Valuation Flashcards
What is VPS 1?
Terms of Engagement.
What is VPS 2?
Inspections/Investigations
What is VPS 3?
Valuation Report.
What is VPS 4?
Bases of value, assumptions and special assumptions.
What is VPS 5?
Valuation approaches and methods.
What are the 3 valuation approaches?
Market, income and cost
What are the 5 methods of valuation?
Comparable, investment, residual, DRC, R and E.
What are difference models of valuation?
Term and reversion, hardcore and top slice, discounted cash flow.
What are the different valuation bases?
Market Value, market rent, investment value/worth, fair value.
What is market value?
Defined in the Red Book as EWAMP. Estimated amount an asset should exchange on the valuation date between willing parties, in an arms length transaction, after proper marketing, where both parties acted knowledgeably, prudently and without compulsion.
Definition of market rent?
EWAMP + appropriate lease terms
What is an assumption?
Assumptions are matters that, by agreement, are reasonable to accept as fact without verification.
What is a 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. Often used to illustrate the effect of changes in circumstances on value.
What is CAT A fit out?
Basic finish. I.e in an office - raised floors and suspended ceilings, basic mechanical and electrical services including lighting and air conditioning, a fire detection system and basic internal finishes.
What is Cat B fit out?
The tenant will bring a building from Cat A condition into a Cat B fit out. This will likely include the installation of kitchens and tea points, partitioning, rerouting of air conditioning and power points and addition of IT infrastructure.
What is the current Bank of England base rate / interest rate / bank rate?
5.25%. Next review due on 9th May 2024. At the beginning of 2022 the base rate was 0.25%. Higher borrowing costs means less affordable mortgages, less demand in the housing market, dampens property values. Issues such as the war in Ukraine has led to high inflation. High interest rates used to dampen that.
Current inflation levels?
CPI 3.8% in the 12 months to Feb 2024. Peaked at nearly 10% in October 2022.
Relevant 2024 budget announcements?
From 6th April 2024 - Reducing the higher rate of CGT for residential property disposals from 28% to 24%. Lower rate to remain at 18%. Done in order to raise revenue and boost the availability of housing by encouraging residential disposals. From 1st June 2024: Abolishing Multiple Dwellings Relief (bulk purchase relief in SDLT) which has seen incorrect and
Abusive claims. From 1st April 2024 Extend empty property relief reset period form 6 weeks to 3 months.
