VIVA Flashcards
Fundamental of Value
At the most fundamental level, value is created and sustained by the interrelationship of four factors associated with any product, service, or commodity. These are Utility, Scarcity, Desire, and purchasing power.
Basis of value
Describes the fundamental premises on which the reported value will be based. Valer chooses the relevant basis of value according to the terms and purpose of the valuation assignment. The valuer’s choice of a basis of value should consider instructions and inputs received from the client or representative.
-Market Value
-Market Rent
-Equitable Value/Fair Value
-Investment Value
-Liquidation Value
Market Value
The case of Spencer v The Commonwealth of Australia (1907) is the origin of the modern meaning of market value, which was defined as: The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein each party had acted knowledgeably, prudently and without compulsion.
Market Rent
The estimate for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lesse on appropriate lease terms in an arms-length transaction, after proper marketing and where the parties had each acted knowledgeably prudently and without compulsion.
Equitable Value
The estimated price for the transfer of an asset or liability between identified knowledgeable and willing parties that reflects the respective interests of those parties.
Investment Value
The value of an asset to a particular owner or prospective owner for individual investment or operational objectives. Investment value is an entity-specific basis of value, this basis of value reflects the benefits received by an entity from holding the asset.
Synergistic Value
The result of a combination of two or more assets or interests where the combined value is more than the sum of the separate values. Weather synergies should be considered depending on the basis of value.
Liquidation Value
The amount that would be realized when an asset or group of assets are sold on a piecemeal basis. Should take into account the costs of getting the asset into saleable condition as well as those of the disposal activity.
Fair Value
International financial reporting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measured date.
Arms Length Transaction?
An arm’s length transaction refers to a business deal in which buyers and sellers act independently without one party influencing the other.
Prudently?
In a way that shows care and thought for the future. (wisely)
Compulsion?
The action or state of forcing or being forced to do something; constraint.
Initial (Passing Yield)
The initial or passing yield is the percentage return on value or price derived from the current net passing income. No allowance is made for any future rent growth and without any adjustment for vacancies or rental fluctuations. Passing Net Income / Sale Price.
Equated yield
The price derived from net income reflects current market rent levels. If the current income from a property is at the market level, then the equated yield is the same as the initial (passing) yield. Market Net Rent / (Sale Price – Adjustments). If the property was sold vacant, it is reasonable to assume the sale price would be less than if it was fully let. Therefore we will need to adjust to a higher sale price thus market yield/sale price if it was let. And adjust for letting fees, campaigns ect.
Reversionary Yield
The Reversionary Yield is the percentage return on the current value or price derived when the current market rentals are payable.
Terminal Yield
The expected return of a property at the end of a particular holding period or end of Lease for example after several rental increases.
Gross Yield?
Gross yield is a simple calculation of the amount of rental income received after one year without deducting taxes and expenses, measured against the market value of the property. May not give a realistic idea of outgoings.
Net yield
Net yield provides a more accurate figure as it factors in the outgoings expenses of your investment property, which in some instances can be considerable.
Gross Rent
Rent including all building costs (outgoings).
Net Rent
Rent excluding all building costs
Face Rent
Quoted rental rate before incentives/ rent incentives
Effective Rent
The actual rent payable after all lease incentives.
Passing Rent
The current rent payable at the time.
Turnover/Percentage Rent
As a retail tenant, you pay a set amount of base rent every year under your retail lease. However, you may also be required to pay turnover rent in addition to base rent. Also known as percentage rent, is the percentage of business turnover that a tenant pays to the landlord on top of their base rent.
Gross Lease Advantage for Tenant?
The most important benefit to a tenant is that they pay the same rentals regardless of the increase in operating expenses. Planning expenses is easier as the exact monthly rental cost is known.
Gross Lease Disadvantage for Tenant?
-As the rent is based on estimated cost, the rent charged is high.
-Tenants have less control over costs.
May not win if the annual increases for outgoings are increasing higher than inflation.
Gross Lease Advantage for Landlord
-Easier to administer as only one payment needs to be collected and there is no requirement to complete a budget or reconciliation at the end of the financial year.
-Potential surplus for the landlord after factoring in the overall cost
Gross Lease Disadvantage for Landlord
The landlord is exposed to any unexpected expenses or inflation in property expenses.
