatory
2 x Professional Standards and 5 x Valuation Professional Standards

Advisory
10 x Valuation Practice Guidance Applications are not mandatory but are a guidance for best practice

Question 23

What does PS1 and PS2 relate to?

Answer 23

PS1 – Compliance with standards and practice statements where a written valuation is required

• Anyone responsible for analysing or communicating a written opinion of value
• May produce but no sign reports
• Any departure must be covered by S.Assumption

PS2 – Ethics, Competency, Objectivity & Disclosure

• Experience, skill, judgement
• Act in a professional manner, free from bias, undue influence, conflict
• 1. Responsibility for valuation
• 2. Professional and ethical standards
• 3. Member qualification
• 4. Independence objectivity and conflicts of interest
• 5. Strict separation between advisors

Question 24

What does VPS1-5 relate to?

Answer 24

VPS1 – Term of Engagement
VPS2 – Inspections, Investigations & Records
VPS3 – Valuation Reports
VPS4 – Bases of value, assumptions and special assumptions
VPS5 – Valuation approach and methods

 T TOE
 I NSPECTIONS, INVESTIGATION, RECORDS
 R EPORTS
 B ASES OF VALUE, ASSUMPTION, SPECIAL ASSUMPTIONS
 A APPROACH & METHODS

Question 25

What does VPGAs relate to?

Answer 25

VPGA1 – Financial Statements VPGA2 – Secured Lending VPGA3 – Business & Business Interests VPGA4 – Individual trade related properties *Net adjusted profit VPGA5 – Plant & equipment VPGA6 – Intangible assets VPGA7 – Personal property (including arts & antiques) VPGA8 – Real property interests VPGA9 – Portfolios, collections and groups of properties VPGA10 – Valuation uncertainty

Question 26

Tell me about VPS 1?

Answer 26

VPS1 – TOE (what needs to be included): 1. Identity of client 2. Identity of valuer and their status 3. Asset to be valued 4. Purpose of valuation 5. Bases 6. Date 7. Extent of Investigations, Inspections 8. Restriction on use 9. Nature and source of information 10. Compliance with IVSC/Global Valuations Standards 2017 11. Assumptions & Special Assumptions 12. PI Cover 13. Disclosures 14. Fee 15. Complaints handling

Question 27

Tell me about VPS 2?

Answer 27

VPS2 – Inspection & Investigation - Must be carried out to the extent necessary to produce a valuation that is professionally adequate for its purpose - Valuer should verify all information provided and clarify assumptions - Any restrictions on inspection must be noted in TOE - Re-valuation without inspection should only be done where value is certain no material changes have occurred. Should also be agreed with client and state in TOE

Question 28

Tell me about VPS 3?

Answer 28

VPS3 – Valuation Reports Similar minimum standards to TOE. Never formal or informal. Never described as ‘certificate of value’, ‘valuation certificate’ or ‘statement of value. - Identity of client and valuer (plus status) - The property - Characteristics (location, description) - Basis of valuation - Valuation Date - Report Date - Inspection/Investigation - Source of information - Assumptions/Special Assumptions - Restrictions on use - PI Cover - Disclosures - Fee - Compliance with IVS - Valuation Approach, Methodology and rationale - Amount of Valuation (in figures and words) - Currency

Question 29

Tell me about VPS 4?

Answer 29

VPS4 – Bases of Value, Assumptions, Special Assumptions Must ensure the bases are suitable for the valuation. Market Value – the estimated amount and asset or liability should exchange on the open market at the valuation date between a willing purchaser and a willing vendor in an arm’s length transaction after proper marketing and assuming both parties have acted prudently, knowledgably and without compulsion Market Rent – the estimated amount an asset or liability will let on the open market at the valuations date between a willing lessor and a willing lessee in an arm’s length transaction, after proper marketing and assuming both parties acting knowledgably, prudently and without compulsion. Investment Value – The value of an asset to an owner or prospective owner for individual or operational objectives. Fair Value – IFRS the price that would be received to sell and asset or paid to transfer a liability in an orderly transactions between market participants at the measurement date. IVSC – The estimated price for the transfer of an asset between identified knowledgeable and willing parties that reflects the respective interests of those parties.

Question 30

Tell me about VPS 5?

Answer 30

Valuers are responsible for adopting and justifying, the valuation approach(es) and the valuation methods used.

Question 31

When do VPS1-5 not apply?

Answer 31

There are no exemptions from compliance with PS 1-2 when providing valuation advice. However, there are 5 specific circumstances where VPS 1-5 may be unsuitable or inappropriate to comply with: Providing agency or brokerage advice for an acquisition or disposal Acting as an expert witness Performing statutory functions Providing a valuation purely for internal purposes, without liability and without communication to a third party Providing valuation advice in the course of negotiations or litigation where the valuer is acting as an advocate

Question 32

Do I need to verify information I rely upon in my valuation?

Answer 32

Effectively, yes. VPS 2 (Inspections, investigations and records) confirms that you must take 'reasonable steps to verify the information relied on in the preparation of the valuation and, if not already agreed, clarify with the client any necessary assumptions that will be made. While a client may request, or consent to, an assumption being relied on, nevertheless if – following inspection – the valuer considers that such an assumption is at variance with the observed facts, then its continued adoption could, providing that it is realistic, relevant and valid for the particular circumstances of the valuation become a special assumption'.

Question 33

Can I revalue without reinspecting?

Answer 33

Revaluation without reinspection cannot be undertaken unless you are satisfied that there have been no material changes to the physical or locational nature of the property since the last valuation. See Section 2 of VPS 2 for further specific detail.

Question 34

What do I have to include in my valuation report?

Answer 34

VPS 3 (Valuation reports) sets out what you need to include in your valuation report: Identification and status of the valuer Identification of the client(s) and other intended users PurposeIdentification of the asset(s)/liability(ies) being valued Basis of value (see VPS 4) Valuation date Extent of investigations Nature and source of information relied upon Assumptions and special assumptions Restrictions on use, distribution and publication Confirmation of compliance with IVS Valuation approach and reasoning Amount of the valuation (s) Date of the valuation report Commentary on material uncertainty Any limitations on liability agreed

Question 35

What type of advice does the Red Book cover?

Answer 35

The Red Book does not instruct valuers how to value - it instead provides the framework/procedural rules and guidance for valuation to which each individual valuer will apply their own skills and experience.Red book Global imposes the mandatory obligations for competence, objectivity, transparaency and performance.

Question 36

If you provide preliminary advice / draft valuation report, what should you state in writing to your client?

Answer 36

• the opinion is provisional and subject to completion of the final report • the advice is provided for the client’s internal purposes only and • any draft is on no account to be published or disclosed. If any matters of fundamental importance are not reflected, their omission must be declared.

Question 37

What type of valuations might be relied upon by a third party?

Answer 37

regulated purpose valuation

Question 38

What is the difference between an assumption and a special assumption?

Answer 38

Assumption: A supposition taken to be true. It involves facts, conditions or situations affecting the subject of, or approach to, a valuation that, by agreement, do not need to be verified by the valuer as part of the valuation process. Typically, an assumption is made where specific investigation by the valuer is not required in order to prove that something is true. Special assumption: An assumption that either assumes facts that differ from the actual facts existing at the valuation date or that would not be made by a typical market participant in a transaction on the valuation date.

Question 39

What sources of information would you consider when preparing a valuation report?

Answer 39

Internal database. Property price register. Daft, MyHome. Call local agents

Question 40

What pre-instruction checks should I carry out?

Answer 40

Before accepting an instruction, you need to ensure you comply with PS 2 - Ethics, competency, objectivity and disclosures: Check you are sufficiently competent, knowledgable and experienced to provide the required valuation advice Ensure no conflicts of interest exist or that they are managed appropriately Undertake the required money laundering checks on your client Issue Red Book compliant Terms of Engagement (see VPS 1) and hold a signed copy on file

Question 41

If you have previously valued an asset, do you need to make any additional disclosures and what might they be?

Answer 41

Certain types of valuation require additional disclosures to be made (under PS 2): ``` Published financial statements Stock exchange Publication, prospectus or circular Investment schemes Takeovers or mergers ``` The additional disclosures may include the following: Relationship with the client and previous involvement Rotation policy Time as signatory Proportion of fees For secured lending valuations, modified or extended requirements may apply under VPGA 2.

Question 42

If your firm is too small to have a rotation policy or valuation panel, what else can you do to ensure objectivity?

Answer 42

An arrangement for the valuation to be periodically reviewed at intervals not greater than seven years by another member would assist in demonstrating that the member is taking steps to ensure that objectivity is maintained and thus mayretain the confidence of those relying on the valuation. (not mandatory)

Question 43

When might a conflict of interest exist in relation to a valuation instruction?

