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APC 2022 > Valuation - Level 1 - Residential Specific > Flashcards

Valuation - Level 1 - Residential Specific Flashcards

1
Q

What is leasehold enfranchisement?

How does it differ for flats and houses?

A

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2
Q

What is the basic procedure of leasehold enfranchisement?

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3
Q

What is the basis of valuation?

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4
Q

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

How have they changed over the past few years?

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5
Q

What are current LTV ratios?

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6
Q

How could you value an HMO using the investment method?

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7
Q

What were you specifically looking for in relation to the HMO use?

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8
Q

How can you establish if a property is an HMO?

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9
Q

What are the minimum rooms sizes for an HMO?

What is statutory overcrowding?

What legislation relates to this?

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10
Q

Tell me about any other legislative requirements relating to HMOs you are aware of?

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11
Q

What planning use do HMOs fall into.

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12
Q

Is there generally a premium attributable to HMO use over and above value as a single family house?

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13
Q

Why did you use an investment method of valuation?

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14
Q

What is an Article 4 direction?

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15
Q

How might gross and net yields differ for HMOs?

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16
Q

What RICS guidance are you aware of relating to HMO valuation?

Was there any UK-specific guidance you also complied with?

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17
Q

What category of buy-to-let valuation does a HMO fall within?

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18
Q

What are some of the broader issues facing the HMO sector?

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19
Q

Tell me about the regulation of the HMO sector.

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20
Q

How can rental incentives impact on HMO valuation?

A

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21
Q

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

A

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22
Q

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

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23
Q

How have you commented upon any limitations to accuracy of your HMO valuations?

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24
Q

How can maintenance costs impact upon valuation and what does the Red Book say about these for HMOs?

A

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25
Q

When is it reasonable to adopt the income approach when valuing HMOs under the Red Book?

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26
Q

What additional considerations do you need to make for category 3 scenarios?

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27
Q

What is a lifetime mortgage/home reversion/sale and rent back/home purchase plan?

A

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28
Q

What are the Red Book requirements in relation to these?

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29
Q

What is shared ownership/shared equity scheme?

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

A

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30
Q

What is a trustee mortgage valuation?

What legislation relates to this?

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31
Q

What is affordable/market rent?

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32
Q

What is your role in relation to advising a lender client?

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33
Q

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

What is the basis of value?

A

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34
Q

What factors may have a material impact on value?

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35
Q

What assumptions / special assumptions have you made in relation to value?

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36
Q

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

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37
Q

How would you calculate BCIS?

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38
Q

How would you deal with suspected hidden defects?

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39
Q

How would you treat incentives?

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40
Q

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

A

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41
Q

Where would you find the RICS Residential Mortgage Specification?

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42
Q

What are the 3 categories of BTL investments?

A

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43
Q

Have you valued a historic building and what RICS guidance were you aware of? Can you tell me a key principle of this guidance?

A

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44
Q

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

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45
Q

What type of RICS surveys include a valuation?

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46
Q

What level of valuation advice does a Level 2 Home Survey include?

What guidance does the RICS provide in relation to this?

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47
Q

Level 2 Home Survey - What is the basis of valuation in this type of report?

What assumptions are made in this type of report?

What else do you need to include in relation to your valuation?

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48
Q

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

What is a key principle of this document?

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49
Q

What is the new build premium?

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50
Q

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.

A

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51
Q

Tell me about your use and understanding of AVMs.

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52
Q

Does the RICS provide any guidance on AVM’s?

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53
Q

What is an AVM?

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54
Q

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

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55
Q

Give me an example of an AVM you have used.

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56
Q

Have you valued a residential property purpose built for renting?

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

What are the key principles?

A

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57
Q

What are the three key pieces of legislation which have impacted the UK residential market (and purpose built valuation)?

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58
Q

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

What is the difference between a gross and net yield in this respect?

A

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59
Q

What factors influence yields?

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

A

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60
Q

What is Net Operating Income?

How would you calculate it?

A

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61
Q

Have you valued a BTL / HMO property?

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

What are the key principles?

A

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62
Q

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

A

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63
Q

Can ‘hope value’ be considered in valuations falling under UK Appendix 10?

A

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64
Q

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?

A

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65
Q

Is there a set discount for a new build premium?

A

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66
Q

What do RICS say about sales incentives?

A

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67
Q

Should you reflect sales incentives in your valuation?

A

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68
Q

Where would you find details of incentives?

A

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69
Q

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

A

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70
Q

For houses with restrictions on occupancy, e.g. by income or job type, what is a typical discount used in the market?

A

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71
Q

What is a new build warranty?

A

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72
Q

How long would a typical warranty last for?

A

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73
Q

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

A

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74
Q

What are the two special assumptions relating to Projected Market Value (PMV) and when would you adopt PMV?

A

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75
Q

What are some of the types of home finance product?

Who further regulates valuations for home finance products?

