Valuation Flashcards
What is IPMS?
The International Property Measurement Standards
What does the IPMS intend to do
Regulate property measurement both nationally and internationally
What is the difference between IPMS for residential and RICS Code of Measurement Practice?
Perimeter measurement is to the Internal Dominant Face (IDF)
What is the Internal Dominant Face?
The internal face comprising more than 50% of the floor to ceiling height for each wall section
What does IPMS 1 replace?
GEA - measured to outer perimeter
What does IPMS 2 replace?
GIA - measurement of the internal area
What is IPMS 3
Measurement of areas in EXCLUSIVE occupation and comprises IPMS 3A, 3B and 3C
What are the differences between GIA and IPMS 2?
Internal and external balconies are included in IPMS 2, but are stated separately - previously - GIA excluded external boundaries and internal was at the valuers discretions
What must RICS members/firms retain/include in reports in relation to property measurement?
- purpose of the measurement instruction
- date of measurement
- measurement standard adopted
- why IPMS has not been used (if it hasn’t)
- method of measurement (e.g. laser)
- RICS member
- unit of measurement and any conversion factor
What is the difference between an assumption and a special assumption?
Assumptions relates to factors that are consistent with, or could be consistent with factors existing at the date of valuation - may be as a result of limitations of investigations
Special assumption is used to illustrate the effect of possible changes on the value of an asset - e.g. property is freehold with VP
What is IPMS 3c
measurement of effective floor area - room x room measurement, includes stairs on GF but not on FF
What does BCIS stand for?
Build Cost Information Service
Where will you find the definition of market value?
IVS 104 paragraphs 30.1
(International valuation standards)
What is the definition of market value for a secured lending valuation?
The estimated value for which an asset or liability should exchange for on the valuation date between a willing buyer and willing seller in an arms length transaction after proper marketing And where the parties have acted without compulsion
Where will you find the definition of market value for a taxation valuation? Such as a valuation for inheritance tax purposes
The inheritance tax act 1984 section 160
What is the definition of market value for an inheritance tax valuation
The price which the property might be reasonably expected to fetch of salt in the open market at that time. The price will not be assumed to be reduced on the ground that the whole property Is to be placed on the market at one and the same time
When did the most recent version of the RICS Valuations Global come into force?
31/01/2022
Why was the red book updated? What are the key changes?
Following update to IVS 2022 (31/01/2022)
- make TOEs clearer, not to say “non-red book”
What do you include in Valuation Terms of engagement?
- The client
- Intended users
- Identification and status of valuer
- Bases of value
- Purpose of valuation
- Valuation date
- Fee basis
- Asset being valued
- Valuation currency
- Assumptions and special assumptions
- Nature and sources of information relied upon
- Format of report
Which part of the red book relates to TOEs? What do they do?
VPS1 - incorporating IVS 101
Enhance client understanding of services to be provided
Where is the bases of valuation defined?
VPS4
Where are valuation methods and approaches defined?
VPS 5
What are the three valuation approaches?
- Cost
- Income
- Market
What is the cost approach of valuation?
Based on the principle that an individual will not pay more for an asset than the cost to obtain one of equal quality, either through purchase or construction
What is the income approach?
Based on capitalisation of the current and predicted income to produce a single capital value
How do you carry out a profits method valuation?
Apply a all risks years purchase yield to the gross profit