Net Lease Advantage for Tenant
-Transparency of outgoings.
-The tenant can control costs better by controlling the use of utilities
Net Lease Disadvantage for Tenant
Unpredictable expenses and major costs occurring.
Net Lease Advantage for Landlord
Avoids underquoting on expenses as it is paid separately.
Net Lease Disadvantage for Landlord
Reconciliation at the end.
Code of Ethics
-Professional behavior - Members must not take any action which includes a failure to act that may or is likely to discredit themselves, the property professional, or API.
-Conflict of Interest - Members have an individual obligation to disclose any conflict of interest, whether actual or perceived.
-Integrity - Members must act ethically, honestly, and fairly when undertaking professional services and must base their professional advice on relevant, valid, and objective evidence.
-Professional competence - Members must maintain and improve their professional knowledge and skill by undertaking CPD at the level required to meet the API CPD Policy.
-Confidentiality - members must act in confidentiality and protect confidential client information.
PPICC
Code of Professional Conduct
The code of professional conduct ensures a high standard and individual behavior is adhered to. It lists the principles, values, and behaviors expected of members of the API.
Rule 1 - Relations with clients - Maintain a good relationship with your clients, being honest and ethical, without personal bias, and acting in a manner that upholds the values and reputation of the property and valuation profession.
Rule 2 - Conflict of interest - members shall consider and identify any actual or potential conflict of interest when carrying out their professional duties, and shall not act in a manner where such conflict or potential conflict has been identified by the member of any other interested party unless all interested parties have been made aware of the situation and have consented to the member continuing the task.
Rule 3 - Impartiality - A member must maintain strict independence and impartiality when making a valuation and where the exercise of objective judgment is required.
Rule 4 - Members and the Institute - A member must not act in any way that reflects adversely on the professional integrity of the API or its other members.
Rule 5 - Copyright - a member must not, without appropriate acknowledgment, reproduce, paraphrase or summarize any work, ideas, or intellectual property of another person which creates the impression that it is their own, and all reports prepared by members must give appropriate acknowledgment of the ideas and intellectual property and other insofar as these have been used.
Rule 6 - Property Valuations - When undertaking a valuation, a member must:
-Personally inspect any property being valued
-Gather sufficient relevant data to form an opinion of value or in the absence of deficiency of such date, explain within the report the basis for which the opinion was formed.
-Verify the information is used.
-Provides a statement of assumptions made within the report, including all conditions and limitations arising.
-Retain on file a copy of the valuation report and all instructions from the client for a minimum of 6 years following the valuation.
Rule 7 - Student and Provisional Members - A student and provisional member must not undertake a valuation on their own, however, they can assist, a provisional member who holds an RPV may undertake a residential property valuation, provided that it is co-signed by a supervising valuer.
Rule 8 - Non-compliance - Where a member considers circumstances that warrant departure from a non-compliance with any rule within the Code of Professional Conduct, the member’s report must include a statement that outlines the reasons for the departure or non-compliance and any impact of the content of the report.
CRIMPS CN
Membership Compliance
20 CPD annually – lodged online with evidence
Pay membership fee annually
Abid by API Rules, Standards, and Regulations.
Complete the valuer compulsory modules which are:
-API Ethics and Rule Module annually
-Risk Management Module
-International valuation standards model whenever there is an update to the standard
-Residential valuation standing instruction module must be completed by all API Members who undertake residential mortgage valuations.
Valuation Approaches
Consideration must be given to the relevance of appropriate valuation approaches. One or more approaches may be used to arrive at the value. No one method is suitable for every situation, the selection process should consider:
-The appropriate basis of value
-The respective strengths and weaknesses of the valuation approach.
-The appropriateness of each method in view of the nature of the asset.
-The availability of reliable information is needed to apply the method.
The Market Approach
Provides an indication of value by comparing the asset with identical or comparable assets for which price information is available. The market approach should be applied and afforded significant weight under the following circumstances.
-The subject asset has recently been sold in a transaction appropriate for consideration under the basis of value.
-The asset or substantially similar assets are actively publicly traded.
-There are frequent and recent observable transactions in substantially similar assets.