Answer 43

There must be strict separation between advisors of the individual instructing the valuation and the valuer. For example; a friend might approach a valuer and ask to undervalue the family home when going through a divorce. This is strictly prohibited as there is no objectivity and it is a conflict of interest.

Question 44

What is a restricted valuation service and can you provide one?

Answer 44

A client may require a restricted service; for example, a short timescale for reporting may make it impossible to establish facts that would normally be verified by inspection, or by making normal enquiries; or the request may be for a valuation based on the output of an automated valuation model (AVM). A restricted service will also include any limitations on assumptions made in accordance with VPS 2. often referred to as ‘drive-by’, ‘desk-top’ valuations.

Question 45

What RICS guidance relates to the use of comparable evidence?

Answer 45

RICS Guidance Note, Comparable Evidence in Real Estate Valuation (1st Edition, October 2019).

Question 46

What is an internal valuer?

Answer 46

Internal valuation is a valuation carried out by a valuer who is employed by either the entity that owns the assets or a related company or manager.

Question 47

Can an external valuer provide an internal purposes valuation?

Answer 47

External Valuer – A valuer who, together with any associates, has no material links with the client, an agent acting on behalf of the client or the subject of the assignment. Yes an external valuer can provide an internal valuation.

Question 48

What happens if market conditions change between the valuation date and report date?

Answer 48

the valuer should draw attention to this in the special assumptions. Valuation date and report date must be clearly distinguished in the report.

Question 49

What is a 'special purchaser'?

Answer 49

A particular buyer for whom a particular asset has a special value because of advantages arising from its ownership that would not be available to other buyers in a market.

Question 50

Is special value from a special purchaser reflected in MV? Where does the definition of fair value come from?

Answer 50

Market value Ignores any price distortions caused by special value or marriage value.

Question 51

Does this differ from MV? When is fair value used?

Answer 51

Fair value refers to the actual worth of an asset, which is derived fundamentally and is not determined by the factors of any market forces. Market value is solely determined by the factors of the demand and supply, and it is the value that is not determined by the fundamental of an asset. Fair value is used when valuing a property for accounting purposes.

Question 52

What are the 3 approaches under VPS5?

Answer 52

1. Market approach (Comparable) 2. Income approach (Investment, profits) 3. Cost approach (Residual , DRC)

Question 53

What is the Valuer Registration Scheme?

Answer 53

Valuer Registration is a risk monitoring and quality assurance programme which audits compliance with the RICS Red Book.

Question 54

Are there any instances where certain sections of the Red Book may not apply?

Answer 54

There are no exemptions from compliance with PS 1-2 when providing valuation advice. However, there are 5 specific circumstances where VPS 1-5 may be unsuitable or inappropriate to comply with: Providing agency or brokerage advice for an acquisition or disposal Acting as an expert witness Performing statutory functions Providing a valuation purely for internal purposes, without liability and without communication to a third party Providing valuation advice in the course of negotiations or litigation where the valuer is acting as an advocate

Question 55

What is the basis of value under FRS 102?

Answer 55

Fair value.

Question 56

What is a SORP?

Answer 56

What does SORP mean? SORP is the Statement of Recommended Practice (SORP) on Accounting and Reporting for charities which prepare their accounts on an accruals basis.

Question 57

When would you use EUV? What is the definition of EUV?

Answer 57

EUV is effectively the value of land in it's existing use. This is not the same as the price paid and it must disregard any hope value.

Question 58

What additional criteria apply to secured lending valuations?

Answer 58

Disclosure of any conflicts in terms of engagement and arrangements to manage the conflict (last 2 years) - Valuation method adopted, supported with the calculation - When a recent transaction at the property has occurred/provisionally agreed price disclosed, the extent to which that information has been accepted as Market Value - Comment on the suitability of the property for lending - Any circumstances of which the valuer is aware that could affect the price - if the property is, or is intended to be, the subject of development or refurbishment for residential purposes, the impact of giving incentives to purchasers - Potential and demand for alternative uses - Occupational demand for the property

Question 59

What information should you specifically request for a secured lending valuation?

Answer 59

. Information and references to the volatility in specific markets is a pre-requisite of a well documented valuation.

Question 60

What is a regulated purpose valuation?

Answer 60

A valuation relied on by third parties who have not commissioned the valuation and they are subject to valuation monitoring.

Question 61

What additional disclosures must be made for a regulated purpose valuation?

Answer 61

Proportion of total fees in the preceding financial year paid by the client to the total fee income expressed as either less than 5%, or, if more than 5%, then within range of 5% Where, since the end of the last financial year, if it is anticipated that there will be a material increase in the proportion of fees payable by a client, the valuer must include a statement to this effect

Question 62

What is the basis of value for a statutory valuation? What might a statutory valuation relate to?

Answer 62

1. Financial statements (company accounts) 2. Stock Exchange listings 2. Takeovers and mergers 4. Collective investment schemes 5. Unregulated property unit trusts

Question 63

What is a yield?

Answer 63

A measure of risk and return on an investment property that generates income, expressed as a percentage.

Question 64

What is an equated yield?

Answer 64

Target rate of return. Internal Rate of Return. Used in DCF.

Question 65

What is an equivalent yield?

Answer 65

The weighted average of the Initial Yield and the Reversionary Yield representing the return a property will produce based upon the timing of the income received.

Question 66

How would a yield reported from auction differ from a Net Initial Yield?

Answer 66

Auction results (beware that these are gross prices, and may also be special purchaser/insolvency sale)

Question 67

How would you value a property in uncertain market conditions – does the Red Book give any guidance?

Answer 67

In the case of uncertainty, the Red Book states that ‘valuers should not treat … a statement expressing less confidence in a valuation than usual as an admission of weakness … it is … a matter entirely proper for disclosure’. Valuers should, therefore, ensure clients understand that unusual market conditions may lead to uncertain valuations, but that this will help them to make better informed business decisions.

Question 68

How could you value a long leasehold interest?

Answer 68

I would deduct the Ground Rent from the Gross Income to calculate the Net Income. Capitalise Net Income at a yield for the remaining length of the lease to create a Market Value of the Leasehold Interest. Typically, single rate yield discounted to reflect risk that a Leasehold interest a ‘wasting asset’; depends on the length of the lease remaining. Long leasehold interests do not realistically require a discount. Graphs of relativity show relationship between lease term remaining and the % of Freehold value. Under 50 years; treated as a ‘wasting asset’.

Question 69

How does a term and reversion and DCF differ?

Answer 69

Both are types of investment method of valuation. T & R = Since market rents tend to rise and fall, if the current passing rent is less than the market rent, the investment is said to be 'reversionary'. Discounted cash flow (DCF) is used to estimate the value of an investment based on its expected future cash flows. It calculates what is the value of an investment today, based on projections of how much money it will generate in the future.

Question 70

What is the difference between a growth explicit and a growth implicit yield?

Answer 70

Implicit used in ’trad’ investment vals, explicit in DCFs where you explicitly forecast rental growth (it is built into the yield for implicit yields and the trad method)

Question 71

When would you use a dual rate investment calculation?

Answer 71

Long leashold.

Question 72

Give examples of each of these types of yield.

Answer 72

Gross yield 5.65% | Net yield 4.96%

Question 73

How would you value an under/over rented investment property?

Answer 73

Hardcore and topslice.

Question 74

Where can you find yield evidence from?

Answer 74

no different to rent or sales comps.

Question 75

What is the hierarchy of evidence?

Answer 75

RICS have categorised comparables into three categories, forming a hierarchy of evidence: Category A – direct transactional evidence Category B – general market data providing guidance rather than a direct indication of value, such as evidence from published sources, commercial databases, indices, historic evidence and demand/supply data Category C – other sources, such as transactional evidence from other property types and locations and other relevant background data

Question 76

What would you do if comparable evidence was limited?

Answer 76

A lack of robust evidence should not prevent a valuation being provided, this is where the skills and experience of the valuer become even more important. Valuers can also look further afield and at a wider range of evidence or indicators where direct comparables are limited. In the case of uncertainty, the Red Book states that ‘valuers should not treat … a statement expressing less confidence in a valuation than usual as an admission of weakness … it is … a matter entirely proper for disclosure’. Valuers should, therefore, ensure clients understand that unusual market conditions may lead to uncertain valuations, but that this will help them to make better informed business decisions.

Question 77

What is NPV?

Answer 77

Net present value. NPV is defined as the present value of all future expected income and capital flows, discounted at the investor's target or required rate of return.

Question 78

What is IRR?

Answer 78

Internal Rate of Return. IRR is a metric used in capital budgeting to estimate the profitability of potential investments. The internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero

Question 79

What is a term and reversion? What is a hardcore and topslice?

