Valuation

Question 1

What is the latest edition of the UK National Supplement

Answer 1

October 2023, effective 1st May 2024

Question 2

What are the changes to the UK National Supplement

Answer 2

Minor amendments to UKVPS 1 and 2, major changes to UK VPS 3

Question 3

What were the changes to UK VPS 3?

Answer 3

VPS 3.3 - Introduced mandatory Rotational Policy for regulated valuations.
-Valuer can be engaged for up to 5 years
-Valuation Firm can be engaged for up to 10 years
-A minimum 3 year period is required before re-engagement

Question 4

What is a regulated purpose valuation?

Answer 4

A valuation for specific purposes which are relied upon, but have not been comissioned by 3rd parties.

Including:
- For financuial reporting
-In connection with mergers and takeovers
-Valuation reports for the inclusion in prospectuses for shareholders.

Question 5

What are the latest International Valuation Standards

Answer 5

Published: 31st Jan 24
Effective: 31st Jan 25

Question 6

What are the changes to the new IVS?

Answer 6

These included a revised structure and increased focus on ESG, data and valuation modelling.

Question 7

How did you conduct your valuation at Bedford Sq?

Answer 7

• I received instruction from my client and agreed and ensured i undertake a COI check and competency check.
• I inspected and measured the property. The property was in a good state of repair and measured in NIA and IPMS3
• Obtained comparable evidence from CoStar and discussing with letting agents
• Obtained an appropriate ARY from investment agents
  Compiled a valution report containing my findings

Question 8

How did you weight your comparables at Bedford Sq

Answer 8

Ranked based on the similiarities to my subject property.
Including:
- Use
-Tenure
-Physical characterisitcs
-Timescale

Question 9

What was the outcome of the valuation at Bedford Sq?

Answer 9

Used in investment method.

Passing rent equalled market rent. (£60.80/sqFt)

MV: £6,600,000.00

Question 10

What yield was adopted at Bedford Sq?

Answer 10

7.9%

Question 11

What is the investment method?

Answer 11

Capitalising the market rent into perpetuity. Used when properties are let as investments, vacant, owner occupied.

Question 12

Describe 41 Clarendon Road to me?

Answer 12

-Grade B office building. End of life M&E kit and infrastructure.
- Concrete frame construction, with lifts and external parking.
-Pitched roof
-Rainscreen/glazing cladding

Question 13

Why was the plan to demolish at 41CR?

Answer 13

As the client wished to redevelop and formed part of their investment stratergy. Other properties on the road were all far superior in specification.

Question 14

What was the spec for the project at 41CR?

Answer 14

Latest VRF installation, ESG Credentials, Grade A office building.

Question 15

What method of valuation did you adopt 41CR?

Answer 15

Residual

Question 16

Talk me through the residual valuation at 41 CR

Answer 16

-Obtained market value of completed development via investment method
-Deduct development costs
-Deduct developers profit

• Results in site value

Question 17

What did you include in development costs at 41CR?

Answer 17

-demolition costs (£500k)
-build costs (£1,500/SqM (BCIS))
-Developers Profit (15% of GDV)
- fees for construction (10% of BC)
-finance costs (6% of total BC)
- contingency (5% of total BC)
-Agent and legal fees on disposal (10% of MR) (1.5% of GDV)
-Agent and legal fees on acquisition (1.8% of gross acquisition price)
- SDLT

Question 18

How did you calculate Developers Profit at 41 CR?

Answer 18

15% of GDV

Question 19

How did you calculate finance at 41CR?

Answer 19

Based on base rate (currently 5.25%)

Question 20

What is the basic approach to profits method

Answer 20

-take estimated annual turnover net of VAT
-deduct costs of generating turnover
-leaves net operating profit
capitalise this at given ARY

Question 21

What was the SDLT for 41 CR valuation?

Answer 21

£0-£150,000: 0% - £0
£150,000-£250,000: 2% £2,000.00
£250,000+: 5% £1,008,625.00

Question 22

What was the SDLT at Bedford Square?

Answer 22

£0-£150,000: 0% £0
£150,000-£250,000: 2% £2,000.00
£250,000+: 5% £341,930.00