If few transactions have occurred, the valuer may consider the prices of identical or similar assets that are listed or offered for sale provided the relevance of this information is clearly established.
Making adjustments to comparable evidence
The heterogeneous nature of many assets means that it is often not possible to find market evidence or transactions involving identical or similar assets. When comparable market information does not relate to the exact or substantially the same asset, the valuer must perform a comparative analysis of the qualitative and quantitative similarities and differences between the comparable assets and the subject asset. It will often be necessary to make adjustments based on this comparative analysis. These adjustments must be reasonable, and valuers must document the reasons for the adjustments and how they were quantified. They may include but are not limited to material characteristics such as the age and size specifications of the asset, relevant restrictions on either the subject asset or the comparable asset, geographical location, profitability or profit-making capacity, unusual terms in the comparable transaction, marketability and control characteristics.
Market Approach Choosing Comparable Transactions
A valuer should choose comparable transactions within the following context.
Evidence of several transactions is generally preferred to a single transaction or event
Evidence from transactions of very similar assets that are ideally identical provides a better indication of value than assets where the transaction prices require significant adjustments.
Transactions that happen closer to the valuation date are more representative of the market at that date than older-dated transactions, particularly in volatile markets.
The transaction should be at arm’s length between unrelated parties.
Sufficient information on the transaction should be available to allow the valuer to develop a reasonable understanding of the comparable asset.
Comparable information should be from a reliable source
Actual transaction of evidence compared to the intended transaction.
Connecting distance
To correctly identify the site. Measuring from the corner of the block to the closest street, shown on the title plan.
The Income Approach
The income approach provides an indication of value by converting future cash flows to a single current value. Under the income approach, the value of an asset is determined with reference to the value of the income, cash flow, or cost savings generated by the asset. A fundamental basis for the income approach is that investors expect to receive a return on their investment and that such a return should reflect the perceived level of risk in the investment. In general, investors can only expect to be compensated for systematic risk.
The income approach should be applied and afforded significant weight under the following circumstances:
a. The income-producing ability of the asset is the critical element affecting value from a participant’s perspective.
b. Reasonable projections of the amount and timing of future income are available for the subject asset but there are few if any relevant market comparables.
Methods under the income approach are effectively based on discounting future amounts of cash flow to present value.
Discount Rate
The rate at which the forecast cash flow is discounted should reflect not only the time value of money but also the risks associated with the type of cash flow and the future operations of the asset.
Discounted Cash Flow
Discounted cash flow is a valuation method used to estimate the value of an investment based on its future cash flow. It uses a discount rate to calculate the present value of expected future cash flows; a present value estimate is then used to evaluate a potential investment. It is a more complex approach as it takes into account all the cash flows in the holding period and accounts for changes in cash flow vacancy and operating expenses.
Discounted cash flow may include a terminal value that represents the value of the asset at the end of the holding period. For real estate valuers, we must estimate the asset’s value at the end of the holding period and then discount the terminal value back to the valuation date using the same discount rate as applied to the forecast cash flow.
There are three ways to calculate the terminal value?
Gordon Growth Model
The constant growth model assumes that the asset grows or declines at a constant rate in perpetuity.
Market Approach
Can be performed in a number of ways, but the ultimate goal is to calculate the value of the asset at the end of the holding period. Common ways to calculate the terminal value under this method include the application of market evidence-based capitalization factors or market multiples. Valuers should comply with the requirements of the market approach and should also consider the expected market conditions at the end of the holding period and make adjustments accordingly.
Salvage value
The terminal value of some assets may have little or no relationship to the preceding cash flow. In such cases, the terminal value is typically calculated as salvage value less the cost of disposal.
Profit Rent
The amount where they passing rent is greater than the market rent. Calculated using the present valuation formula. Taking the passing rent and subtracting the market rent to get the rental difference (PMT) and then adopting an appropriate discount rate over the remaining lease term.
Direct Capitalisation Approach
Direct capitalisation is an income technique that converts an estimate of a single year’s income expectancy into an indication of value by dividing the market rental by a capitalization rate. which are both derived from comparable market evidence.