Answer 79

Used for under/ over-rented properties - The income flow is divided horizontally - Top slice = passing rent less The market rent - Bottom slice = market rent - Top slice is capitalised until The next rent review/end of term - Bottom slice is capitalised into perpetuity - Higher yield applied to The Top slice

Question 80

What is a Discounted Cash Flow (DCF)?

Answer 80

DCF discounts back to the future value of the property’s future income stream, allowing for rental growth and taking account of the timing of receipts/payments.

Question 81

When would you use a DCF?

Answer 81

A DCF analysis is appropriate in any situation wherein a person is paying money in the present with expectations of receiving more money in the future. Example a hotel.

Question 82

What are the advantages of a DCF? What are the disadvantages of a DCF?

Answer 82

PROs 1. Theoretically the most sound method if the analyst is confident in his assumptions 2. Not significantly influenced by temporary market conditions or non-economic factors 3. Especially useful when there is limited or no comparable information CONS 1. Valuation obtained is very sensitive to a large number of assumptions/forecasts, and can thus vary over a wide range 2. Often very time-intensive relative to some other valuation techniques 3. Involves forecasting future performance, which is very difficult

Question 83

What is marriage value?

Answer 83

The additional value created when combining two or more assets together rather than the value of them separately.

Question 84

When would you include an element of hope value in a valuation?

Answer 84

An additional value applied to land in the hope of conversion to an alternative and higher value use. Example: Hibernia REIT’s purchase of 90 acres at Newlands Cross area for €27m. The land is zoned agri and adjoins other holdings owned by Hibernia. There is a hope that given the location, access etc and the hosing crisis that these lands will be rezoned for residential use. Interestingly, the IRFU have retained an interest in the land in this regard – Should the lands be re-zoned in the next 10 years, the IFRU will be entitled to an additional payment equal to 44% of the market value of the lands at that date, minus the initial purchase price and subject to certain minim payments.

Question 85

What is market value?

Answer 85

It is the estimated amount at which an asset or liability should be exchanged for on the open market on the valuation date between a willing vendor and willing buyer, in an arm’s length transaction, after proper marketing, and where the parties acted knowledgeably, prudently and without compulsion.

Question 86

Tell me what the definition of investment value?

Answer 86

The value of an asset to an owner or prospective owner for individual or operational objectives.

Question 87

Tell me what the definition of fair value?

Answer 87

The estimated price for the transfer of an asset between identified knowledgeable and willing parties that reflects the respective interests of those parties. Fair value refers to the actual worth of an asset, which is derived fundamentally and is not determined by the factors of any market forces. Fair value is used when valuing a property for accounting purposes.

Question 88

How does market value differ to investment value/fair value?

Answer 88

Market Value is achieved in an arm’s length transaction so disregards any advantages or disadvantages for each party gains from the transaction, whereas fair value is the assessment of price between two identified parties and can take these advantages and disadvantages into account.

Question 89

Definition of Market Rent

Answer 89

Is it the estimated amount at which an asset would be leased on the open market between a willing lessor and a willing lessee, in an arm’s length transaction, after proper marketing and where both parties have acted knowledgeably, prudently and without compulsion

Question 90

What is gross yield?

Answer 90

The yield is not adjusted for purchasers’ costs

Question 91

What is net yield?

Answer 91

The resulting yield adjusted for purchasers’ costs

Question 92

Definition of Reversionary Yield

Answer 92

The yield a property will fetch once the rent returns to Market Rent in the future. Found by dividing the Market Rent by the current price

Question 93

What are purchasers’ costs?

Answer 93

The costs associated with purchasing the property, namely Stamp Duty which is 7.5% on commercial properties, agents and legal fees which are approximately 1% each.

Question 94

What is a dual capitalisation rate and when would you use one?

Answer 94

Capitalisation Rate (or Cap Rate) is a ratio used to estimate the value of income producing properties. Put simply, the cap rate is the net operating income divided by the sales price or value of a property expressed as a percentage. Use for investment properties.

Question 95

Is the profits/DRC method used for specialised or specialist property?

Answer 95

DRC.

Question 96

What type of properties would you use the profits method for?

Answer 96

Profits - A nursing home/ hotel

Question 97

What is intangible goodwill?

Answer 97

Goodwill is an intangible asset that accounts for the excess purchase price of another company. Items included in goodwill are proprietary or intellectual property and brand recognition, which are not easily quantifiable.

Question 98

What is net profit?

Answer 98

Net profit is the amount of money your business earns after deducting all operating, interest, and tax expenses over a given period of time. To arrive at this value, you need to know a company's gross profit. If the value of net profit is negative, then it is called net loss.

Question 99

What is gross profit ?

Answer 99

Gross profit is the profit a business makes after subtracting all the costs that are related to manufacturing and selling its products or services. You can calculate gross profit by deducting the cost of goods sold (COGS) from your total sales.

Question 100

What is turnover?

Answer 100

Turnover is the total amount of money your business receives as a result of the sales from your goods and/or services over a certain period of time. The calculation doesn't deduct things like VAT or discounts, which is why it's also referred to as 'gross revenue' or 'income'

Question 101

What are the steps to providing a profits valuation?

Answer 101

Profits method. 1. Review company accounts 2. Take net profit and add charges that are specific to the operator (finance, depreciation etc to arrive at ‘’Adjusted Net Profit” 3. Apply a multiplier

Question 102

What is Fair Maintainable Turnover?

Answer 102

The majority of public houses are valued taking into account the level of trade generated; referred to as the fair maintainable turnover. The age, style of property, location and other factors are also taken into account, together with income streams such as wet trade, dry trade, accommodation and other receipts.

Question 103

What is a Reasonably Efficient Operator?

Answer 103

This is a concept where the valuer assumes that the market participants are competent operators, acting in an efficient manner, of a business conducted on the premises.

Question 104

What is personal goodwill?

Answer 104

Personal goodwill is the intangible value that arises from the efforts or reputation of a business owner or other individual. It means that the value is only associated with the person working within an organization and not the business itself. In accounting and finance, goodwill is an intangible asset, whose value cannot be traced to a distinct and identifiable source. When assessing future trading potential, the valuer should exclude any turnover and costs that are attributable solely to the personal circumstances, or skill, expertise, reputation and/or brand name of the existing operator (i.e. personal goodwill).

Question 105

What is trading potential?

Answer 105

The essential characteristics of properties that are sold on the basis of their trading potential are that they are designed for a specific use and that ownership of the property normally passes with the sale of the business as a going concern. The approach that lends itself best to valuing such a property, ensuring that the valuer has a thorough understanding of that business, is the earnings capitalisation approach by use of the discounted cash flow (DCF) model.

Question 106

What is EBITDA?

Answer 106

Earnings before interest, taxation, depreciation and amortisation. - Annual turnover less costs, working expenses and operators remuneration.

Question 107

What is Fair Maintainable Operating Profit?

Answer 107

This is ascertained by making reference to recent trading information for the business (ideally profit and loss accounts for the last 3 years).

Question 108

How do you calculate the divisible balance?

Answer 108

Net profit = Divisible balance. The profits method estimates a business’s gross profits and thereafter deducts all working expenses excluding any rental payments made; this gives the divisible balance, or the amount of capital to be shared between tenant (for running the business) and landlord (for rent).

Question 109

What accounts information would you want to review for a profits valuation?