A

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76
Q

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

A

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77
Q

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?

A

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78
Q

What is home reversion?

A

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79
Q

What is sale and rent back?

A

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80
Q

What is a home purchase plan?

A

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81
Q

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

A

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82
Q

What is a statutory valuation?

A

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83
Q

Who is responsible for Council Tax valuations?

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84
Q

What Council Tax bands exist in England?

A

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85
Q

What is the basis of value for Council Tax valuations?

A

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86
Q

What assumptions are made in a Council Tax valuation?

A

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87
Q

What is the Right to Buy?

What legislation relates to Right to Buy?

A

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88
Q

When might a lender instruct a drive-by valuation?

A

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89
Q

What is the impact of the Rentcharges Act 1977?

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90
Q

Until 22 August 2037, how should rentcharges be dealt with?

A

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91
Q

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

A

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92
Q

Do RICS publish any guidance on leasehold reform?

A

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93
Q

What right did the Leasehold Reform Act 1967 introduce?

A

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94
Q

What is the definition of a house under the Leasehold Reform Act 1967?

A

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95
Q

What are the qualification criteria to acquire the freehold of a house?

A

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96
Q

How long is a ‘long tenancy’?

A

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97
Q

Which section are the bases of valuation set out in?

A

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98
Q

What does the Section 9 (1) basis of valuation comprise?

What does the Section 9 (1A) basis of valuation comprise?

What does the Section 9 (1C) basis of valuation comprise?

A

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99
Q

Which is the most favourable basis of valuation?

A

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100
Q

How is a claim to acquire a freehold started?

A

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101
Q

What is the main impact of the tenant’s notice?

A

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102
Q

How long does a landlord (reversioner) have to reply to the tenant?

A

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103
Q

If a landlord intends to reoccupy or redevelop, what Sections can they rely on?

If the parties cannot agree on a price, where is the matter referred to?

A

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104
Q

What is marriage value?

A

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105
Q

What is hope value?

A

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106
Q

How is marriage value calculated?

A

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107
Q

What is the deferment rate?

A

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108
Q

What right did the Leasehold Reform, Housing and Urban Development Act 1993 introduce?

A

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109
Q

What is the basis of a new lease for a flat under the 1993 Act?

A

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110
Q

What is the basis of valuation in Schedule 13 for the new lease premium under the 1993 act?

A

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111
Q

How long can a lease be extended for?

A

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112
Q

Is a premium payable upon the grant of an extended lease?

A

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113
Q

What are the additional qualification criteria if the long leaseholder of a house wishes to extend their lease (rather than acquire the freehold)?

A

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114
Q

What are the ways to calculate a modern ground rent?

A

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115
Q

What precedent was set in the Sportelli v Cadogan Estate (2008) case?

How is the generic rate in Sportelli calculated?

A

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116
Q

Does a leaseholder have to pay the landlord’s reasonable professional costs?

A

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117
Q

What valuation approach should be used to assess the value of the freeholder’s loss (or landlord’s diminution in value)?

A

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118
Q

When does marriage value generally become payable?

A

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119
Q

What is collective enfranchisement?

What does the collective enfranchisement price under Schedule 6 include?

A

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120
Q

What is the Delaforce (1970) effect?

A

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121
Q

Explain your understanding of Sloane v Mundy and Reiss v Ironhawk Ltd.

A

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122
Q

Explain the impact of Cadogan Square Properties Ltd v Earl Cadogan and Cadogan v Erkman.

A

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123
Q

What is an adverse differential?

A

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124
Q

What is leasehold relativity?

A

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125
Q

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

A

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126
Q

What RICS guidance relates to residential leasehold properties and secured lending valuation? What principles from this are you aware of?

A

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127
Q

What sections of the Red Book and the UK National Supplement should this guidance be read alongside?

A

TBC

128
Q

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

Why does it not relate to unexpired lease lengths below this?

A

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129
Q

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

A

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130
Q

What assumptions might be made in this type of secured lending valuation?

A

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131
Q

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

A

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132
Q

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

A

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133
Q

When would you use a leasehold relativity graph?

A

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134
Q

What would you use a magnet / plumb bob / spirit level for during an inspection?

A

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135
Q

How would you value a property affected by Japanese Knotweed?

A

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136
Q

What does the legal case of Ryb v Conways (2019) say about the valuation of property affected by Japanese Knotweed?

A

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137
Q

What valuation approach does the RICS recommend is taken when valuing property is affected by Japanese Knotweed?

What guidance sets this approach out?

A

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138
Q

How can a NIY of zero be achieved?

A

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139
Q

In a scenario where rents are static and the capital value increases, would you expect yields to increase or decrease?

A

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140
Q

What impact does tenure/supply/location/immediate environment/structural condition/ specification/energy efficiency have on value?

A

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141
Q

What is the current version on the Red Book (global)?

A

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APC 2022 (27 decks)

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