The capitalisation rate is the percentage rate used to convert net income into value or a price. The rate at which the annual net income from an investment is capitalized to ascertain its capital value at a given date Factors that influence the capitalisation rate is:
-Size and condition of the property
-Current market conditions
-Tenant and lease terms and remaining lease -durations
-Interest rates
-Vacancies
If valuing a vacant possession basis, an allowance for vacancy and a letting up period
would need to be made.
Retrospective and Project Valuations
Valuers may sometimes be asked to provide an opinion of value on a specified date in the past when market conditions will probably have been significantly different from those at the date of instruction. This situation can arise, for example, in valuations for taxation purposes or those used as evidence in court cases.
If the valuation is an audit of another valuer’s work, the valuer will need to work with the evidence used in the valuation subject to the audit. In other cases, the valuer should consider the following.
-Comparable evidence should only be used if it would have been available to a valuer on the date of valuation.
-Viewed with the benefit of hindsight, comparable evidence can be much clearer than it would have appeared to a valuer at the date of valuation. The valuer valuing retrospectively needs to place themselves in the position of someone reviewing the available evidence on the valuation date, and then make a judgment on the extent and nature of the evidence that could reasonably be expected to have been available at the time.
A projected valuation for a future date may sometimes be required, it is referred to, as bases of value, assumptions, and special assumptions. Current comparable evidence will not be available, and the valuer should ensure all assumptions made are realistic, credible, and clearly described in the report.
The Cost Approach
Provides an indication of value using the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchasing or by construction, unless inordinate time, inconvenience, risk, or other factors are involved.
The cost approach provides an indication of value by calculating the current replacement or reproduction cost of an asset and making deductions for physical deterioration and all other relevant forms of obsolescence. The cost approach should be applied and afforded significant weight under the following conditions
-Capable of recreating an asset with substantially the same utility as the subject without regulatory or legal restrictions, and the asset could be recreated quickly enough that a participant would not be willing to pay a significant premium for the ability to use the subject asset immediately.
-The asset is not directly income-generating, and the unique nature of the asset makes using an income- or market-based approach unfeasible.
-The fundamental basis of value used is replacement cost, such as replacement value for insurance purposes.
Replacement Cost Method
The estimated cost to construct a building with utility equivalent to the building being appraised using contemporary materials, standards, design, and layout. When this cost method is used some existing obsolescence in the property is assumed to be cured.
Usually, replacement cost is adjusted for physical deterioration and all relevant forms of obsolescence. After such adjustments, this can be referred to as depreciated replacement cost.
Steps
1. Calculate all the costs that would be incurred by a typical participant seeking to create or obtain an asset providing equivalent utility.
2. Determine whether there is any depreciation related to physical, functional, and external obsolescence.
3. Deduct total depreciation from the total costs to arrive at the depreciated replacement cost.
Cost Approach Obsolescence
Physical deterioration is the result of wear and tear over time.
Functional obsolescence occurs when the asset’s design or specification no longer fulfills the function for which it was originally designed, such as a building designed with specific features to accommodate a process that is no longer carried out.
Economic obsolescence is the impact of changing economic conditions or demand for the asset’s goods or services. An example would be a change in legislation or an increase in raw material costs, which are external factors to the asset itself.
Difference between added value vs depreciated replacement cost method?
They are not two different approaches to valuation but rather different ways, mainly valuing the improvement value. Added value is used when there is sales evidence in the current market (land and Improved land) (not unique) and the building value is worked out by subtracting the improved land from the land value to arrive at the added value of the property. When there is no market evidence for the property e.g. rural or specialized properties then depreciated replacement cost method is used, it is obtaining the cost of the building as new and subtracting depreciation.
Overall, the added value approach is more accurate and should be considered first before considering the depreciated replacement method.
Four Main Methods to Estimate Construction Costs
The indexed method
Assumes that the replacement/reproduction cost is simply the original construction cost times a cost index. E.g. Rawlinson handbook.
Comparative unit method
For a relatively standardized structure, the unit value of the building is estimated by that of a similar building. E.g. similar townhouses. $/sqm
Unit in-place method
The cost of the individual components in the building is used to estimate the overall replacement cost. E.g. Average construction cost of one bedroom is $50,000, the living room is $20,000…
Quantity survey method
Identifies the exact materials required to reproduce the structure to estimate the cost, it is the most comprehensive and accurate.