Answer 109

``` Use three years of accounts. Annual turnover – costs = gross profits – reasonable working expenses = net profit – operators renunciation = EBITDA X capitalise at an appropriate yield ```

Question 110

Do RICS provide any guidance on RLVs or valuing development property?

Answer 110

RICS Guidance Note, Valuation of Development Property (1st Edition, October 2019). RICS Valuation – Global Standards 2022 (Red Book), which incorporates IVS 410 – Development Property.

Question 111

What is an RLV? What is a development appraisal?

Answer 111

Development Appraisal: (gives profit) A financial appraisal of a development. It is normally used to calculate either the residual site value or the residual development profit, but it can be used to calculate other outputs. Residual Land Valuation: (gives site value) The amount remaining once the gross development cost of a project is deducted from its gross development value (GDV) and an appropriate return has been deducted.

Question 112

What is the difference between a development appraisal and a residual?

Answer 112

A development appraisal does not provide a market value. It assumes a site value and then provides guidance as to the viability of a proposed development. A residual is a specific valuation of a property holding (site value) at a particular point in time for a particular purpose. ``` Development Appraisal Residual GDV GDV Less Costs Less Costs Less Site Value Less Profit =Profit = Site Value ```

Question 113

How can you value development land?

Answer 113

The two main valuation methods are the comparable and residual methods. Ideally, both methods should be used to ensure that the end value is cross-checked appropriately.

Question 114

What is the basic process of undertaking a RLV/development appraisal? What does a development appraisal show?

Answer 114

I would use the Residual method of valuation. a. I would first find the Gross Development Value which is the market value of the proposed development at the date of valuation. If it is a residential site, I would multiply the number of units by the sale price and take off 13.5% for VAT. For commercial I would capitalise the market rent by an appropriate yield. b. I would then deduct purchaser’s costs to get the Net Development Value – this is stamp duty at 7.5% and legal and agents’ fees at approximately 2% c. I would then deduct Development Costs – construction costs, professional fees, marketing costs, and finance. d. I would then deduct Developer’s Profits which is usually approximately 15% - 20%

Question 115

What are the key things you need to consider when inspecting a development site?

Answer 115

• the presence of archaeological features. • evidence of waste management obligations and whether these obligations have been fulfilled • water or mineral extraction rights that may be available • geotechnical conditions, including potential for contamination or other environmental risks • limitations, encumbrances or conditions imposed on the relevant interest by private contract • rights of access to public highways or other public areas • the availability of and requirements to provide or improve necessary services, for example, water, drainage or power and • the need for any off-site infrastructure improvements and the rights required to undertake this work.

Question 116

What are the key things you need to consider when appraising a development site?

Answer 116

``` The planning history of the site. Local needs such as employment and affordable housing. Likely local reaction. The need for consultation. The local plan. ```

Question 117

What is a development appraisal?

Answer 117

The RICS define a development appraisal as “an objective financial viability test of the ability of a development project to meet its costs including the cost of planning obligations, whilst ensuring an appropriate site value for the landowner and a market risk adjusted return to the developer in delivering the project”. Development appraisal involves research into constraints and opportunities evolving from the location, legal and planning aspects of potential sites as well as their physical characteristics. This can be a complex process, and independent client advisers may be required by the client to supplement in-house expertise and assist research and evaluation.

Question 118

Tell me about your due diligence when undertaking a development appraisal.

Answer 118

§ Title and conveyance documentation. § Land Registry records. § Boundaries and demarcation. § Restrictive covenants. § Rights of way and easements. § Rights of light. § Party walls. § Existing tenancies licences and unexpired leases. § Access, adopted highways and third-party access rights. § Tree preservation orders § Listed buildings and conservation areas.

Question 119

What is a development appraisal? What sources of information do you use when undertaking a development appraisal?

Answer 119

The development appraisal generally concerns properties and their opportunities for development; vacant lots, gaps between buildings and abandoned industrial or military sites are especially suited for development appraisal. In order to examine their value and to emphasise their development and appreciation potential, the potential of the property has to be contrasted with its risks. Therefore, the development appraisal leads off with an analysis of the current state of the property, which includes a review of the property itself, the site and the significant market situation. With regard to the property itself, follows an examination of the substance (e.g. are there any contaminated sites?), potential property rights of third parties, for example, rights of use, and furthermore, the building regulations (does a development plan exist or are there other regulations?).

Question 120

How can you assess development potential?

Answer 120

Development Appraisal to assess its profitability/ viability. Also check local councils for development needs, suitability of site (size, topography, availability, infrastructure, drainage)

Question 121

What is GDV/NDV?

Answer 121

Gross Dev Value | Net Dev Value (minus sales costs)

Question 122

How do you calculate GDV?

Answer 122

The GDV of a new development can be obtained gaining evidence of recent sales transactions within the near vicinity, and also be obtained from market evidence. The overall end value is the GDV.

Question 123

What do development costs include?

