Valuation Level 2 Flashcards
Step by step, how did you carry out a valuation using the comparable method?
Look at subject property
Select comps
Analyse comps
Display in a matrix
Value property
Stand back and look
Tell me about the flat you valued in Kings lynn?
Valued a 1 bedroom flat in Kings lynn
MV basis as per VPS 4
Drafted and sent TOE
Inspected and measured IPMS 3B residential
Adopted comparable method
Analysed and gave weight to evidence of similar flats
Drafted a report as per VPS 3 and advised on value
What type of property was the king’s lynn flat?
1 bedroom Fair faced cavity brick construction 3 storey block with communal parking Lift access Pitched roof 1980s construction 60 years remaining on lease
Does RICS have any guidance on residual valuations?
RICS guidance note valuation of development property 1st ed Oct 2019
Tell me about the property you valued in Braintree, Essex?
4 bed resi with 1 acre of of land to the rear with road frontage
IHT purposes
Instructed to advise on MV
Considered hope value for land element
Valued using residual method for land and comp for house
Deducted relevant costs from GDV and reflected planning risk
Discussed with senior and advised to accept value
What is hope value?
Hope value is the prospect of getting planning permission on the land to develop on it.
Why did you feel this land in Braintree had hope value?
It had road frontage. Located in between residential dwellings. I felt it was likely planning permission could be sought.
Is Digimap accurate?
Digimap is updated annually.
How would you decide if there is planning potential on a piece of land?
Consult the local plan. It defines what development is allowed at which locations.
Search for past planning applications
Look for similar parcels of land sold nearby or on the market.
Tell me about prosser case v cir 2000 and why you used it?
Similar scenario. Parcel of land with a cottage. No planning consent at date of death. VOA valued with benefit of consent and took off 20% to reflect no planning. Judge said at DOD no planning so somebody would only pay 25% of GDV. VOA valued at £55k. Judge valued at £12,500.
What is gross development value?
GDV is the estimate of open market value once the project is complete. I used sales values for other 4 bed new builds for my GDV.
What costs did you deduct from your residual val for braintree case?
build costs from BCIS. Professional fees 10% Finance 7%. Developers profit 20% Planning risk 50%
Why did you use 7% finance? (maybe i used another figure)
Cost of borrowing in the market. Lenders on such a scheme will expect a return on their lending. Initial research suggested 6-7% were reasonable. Took advice from development surveyors who supported this %.
Why is developers profit 20%
Profit is based on risk. Bare land with no planning is risky. Hence 20%.
What type of scheme did you envisage for your residual scheme and why?
Consulted local plan which outlines ….
