Valuation Techniques And Issues

Question 1

What is the RICS Independent Review of Real Estate Investment Valuations?

Answer 1

A report published in 2021 containing 13 recommendations for improving valuation practices.

Question 2

What are some key recommendations from the RICS Independent Review?

Answer 2

1. Commissioning and receiving of valuation reports. 2. Rotation of valuers for regulated purpose valuations. 3. Use of discounted cash flow as the principal model for property investment valuations. 4. Valuation audit trails. 5. Establishment of a new Valuation Assurance Committee.

Question 3

What is the purpose of the RICS Professional Standard on Sustainability?

Answer 3

To provide guidance on incorporating Environmental, Social & Governance (ESG) factors into commercial property valuation and strategic advice.

Question 4

What does the margin of error refer to in property valuation?

Answer 4

The permissible range allowed by courts for a valuation, which can vary based on the complexity of the case.

Question 5

What was established in the case of Singer & Friedlander Ltd v J. D. Wood (1977)?

Answer 5

The principle that the margin of error can be narrower for straightforward valuations and wider for complex cases.

Question 6

What margin of error was reinforced in K/S Lincoln and Others v CB Richard Ellis (2010)?

Answer 6

An appropriate margin may be +/-5% for standard residential properties, +/-10% for one-off commercial properties, and +/-15% for properties with exceptional features.

Question 7

What is hope value in property valuation?

Answer 7

The value arising from expectations that future circumstances affecting the property may change, such as securing planning permission.

Question 8

What is marriage value?

Answer 8

Value created by the merger of interests in land, calculated through before and after valuations.

Question 9

What are the current Stamp Duty Land Tax (SDLT) rates for non-residential properties in England?

Answer 9

0 - £150,000: 0%, £150,001 - £250,000: 2%, Over £250,000: 5%.

Question 10

What are the SDLT rates for residential properties in England?

Answer 10

0 - £250,000: 0%, £250,001 - £925,000: 5%, £925,001 - £1,500,000: 10%, Over £1,500,000: 12%.

Question 11

What relief do first-time buyers receive under SDLT?

Answer 11

Nil rate up to £425,000 and 5% on the portion from £425,001 to £625,000, with no relief over £625,000.

Question 12

What is the Net Present Value (NPV) in the context of SDLT?

Answer 12

The total rent payable over the term of the lease, reduced by an annualised discount rate.

Question 13

What is the SDLT rate for the Net Present Value over £5,000,000?

Answer 13

2%.