Answer 123

``` Construction costs (contingencies, professional fees, build costs, planning costs) Post construction costs (marketing costs, sales and legal fees, finance costs and developer's profit). ```

Question 124

Where can you source build costs from?

Answer 124

Society Of Chartered Surveyors Ireland Publish Real Cost Of Housing Report

Question 125

What are typical finance costs?

Answer 125

Interest rates on loans

Question 126

What would you apply finance costs to and on what basis?

Answer 126

Apply it to the development appraisal. Site value (GDV- less VAT – profit – construction cost – finance cost) e.g. Less Finance Costs – 6%. I confirmed the finance costs with my line manager.

Question 127

What is an S curve?

Answer 127

An S curve relates to the shape produced by the typical flow of costs on a property development project. The construction costs start off small, then as the project kicks off the costs increase and then the taper off again towards the end.

Question 128

What do holding costs typically include?

Answer 128

Depending on what stage of the project lifecycle the borrower approaches the lender, the borrower may have incurred various ‘holding’ costs. Holding costs are costs associated with owning the development site/building prior to the construction phase, but which do not add value to, or progress, the development process. Examples include insurance of the building, site security, empty rates and utility charges. Such holding costs are often considered as not being true development costs and are instead classified as ‘sunk costs’.

Question 129

How do you typically calculate developer’s profit?

Answer 129

Development appraisal

Question 130

What are some typical inputs (and %/£) in a RLV?

Answer 130

build costs, professional fees, marketing fee, planning costs, contingency.

Question 131

What other criteria might be assessed in terms of performance measurement for a RLV?

Answer 131

Profit on cost / GDV.

Question 132

What are the advantages/disadvantages of a RLV?

Answer 132

Residual valuation is the process of valuing land with development potential. Advantage: For developers, it is an essential valuation tool as it helps to quickly identify the value of a development site, land or existing buildings that have the potential to be developed or redeveloped. Disadvantage: 1. Relies on a number of accurate inputs from the valuer. 2. Very sensitive to minor adjustments 3. Can be complex

Question 133

What is a sensitivity analysis?

Answer 133

Development Appraisals are sensitive to many factors, particularly to the variables that are put into the appraisal, such as construction costs, rates of interest, the yield and the rent. A sensitivity analysis will show you how the outcome changes when the inputs are varied slightly.

Question 134

How do you carry out a sensitivity analysis? What variables might you change and why?

Answer 134

Changing the GDV and potential costs.

Question 135

What factors affect sensitivity of a development appraisal?

Answer 135

Development Appraisals are sensitive to many factors, particularly to the variables that are put into the appraisal, such as construction costs, rates of interest, the yield and the rent. A sensitivity analysis will show you how the outcome changes when the inputs are varied slightly.

Question 136

Tell me about software you have used to provide a RLV. Give me a limitation of this software.

Answer 136

ARGUS. Limiation: program is complex to understand

Question 137

What RICS guidance relates to the valuation of development property?

Answer 137

RICS Guidance Note, Valuation of Development Property (1st Edition, October 2019). RICS Valuation – Global Standards 2022 (Red Book), which incorporates IVS 410 – Development Property.

Question 138

What is viability?

Answer 138

Viability assessments are financial appraisals carried out on planned housing. developments. They estimate the amount the developer will spend building the. homes, and the profit they will make from selling them.

Question 139

When would a cost approach be used?

Answer 139

Cost approach (Residual , DRC) . USES: Special use properties, new construction, insurance.

Question 140

What type of buildings would a cost approach be used for?

Answer 140

Special purpose or special use properties are those that have limited or specialized uses. These are ``` Religious buildings Hospitals Theaters Museums, and the like The cost approach is used in their market pricing because they generate little income, which invalidates other valuation methods. ```

Question 141

What is the supposition that a DRC is based upon?

Answer 141

This concept ASSUMES that the cost of a property should be more or less equal to the cost of constructing an identical building (again, plus the land value).

Question 142

What are the 3 components of the cost approach? How do you assess the value of the land?

Answer 142

The cost approach considers the cost of land, plus costs of construction, less depreciation.

Question 143

How do you assess Gross Replacement Cost?

Answer 143

Home replacement cost is the total amount required to rebuild your home to its original standard. Your dwelling limit must be at least 80% of your home's rebuild value to be fully covered. The net rebuilding cost is normally calculated by multiplying the gross internal area of the building by a suitable rate for its reconstruction.

Question 144

What costs would you consider within GRC?

Answer 144

In assessing the cost of the replacement asset, due account should be taken of all the costs that would be incurred by a potential buyer on the valuation date. Examples of costs that may be expected to be incurred in replacing the asset include: • delivery and transportation • installation and commissioning • any unrecoverable duties or taxes • setting up costs, where appropriate, such as planning fees and site preparation works • professional fees related to the project • a contingency allowance, if appropriate and • finance co

Question 145

What would you do if the building could be replaced with a modern equivalent?

Answer 145

The general principle is that the costs reflect those of a modern equivalent asset that offers an equivalent service potential to the actual asset.

Question 146

What types of obsolescence are there?

Answer 146

There are three types of obsolescence • Physical obsolescence – caused by deterioration • Functional obsolescence – the design or specification becomes so outdated the building can no longer be used for its original function • Economic obsolescence – due to changing market conditions for the asset

Question 147

How would you deal with depreciation/obsolescence?

Answer 147

Depreciate Replacement Cost method of valuation. This includes valuing the land in it’s current use, and adding on the cost of rebuilding the property and less an amount for depreciation and obsolescence.

Question 148

Is the cost approach a market valuation?

Answer 148

No. The cost approach estimates a price that is equal to building an equivalent.

Question 149

1. What is the current level of Stamp Duty?

Answer 149

7.5% on commercial properties. For residential it is 1% on properties up to €1 million, anything over €1m is subject to 2%.

Question 150

How would you value a site?

Answer 150

I would use the Residual method of valuation. a. I would first find the Gross Development Value which is the market value of the proposed development at the date of valuation. If it is a residential site, I would multiply the number of units by the sale price and take off 13.5% for VAT. For commercial I would capitalise the market rent by an appropriate yield. b. I would then deduct purchaser’s costs to get the Net Development Value – this is stamp duty at 7.5% and legal and agents’ fees at approximately 2% c. I would then deduct Development Costs – construction costs, professional fees, marketing costs, and finance. d. I would then deduct Developer’s Profits which is usually approximately 15% - 20%

Question 151

What is Part 5 and how would you account for it in a residual valuation?

Answer 151

Take it off of costs section, and not put it in the profits section

Question 152

What are the different purposes for valuations?

Answer 152

* Loan security * Financial reporting * Compulsory Purchase * Equity release * Court proceedings

Question 153

What liabilities may be created through valuation? What is a liability cap and when would one be used?

Answer 153

A liability cap puts a maximum 'cap' the amount of potential damages to which a company is exposed. The most direct way for parties to limit their liabilities under a contract is by putting a financial cap on liability for such losses through a limitation of liability clause.

Question 154

Explain why the RICS are carrying out an Independent Valuation Review. Who is leading this?

Answer 154

RICS Standards and Regulation Board (SRB) commissioned a Review of Real Estate Investment Valuation. The Valuation Review’s aim is to future-proof confidence in this important area of valuation upon which economies and the public rely most heavily. The Review’s focus is on valuations relied upon directly by third parties, predominately for financial reporting purposes. The Valuation Review was led by Peter Pereira Gray, supported by an expert advisory group,

Question 155

Explain what you understand by the term, margin of error.

Answer 155

what is deemed to be an acceptable margin of error in valuation disputes. It is has been left to the courts to decide what is a permitted margin of error when carrying out a valuation of property. Generally, case law precedent refers to a margin of between 10% and 15% depending upon the facts.

Question 156

Explain your understanding of K/S Lincoln v CBRE Hotels (2010).

Answer 156

Acceptable margins of error ranged depending on the type of property and the Judge felt that in this case the margin of error was probably slightly in excess of 10%. In this case therefore despite the defendants admitting (and the Judge finding) that their report was deficient in a number of respects, they were not found liable to pay damages to the claimants for a variety of different legal reasons.

Question 157

Explain the precent set in Hyde and another v Nygate and another (2021) in relation to the valuation of high-profile development sites.

Answer 157

In considering whether an administrator had acted properly and independently in connection with the sale of a valuable development site in central London, the High Court determined the scope of an administrator’s duties.

Question 158

What are the proposed changes in the 2022 Red Book Global consultation?

Answer 158

The aim of the update is to reflect changes to the International Valuation Standards 2022, as well as clarifying certain sections of the existing Red Book Global.Valuers need to amend any valuation templates or proformas used, including reports and terms of engagement to reflect below changes. Emphasising the need to agree clear and unambiguous terms of engagement. The terms quasi, partial or non Red Book should not be used in terms of engagement or reporting. Instead, the exception should be specifically stated and explained in the terms of engagement and valuation report. Requiring more detailed commentary on sustainability/resilience and environmental, social and governance (ESG) matters in VPGA 8 Valuation of Real Property Interests. Various amendments are made to the VPGAs, in particular VPGA 4 Individual Trade Related Properties and the reference to IVS 230 Inventory.

Question 159

What is leasehold enfranchisement?

Answer 159

Leasehold enfranchisement is the process you go through to either extend your lease, or purchase a share of the freehold (collective enfranchisement). ... These leases tend to be long-term – as high as 999 years

Question 160

How does leasehold enfranchisement differ for flats and houses? What is the basis of valuation?

Answer 160

The law is slightly different depending on whether you have a house or flat. You might be able to extend your lease by: - 90 years on a flat - 50 years on a house Market value.

Question 161

What is the basic procedure of leasehold enfranchisement?

Answer 161

1. Speak to landlord to see if they are willing to extend lease. 2. Appoint a valuation surveyor and solicitor. 3. Make a formal offer. 4. Pay the deposit and allow access to landlord (if requested) 5. Counter notice (accept or not) 6. Negotiate terms.

Question 162

What are current mortgage rates (on a BTL mortgage)?

Answer 162

Interest rates on buy-to-let mortgages are usually higher. The minimum deposit for a buy-to-let mortgage is usually 30% + of the property's value. A typical Buy to Let mortgage of €250,000 at 3.95% over 20 years with 240 monthly instalments would cost €1582 a month – a total of €355,730 over 20 years.

Question 163

How have mortgage rates changed over the past few years?

Answer 163

Latest figures from the Central Bank show that the average interest rate on a new mortgage in Ireland was 2.73% in October. Although low for Ireland by historical standards, and a drop from 2.79% the year before, this compares to an average rate of 1.28% across the Eurozone

Question 164

What are current buy to let LTV ratios?

Answer 164

ICS, KBC, AIB 70% or less. Finance Ireland, PTSB 60% or less.

Question 165

Why did you use an investment method of valuation in Lancaster?

Answer 165

I valued the PRS portfolio using the investment method, to achieve a 5.65% gross yield, with a market value of €4.2 million. I used this method of valuation as the property portfolio was aimed towards the PRS sector. The units were purely investment properties.

Question 166

What are cash backs in lieu of rental income and how can these impact upon value?

Answer 166

Used to attract tenants when demand for rental units was low .e.g. NYC in particular during covid lockdown.

Question 167

What are guaranteed rents?

Answer 167

Guaranteed Rent also known as Rent to Rent is where an individual or company takes an interest in a property for a period of time from a landlord and guarantees to pay a fixed rent to the landlord. The landlord gives consent to the third party, 'the Renter', to then rent the property to other tenants.

Question 168

How can Market Rent impact upon the underwriting of a loan?

Answer 168

Landlords that consistently achieve above-market rents expect to be compensated with stronger cash flows and enhanced property values. However, lenders often consider such high rents to be “at risk” and write rents down to reflect market averages when formulating their underwritten cash flows. This strategy safeguards lenders if they need to take over the property and release the space.

Question 169

What is a lifetime mortgage?

Answer 169

A lifetime mortgage is when you borrow money secured against your home, provided it's your main residence, while retaining ownership. ... When the last borrower dies or moves into long-term care, the home is sold and the money from the sale is used to pay off the loan.

Question 170

What is home reversion?

Answer 170

A home reversion scheme is where a consumer agrees to sell a share of their home in return for a set price. The consumer does not borrow against the value of their home but instead sells a share of their home. Typically, home reversion schemes don't offer the best value for money, particularly as you never receive the full market value for your property. For this reason, equity-release schemes tend to be regarded as a last resort for homeowners.

Question 171

What is the amortgage to rent scheme?

Answer 171

If you are having trouble paying your mortgage, the mortgage-to-rent scheme lets you switch from owning your home to renting it as a social housing tenant. Under the scheme, you choose to give up ownership of your home to your lender. This means you will no longer own your home or have any financial interest in it. An approved housing body (AHB) or approved private company then buys your home from your lender and rents it back to you. If your financial situation improves, you have an option to buy your home back.

