Valuation Flashcards
What are the 5 methods of valuation?
- Investment
- Comparable
- Profits
- Residual
- Depreciated Replacement Cost
What should be checked prior to carrying out a valuation?
- Competence
- Independence (COI)
- Terms of Engagement
What does IVS 105 refer to?
- Income method
- Cost method
- Market approach
What is the guidance on comparable evidence?
RICS Professional Standard: Comparable Evidence in Real Estate Valuation, 2019
What statutory due diligence should be checked?
Asbestos Register
Business Rates
Contamination
EPC rating
Flooding Risk
Highways
Legal title
Planning history
What’s a party wall?
Wall the straddles the boundary of different plots of land
Right to light
Aries after 20 years of enjoyment of light without third party consent by way of an easement with a prescriptive right
What are the three categories in the Hierarchy of Evidence?
Cat A - Direct transactional comps
Cat B- General market data (supply/demand)
Cat C- Evidence from other sectors
What are the aims of the RICS Valuer Registration Scheme
- Improve val quality and ensure high professional standard
- Meet RICS reqs to effectively self- regulate
- Protect and improve status of valuation profession
What is Hope Value?
Value arising from an expected future circumstance e.g. securing planning permission
What is Marriage Value?
Merger of interests physical or tenurial
Undertaken pre and post val and then level of marriage value calculated
Usually negotiated by splitting marriage value 50:50 or pro rate by £ of individual interests
When was the most recent RICS - Valuation Global Standards issued?
November 2021, Effective January 2022
What is on the front cover of the Red Book?
A red spherical shape with grey boarders
What is the structure of the Red Book?
Part 1: Introduction
Part 2: Glossary
Part 3: Professional Standards (PS)
Part 4: Valuation Technical and Performance Standards
Part 5: Valuation Applications
Part 6: The international Valuation Standards
What changes were incorporated in the latest edition?
- The need for compliance with RBG and adequate terms of reference to reflect this
- Reference to the use of the Profits Method for certain trade related property
- Sustainability and ESG factors regarding:
- Definitions (Glossary)
- Inspections and Reporting
- Valuation for secured lending, noting ESG should form an integral part of the valuation approach
- Definitions and scope of vals contained within the IVS
What is the commercial valuation Margin of Error?
Principle is +/-10%, in specialised situations +/-15%
What are purchasers costs?
Normally 6.8%
Includes:
Agents Fees .c1%
Legal Fees .c0.8%
SDLT
What is the rate of Stamp Duty Land Tax in England?
Payable by the purchaser in respect of the transfer for land and buildings on an incremental basis
The bands for Commercial property:
£0-150,000 - Nil
£150,001-250,000- 2%
£250,000 + - 5%
What is a ‘special purchaser’?
A particular buyer for whom a particular asset has special value because of advantages arising from it’s ownership that would not be available to other buyers within the market
e.g. an over-riding motivation, due to an adjoining plot of land or a tenant purchasing the freehold interest
What is special value?
Is the amount that reflects particular attributes of an asset that are only of value to the special purchaser
What are building cost reinstatement valuations / estimations?
Used for building insurance purposes
The cost of reinstating a building without a profit
What is a WAULT?
Weighted Average Unexpired Lease Term
- Remaining term to the first break or expiry of the leases
- It is calculated for multi occupied asset when considering an appropriate investment yield
What is a ransom strip?
This is a piece of land which controls the access to another piece of land
The Lands Chamber evidence suggests that value of a ransom strip could be in the order of 15%-50% of the development value unlocked by the inclusion of the ransom strip