Question 172

What is the gov shared equity scheme?

Answer 172

The scheme will be targeted at first-time buyers who are seeking to buy a new home but who cannot secure the full amount required. The Government lends you the money and charges interest on this loan. In addition, the Government takes an ownership stake in your property equal to the percentage of the property’s value that they have contributed. So if the Government has put up 10% of the money via an equity loan, they own 10% of the property.

Question 173

What is the difference between a mortgage loan and the gov shared equity scheme?

Answer 173

The equity loan scheme differs from a mortgage whereby the bank puts up the money and takes a charge on the property as a security but does not take an ownership stake in the property. If you sell a property that has a mortgage, you pay back the outstanding mortgage. If you sell a property that has an equity loan, the lender is entitled to their percentage of the sales price; if the price has gone up, you will pay back more than the initial loan i.e. the lender shares in the capital appreciation of the property. A bank lending a mortgage does not.

Question 174

How would you value a shared ownership / shared equity scheme property?

Answer 174

Market value.

Question 175

What is a mortgage valuation?

Answer 175

A mortgage valuation tells the lender whether or not the property is reasonable security for the loan being advanced. It may not always include a physical inspection and will not provide in-depth information about condition and any defects.As part of a loan application, most lenders will require a valuation to be carried out on the property that you are seeking a loan on. The valuation is based on the valuers knowledge of comparable prices in the locality. It may also give a “minimum reinstatement value”, which is the amount of money it would take to rebuild the property from scratch, should it ever be necessary.

Question 176

What legislation relates to mortgage valuations?

Answer 176

Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Housing Loan Requirements) Regulations 2015.

Question 177

What is affordablet rent?

Answer 177

it is a part of the governments housing for all strategy. Applicants must show they are not in receipt of social welfare and must have a combined household income of less than 82k. Next door to Lancaster.

Question 178

Tell me about the requirements in relation to your terms of engagement / inspection.

Answer 178

VPS 1 - TOE's. | VPS 2 - Inspections.

Question 179

What is the basis of value?

Answer 179

A basis of value is a statement of the fundamental measurement assumptions of a valuation, and for many common valuation purposes these standards stipulate the basis (or bases) of value that is appropriate.

Question 180

What factors may have a material impact on value?

Answer 180

These could be location, tenure, design, construction, defects, condition and tenure aspect, outlook and the immediate environment are important. Physical condition of the structure and services, facilities provided and energy efficiency will also affect value.

Question 181

What assumptions / special assumptions would you include in a valuation?

Answer 181

1. Title 2. Condition of Building 3. Services Provided 4. Planning Permission 5. Hazardous Substances

Question 182

What is reinstatement cost and when would you be asked to provide it?

Answer 182

The Reinstatement Cost of your home is how much it would cost to completely rebuild the property if it were totally destroyed, for example by a fire. ... Reinstatement Costs are for an accurate reconstruction of your property

Question 183

How would you calculate reinstatement cost?

Answer 183

SCSI website has a House Rebuild Calculator.

Question 184

How would you deal with suspected hidden defects?

Answer 184

Where the valuer suspects that hidden defects exist that could have a material effect on the value of the property, ‘the valuer should recommend more extensive investigation. It may be appropriate, in exceptional circumstances, to defer making a valuation until the results of the further investigations are known.’

Question 185

What is an incentive?

Answer 185

Incentives are not usually offered in the second-hand market and are considered in practice later in this section, but they are of such significance in the new build market that Valuation of individual new-build homes (3rd edition; 2019) includes specific reference to how they must be treated in the valuation. Only applicable in the UK however it may assist Irish valuers.

Question 186

How would you treat incentives when valuing?

Answer 186

Incentives have become increasingly innovative and sophisticated. Adjustments should be made to reflect these incentives when analysing varying comparables. The detail of the incentives included in the sale of comparable new-build properties may not always be readily available to RICS members. However, it is the responsibility of RICS members to seek and establish the details of any incentives if they propose to use the transaction as a part of their evidence base. If they cannot do so satisfactorily, they should avoid using the comparable concerned.

Question 187

Tell me about the application of the SCSI Residential Mortgage Specification in relation to a specific purpose, e.g., re-inspection or valuation without internal inspection.

Answer 187

VPGA 2 - Valuation for secured lending. A ‘re-inspection’ is a further visit to a property for which the valuer has previously provided a report, where the lender has either imposed conditions or made a retention. In a new build home, a re-inspection is required when the property has been completed/ if there has been a material change.

Question 188

What are the 3 categories of BTL investments?

Answer 188

Buy to let traditionally involves investing in property with the expectation of capital growth with the rental income from tenants covering the mortgage costs and any outgoings. 1) Individual investor 2) Consortium 3) REIT TO BE CONFIRMED

Question 189

Have you valued a historic building? What RICS guidance were you aware of?

Answer 189

Rathmore school house. RICS professional information, UK Valuation of historic buildings

Question 190

Can you tell me a key principle of this guidance?

Answer 190

Historic buildings may be subject to particular constraints that can affect their value in the wider market. These include limitations on the degree of physical alteration that can be accommodated, the range of acceptable uses of the property, and the higher costs frequently associated with repair and maintenance. Much of the historic building stock is, in terms of type and use, no different to their contemporary equivalents and standard valuation methodologies can be applied in order to determine market value

Question 191

How do you reflect the historic nature of a building in your valuation advice?

Answer 191

It is crucial to establish a comprehensive knowledge of a building, its history and environs, in order to ensure all relevant facts are taken into account in the valuation. Where appropriate valuers should also be alert to the need to consult an accredited conservation professional at an early stage of the valuation process; e.g. where issues relating to repairs or structural condition are identified.

Question 192

Tell me about the RICS guidance relating to the valuation of individual new-build homes.

Answer 192

RICS Guidance Note Valuation of Individual New-Build Homes 3rd Edition.2019. Only applicable in the UK however it may assist Irish valuers.

Question 193

What is the new build premium?

Answer 193

New-build properties may attract a new-build premium price over and above second-hand market prices. - The new build premium is split into two categories; first owner benefits and resale benefits. - First owner benefits are those only available to the first owner of a new-build property and which fall away after first occupation.

Question 194

How would a valuation of new build home differ to a second hand home? Tell me about how you have applied this guidance to a new build valuation.

Answer 194

Valuers adopt appropriate assumptions and special assumptions for new-build property. E.g. if not built yet, assumption that when finished it complies with planning permission and other statutory requirements. E.G. Assumption of 10 year warranty. E.G. Assumption that all infrastructure like roads will be completed.

Question 195

What is a key principle of the RICS Guidance Note Valuation of Individual New-Build Homes 3rd Edition.2019. document?

Answer 195

Only applicable in the UK however it may assist Irish valuers. The valuer’s comparable analysis should take into account: Underlying value locally for similar resale properties Added value for better specification or design of new-build property compared to resale or second-hand properties Incentives offered to facilitate new-build sales First-owner benefits, in terms of newness and new-build purchase packages Affordability premium Specific site and market conditions

Question 196

Does the RICS provide any guidance on this?

Answer 196

Automated Valuation Models Roadmap for RICS members and stakeholders June 2021

Question 197

What is an AVM?

Answer 197

Automated valuation models (AVMs) are statistically based computer programs that use real estate information such as comparable sales, property characteristics, and price trends to provide a current estimate of market value for a specific property. Uses: For banks to revaluation for credit decision purposes. In an audit of valuations LPT appraisal Identification of fraudulent activity

Question 198

What is an advantage and a disadvantage of using an AVM?

Answer 198

Advantages: Attractive to lenders as can be into existing valuation processing platforms. Useful to tease out statistical analysis. Save time, money and resources. Removes human element of risk. Disadvantages: Property is not usually inspected, leads to innacuracy, Little consumer transparency. Lack of quantity/ quality comparables. Systems subject fraud.

Question 199

Give me an example of an AVM you have used.

Answer 199

Never used. Examples: Zillows Zestimate. Hometrack is market leader in UK.

Question 200

Have you valued a residential property purpose built for renting?

Answer 200

No. If I did, I would make adjust my key considerations as per below. The primary driver for a buyer of an asset to be held for rent is for secure long-term income. Valuations should reflect this where such an approach is consistent with the motivation and practice of market participants generally. A valuer’s principal approach is likely to be an income capitalisation one, not dissimilar to the practice widely adopted by the commercial real estate sector. A detailed assessment of relevant costs associated with the income that can be obtained from a property is a key consideration in the valuation of properties held for rent.

Question 201

What RICS guidance are you aware of in relation to this?

Answer 201

UK Valuing residential property purpose built for renting 1st edition, July 2018 Guidance Note.

Question 202

What are the key principles of UK Valuing residential property purpose built for renting 1st edition, July 2018 Guidance Note?

Answer 202

The primary driver for a buyer of an asset to be held for rent is for secure long-term income. Valuations should reflect this where such an approach is consistent with the motivation and practice of market participants generally. A valuer’s principal approach is likely to be an income capitalisation one, not dissimilar to the practice widely adopted by the commercial real estate sector. A detailed assessment of relevant costs associated with the income that can be obtained from a property is a key consideration in the valuation of properties held for rent.

Question 203

What valuation considerations would you take into account when valuing a purpose built for renting property?

Answer 203

The primary driver for a buyer of a build-to-rent asset is the value of the existing and potential net income stream. Key valuation considerations in this context are: • security of the existing income • the potential for rental growth and assessment of the market rent • likelihood of tenant change, speed of let up, depth of occupier market and void rates • assessment of the likely expenditure necessary to sustain the current income and market rent • an assessment of any additional factors that could materially affect the value of the asset, such as legal or planning considerations (such as a covenant that may limit individual dwellings to rent for a period) • an assessment of the appropriate investment return and • as a ‘sense check’ the underlying potential to sell off the individual dwellings, one by one for sale – often referred to as the ‘break-up potential’ – assuming this is permitted in planning/legal terms.

Question 204

What is the difference between a gross and net yield in valuing BTL? What factors influence yields?

Answer 204

Gross yield is before all of the owner costs are taken account of. Factors that influence yield include: rent achieved, service charges, letting costs.

Question 205

What residential operating expenses would you need to take into account?

Answer 205

Voids, write offs, expenditure on voids, maintenance, insurance, utilities, management costs, letting costs. Amenity cots, service change and ground rent.

Question 206

What is Net Operating Income? How would you calculate it?

Answer 206

Net operating income (NOI) is a calculation used to analyse the profitability of income-generating real estate investments. NOI equals all revenue from the property, minus all reasonably necessary operating expenses.

Question 207

Have you valued a BTL property?

Answer 207

No. Lancaster Gate PRS was similar. Valued based on investment method.

Question 208

What RICS guidance are you aware of in relation to this? What are the key principles?

Answer 208

RICS Valuation Standards Global 2022 (Red book) | RICS professional guidance, UK The valuation of buy-tolet and HMO properties 1st edition, December 2016

Question 209

What key factors might affect the impact on the market of a large release of new build property?

Answer 209

Flooding the market, balancing supply and demand.

Question 210

If Market Value is assessed prior to or during construction, should the valuation reflect the evidence and market at the date of valuation or an assumed completion date?

Answer 210

Date of valuation.

Question 211

Is there a set discount for a new build premium? What do RICS say about sales incentives?

Answer 211

Incentives have become increasingly innovative and sophisticated. Adjustments should be made to reflect these incentives when analysing varying comparables. The detail of the incentives included in the sale of comparable new-build properties may not always be readily available to RICS members. However, it is the responsibility of RICS members to seek and establish the details of any incentives if they propose to use the transaction as a part of their evidence base. If they cannot do so satisfactorily, they should avoid using the comparable concerned.

Question 212

Should you reflect sales incentives in your valuation? Where would you find details of incentives?

Answer 212

Yes, you should. Call the selling agent, check new build wesbite.

Question 213

What are some of the ways that a home can be offered at a reduced price?

Answer 213

Help To Buy. | Sign contracts within 28 days and flooring is included FOC.

Question 214

What is a new build warranty?

Answer 214

A new build or new home warranty is a 10-year insurance policy for newly built or converted properties. Even though they protect buyers of new build homes from structural defects, they are actually taken out by the builder or developer. E.g. Homebond Guarantee / Premier Guarantee

Question 215

How long would a typical warranty last for?

Answer 215

10 years

Question 216

If a property was built in the last 10 years and does not have a professional certificate or guarantee/warranty, would this affect value?

Answer 216

It is expected in all new homes developments that a 10 year structural warranty would be in place. If the building works are all certified to show building compliance, then I do not believe that it would affect market value.

Question 217

What is Projected Market Value (PMV) and when would you adopt PMV?

Answer 217

Projected Market Value of Residential Property is “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”. PMV is requested by a lender for New build homes.

Question 218

What are some of the types of home finance product?

Answer 218

Conventional Mortgages (interest plus capital) Fixed-Rate Mortgages Variable rate Mortgages. If you cannot get a mortgage from a commercial lender (bank) you may be eligible for a loan from a local authority. Shared equity home loan.

Question 219

Who further regulates valuations for home finance products?

Answer 219

Trust your valuation to a chartered surveor who is monitored and regulated to ensure that valuations are being carried out in line with international valuation standards (IVS) and recognised Red Book standards.

Question 220

What are the key differences between a lifetime mortgage and a conventional mortgage?

Answer 220

A lifetime mortgage is a long-term loan secured against your home. It's repaid when you die or go into long-term care. A "conventional" mortgage is a loan that conforms to established guidelines for the size of the loan and your financial situation

Question 221

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?

Answer 221

More.

Question 222

What is home reversion? What is sale and rent back?

Answer 222

A home reversion scheme is where a consumer agrees to sell a share of their home in return for a set price. The consumer does not borrow against the value of their home but instead sells a share of their home.

Question 223

What is the help to buy scheme?

Answer 223

The Help to Buy (HTB) scheme helps first-time buyers of newly-built homes to buy a new house or apartment. It also applies to once-off self-build homes. ... The Help to Buy scheme gives a refund of income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous 4 tax years

Question 224

What are the bases of value for a registered social landlord’s housing stock for secured lending purposes?

Answer 224

Fair value. Exisiting use. Existing Use Value for social housing (EUV-SH)

Question 225

What is a statutory valuation?

Answer 225

Statutory valuations are usually required for the purposes of taxation or in cases of compulsory purchase (eminent domain acquisition), and therefore they must be undertaken in accordance with the relevant statutes.

Question 226

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

Answer 226

7m distance from the property

Question 227

What is hope value?

Answer 227

An additional value applied to land in the hope of conversion to an alternative and higher value use.

Question 228

How is hope value calculated?

Answer 228

Although it will be on a very case specific basis, comparable approach to be applied considering: 1. The likelihood of the anticipated event actually occurring 2. Adjoining landowner 3. PP in place

Question 229

Explain what you understand in relation to the issue of ‘down valuation’.

Answer 229

A down valuation occurs when a mortgage lender or, more accurately, their valuer believes that the agreed sale price is more than the value of the property. It can also affect applications for mortgages and refinancing where the estimated value is seen to be too high and not supported by evidence of comparable sales

Question 230

What RICS guidance relates to residential leasehold properties and secured lending valuation?

Answer 230

Valuation of residential leasehold properties for secured lending purposes. GUIDANCE NOTE - 1st edition, May 2021

Question 231

What principles from 'Valuation of residential leasehold properties for secured lending purposes. GUIDANCE NOTE - 1st edition, 2021' are you aware of?

Answer 231

1. The valuation of leasehold property is a complex matter. 2. The valuer must find / investigate the value-influencing details 3. valuers can no longer rely on assumptions to the extent that has historically been the case. 4. All of the following have the potential to affect value materially, and should therefore be taken into account during the valuation process. ground rent and review provisions, lease length, repair costs, service charges and restrictive covenants. 5. If key info is missing e.g. term of the lease, only the valuer can decide if the valuation can be submitted with confidence.

Question 232

What length of unexpired lease term does the guidance relate to?

Answer 232

A valuer can assume an unexpired term of 85 years for the subject property.

Question 233

What factors might affect the valuation of a leasehold property according to the Guidance Note?

Answer 233

Ground rent and review provisions, lease length, repair costs, service charges and restrictive covenants.

Question 234

What assumptions might be made in a residential leasehold property secured lending valuation?

Answer 234

Assumptions should only be relied on where appropriate enquiries have been reasonably pursued but failed to elicit information. - Unless information is provided to the contrary, a valuer can assume an C872unexpired term of 85 years for the subject property. The existing lease is enfranchisable. • The valuation includes leaseholder’s improvements. • There are no intermediary leases.

Question 235

What special assumption might be agreed and why, with the lender client?

Answer 235

Special assumption that a lender in possession has the right to serve notice to extend the lease or purchase the freehold. This means that, in the event of default, a lender would be assumed to have the right to operate in the same way as other market participants, and that this would have no impact on value.

Question 236

What methods are available to value a leasehold property and when/why might you adopt each?

Answer 236

Marriage value (for unexpired terms in excess of 80 years. (See Leasehold reform.), market value.

Question 237

When would you use a leasehold relativity graph?

Answer 237

Leasehold Reform graphs of relativity show Leasehold value as a percentage of freehold vacant possession value

Question 238

How do you ensure you know who your client is when undertaking a valuation instruction?

Answer 238

Your client is who paid for the instruction, the person you did conflict of interest and anti money laundering checks on.

Question 239

Tell me why terms of engagement are important.

Answer 239

Terms of engagement set out the basic facts of your valuation instruction so that there is no confusion about what you have been asked to do. They also define the scope and depth of the service you will provide, and in doing so set boundaries to your liability.

Question 240

What checks do you undertake before accepting a valuation instruction?

Answer 240

CIT 1. Competence 2. Conflicts of interest 3. Terms of Engagement

Question 241

Are there any additional requirements when undertaking a valuation in which the public has an interest or third parties may rely? What might these include?

Answer 241

Certain types of valuation require additional disclosures to be made (under PS 2): ``` Published financial statements Stock exchange Publication, prospectus or circular Investment schemes Takeovers or mergers ``` The additional disclosures may include the following: Relationship with the client and previous involvement Rotation policy Time as signatory Proportion of fees

Question 242

Top tips for good valuation practice

Answer 242

Be familiar with the Red Book and understand what you need to do Understand the difference between an assumption and a special assumption Ensure you know what to include in your Terms of Engagement and within your valuation report Reflect specific guidance (in VPGAs) relating to your valuation or asset type within your valuation report Check prudently for conflicts of interest and know what to do if you identify one Ensure you include sufficient justification within your report and supporting appendices Keep your file notes in good order and archive them safely and securely for future reference

Question 243

Are there any additional requirements for loan security valuations?

Answer 243

For secured lending valuations, modified or extended requirements may apply under VPGA 2. For example: 1) the valuer has no previous involvment with the lending institution/ prospective borrower. 2) Extra conflict of interest checks, to say no involvement in the assett/ lender/ borrower. Valuer has not acted in market transaction involving the property. 3) Special assumptions to be agreed in writing with the lender in advance of the report. e.g. in a new built home there will be a material change to the property.

Question 244

Talk me through an example of when you have agreed terms of engagement with a client.

Answer 244

Received instruction from Client - PWC C- Competence I - Conflict of Interest check T - TOE letter ``` I adhered to VPS 1 when preparing the TOE for Rathmore. TOE included: 1. Identity of client 2. Identity of valuer and their status 3. Asset to be valued 4. Purpose of valuation 5. Bases 6. Date 7. Extent of Investigations, Inspections 8. Restriction on use 9. Nature and source of information 10. Compliance with IVSC/Global Valuations Standards 2017 11. Assumptions & Special Assumptions 12. PI Cover 13. Disclosures 14. Fee 15. Complaints handling ```

Question 245

What does the Red Book say about inspections?

Answer 245

VPS2 – Inspection & Investigation - Must be carried out to the extent necessary to produce a valuation that is professionally adequate for its purpose - Valuer should verify all information provided and clarify assumptions - Any restrictions on inspection must be noted in TOE - Re-valuation without inspection should only be done where value is certain no material changes have occurred. Should also be agreed with client and state in TOE

Question 246

What does the Red Book say about reporting requirements?

Answer 246

VPS 3. Valuation Reports: The report must clearly and accurately set out the conclusions of the valuation in a manner that is neither ambiguous nor misleading, and which does not create a false impression. If appropriate, the valuer should draw attention to, and comment on, any issues affecting the degree of certainty, or uncertainty, of the valuation. The standard of reports varies from the brief one page document devoid of minimum content to well written and structured reports that comply fully with the requirements of VPS 3 – Valuation Reports. Again, every valuation is a Red Book valuation and valuation reports must be clear and unambiguous, deal with all matters in the terms of engagement and include the minimum content of VPS 3.2, of which there are sixteen items. It is good practice to attach a copy of the terms of engagement as an appendix to the report.

Question 247

Tell me about how you ensure that information relied upon in your valuation is appropriate and reliable?

Answer 247

I mist verify information I rely upon in my valuation. VPS 2 (Inspections, investigations and records) confirms that you must take 'reasonable steps to verify the information relied on in the preparation of the valuation and, if not already agreed, clarify with the client any necessary assumptions that will be made. While a client may request, or consent to, an assumption being relied on, nevertheless if – following inspection – the valuer considers that such an assumption is at variance with the observed facts, then its continued adoption could, providing that it is realistic, relevant and valid for the particular circumstances of the valuation become a special assumption'.

Question 248

What are the differences between a desktop and a full valuation report?

Answer 248

The desktop appraisal is a valuation performed without a physical inspection of the property. All research is done as the name suggests, from the appraiser's desk. ... A full appraisal means that an appraiser visits your home and takes photos, measures and evaluates in person the condition of your home.

Question 249

Swords – how did you value the houses using the comparable method? Explain your comparable analysis.

Answer 249

Firstly, I searched for comparable evidence. They will need to record comprehensive details. Then, Analyse the net effective rate, i.e. taking any incentives into account Collate evidence in a schedule or matrix Adopt a common measurement or comparison standard Adjust quantitatively and qualitatively using the hierarchy of evidence and other key considerations (including the valuer’s own knowledge and experience) Analyse to form opinion of value Stand back and look to sense check the final valuation figure Report their opinion to the client

Question 250

What makes a good comparable?

Answer 250

Comprehensive, i.e. ideally a valuer needs more than one transaction Very similar or identical Recent Result of an arm’s length transaction Verifiable Consistent with local market practice Result of underlying demand, i.e. sufficient bidders to create active market

Question 251

Swords - What factors affected value?

Answer 251

New build premium Size Garden size Position

Question 252

Meadowbank - How did you apply the hierarchy of evidence?

Answer 252

I used : A- Direct Market Comparables 1) new build developments in the area as the first comparable. 2) second hand properties with adjustment to reflect new build premium b - Market Data 1) supply and demand data from the area 2) published sources of information e.g. Daft Price Report

Question 253

Meadowbank - How did you factor in a new build premium?

Answer 253

Adjustments were made to reflect the new build premium when analysing varying comparables. As I was valuing these units in an area with lots of new build developments, I could clearly identify the new build premium being achieved in comparison to second hand homes.

Question 254

What RICS guidance did you follow when using the hierarchy of evidence?

Answer 254

Comparable evidence in real estate valuation - RICS

Question 255

Was this a valuation or a market appraisal – how do they differ? Did you fully comply with the Red Book?

Answer 255

Pricing the units in a new home scheme is different to a valuation. Value is a measure of worth based on the future benefits anticipated to accrue because of ownership of a property. Price is the amount of money a seller is asking for a property. While pricing the units in Meadowbank was not a red book valuation, I did adopt the principles of the red book e.g. hierarchy of evidence, Ethics, Competency, Objectivity & Disclosure.

Question 256

Rathmore – explain how you adhered to the Red Book.

Answer 256

This was a Red Book Valuation for secured lending purposes that I assisted on. After receiving the instruction from the client, we sent around a conflict of interest check to ensure we were not conflicted before devising a TOE. I then gathered all information needed from the client, title documents, planning information, OS maps etc, and then undertook all the necessary due diligence e.g. checking flood maps, planning history. We then went and inspected and measured the property. Then we gathered comparable evidence, analysed and adjusted in relation to the subject property and formed and opinion of value. I then drafted up a report, had it checked by another surveyor and sent it to the client. The report was then finalised and signed off by a registered valuer before the report was issued, invoice was raised and valuation file was archived.

Question 257

Rathmore - How did you adhere to VPS 1?

Answer 257

``` I adhered to VPS 1 when preparing the TOE for Rathmore. VPS1 – TOE (what needs to be included): 1. Identity of client 2. Identity of valuer and their status 3. Asset to be valued 4. Purpose of valuation 5. Bases 6. Date 7. Extent of Investigations, Inspections 8. Restriction on use 9. Nature and source of information 10. Compliance with IVSC/Global Valuations Standards 2017 11. Assumptions & Special Assumptions 12. PI Cover 13. Disclosures 14. Fee 15. Complaints handling ```

Question 258

What was the basis of value defined as?

Answer 258

"Basis of valuation was market value. Our opinion of market value is based upon the scope of work and valuation assumptions attached, and has been primarily derived using comparable evidence on arm’s length transactions." €170,000 market value.

Question 259

Explain your desktop due diligence.

Answer 259

* Planning history and compliance * Flood maps * Strategic development * BER rating * Public rights of way

Question 260

What factors affected value?

Answer 260

Condition, Location, setting, plot size, market activity, size, proximity to road.

Question 261

Rathmore - How did you reach your opinion of MV?

Answer 261

Looked at direct market comparable evidence. I recorded comprehensive details. Collated evidence in a schedule or matrix Adopted a common measurement or comparison standard, e.g. ppsqft Adjusted using the hierarchy of evidence and other key considerations (including the valuer’s own knowledge and experience) Analysed to form opinion of value Stand back and look to sense check the final valuation figure Report their opinion to the client

Question 262

Rathmore - What comparables was this based on?

Answer 262

4 detached properties within 5km of the subject property. | Also rang local agents for their local knowledge of market activity.

Question 263

Rathmore - What assumptions did you make?

Answer 263

We have assumed good marketable unencumbered freehold title, no onerous conditions attached to the property. We made no special assumptions.

Question 264

How did you follow the SCSI sign off requirements? What are the requirements to be part of the VRS?

Answer 264

In line with SCSI guidance, I asked two colleagues that are registered valuers to review and sign the valuation to ensure a high level of service was provided to the client.