Reproduction cost method
Estimated cost to construct an exact duplicate of the building being appraised, insofar as possible using the same materials, construction standards, design layouts, and quality of workmanship and embodying all the deficiencies
Appropriate when:
-The cost of creating a modern equivalent asset is greater than the cost of creating a replica.
-The utility offered by the subject asset could only be provided by a replica rather than a modern equivalent.
Insurance costs for a heritage building would be done on a reproduction basis. This amount would be substantially higher than normal construction to the uniqueness of the building.
Summation Method
Adding all values of the various components of the subject property to calculate its full value. Key steps involve:
-Value each of the component assets that are part of the subject property using the appropriate valuation approach and method.
-Add the value of the component assets together to reach the value of the subject asset.
Hypothetical Development Model
The Hypothetical Development Analysis approach is a method of valuation that is used to assess the value of a parcel of land that is suitable for some form of development (or re-development). It is also referred to in some literature as Residual Land Value Analysis or Turner Approach.
The methodology involves determining the value of a proposed development on completion (known as the gross realization) and then working backward by deducting selling costs, developers’ profit, and development costs to derive a residual land value. Such costs may include design and construction, professional fees, holding, interest, and acquisition costs.
Internal Rate of Return
Tells investors the average annual return they have either realized or can expect to realize from a real estate investment over time, expressed as a percentage. The IRR for Project A is 12%. If I invest in Project A, I can expect an average annual return of 12%. A negative IRR implies a money-losing project.
IRR calculates the actual return provided by the project’s cash flows, then compare the rate of return with your company’s hurdle rate (how much it mandates that investments return).
Required Rate of Return
The minimum rate of return an investment must produce in order to induce an individual to invest. Also known as the Hurdle Rate of Return.
Weighted Average Lease Expiry (Wale)
Lease term remaining to expire across a portfolio. Used in properties where there is more than one tenant with a different lease expires. Can be weighted by rental income or GLA.
Net Present Value
The difference between the present value of cash inflows and the present value of cash outflows over the life of the investment, as money is worth more in the present than the future, the discounted rate of the net present value accounts for this.
NPV is the result of calculations that find the current value of a future stream of payments, using the proper discount rate. In general, projects with a positive NPV are worth undertaking while those with a negative NPV are not.
Check Method of Valuation
It is prudent to use one valuation method to check the veracity of another when undertaking a valuation. As an example, when valuing a dwelling, the primary method of valuation may be the direct comparison approach, and a check method could be the summation approach. The valuer may find that the two methods result in different values.
If the result of the secondary valuation is close to that of the primary method then the primary valuation is accepted. If the result of the secondary method is too dissimilar to that of the primary method then the valuation is analyzed to find the reason.
Insurance
The purpose of an insurance valuation is to establish either the Reinstatement (old for a new replacement of an asset) or Indemnity (old for an old replacement of an asset) Value of the subject assets. However, in addition to either of these values, a client is often required to state the “Declared Value” of the property.
This value is a worst-case situation loss for the site and as such, it should include not only the Reinstatement value of the assets, but also an allowance for the cost of removing debris from the site following a loss, and allowances for the loss occurring on the last day of the insurance policy period (often 12 months from the policy renewal date) and then allowance to take account of cost increases over the time necessary to get all planning approvals to rebuild on the site plus the length of time necessary to rebuild the assets on the site.
As long as a client is registered for GST then the values declared in an insurance policy should exclude GST, and this is the case for the majority of non-residential policies.
The presence of property in either a flood-prone or bushfire-prone area can increase the cost to rebuild the asset. For example, any residential building constructed in a designated bushfire-prone area now needs to comply with the requirements of Australian Standard 3959 – Construction of Buildings in Bushfire-Prone Areas. The cost of complying with this Standard increases as the risk of a bushfire occurring increases.
Major determinants of a building’s construction cost
The major determinants of a building’s construction cost can be summarized as follows:
Building size
Materials used in construction - for example, a warehouse constructed with concrete tilt panel walls can cost 20% more than a comparable building constructed with prefinished metal deck-clad walls.
Use of the building - for example, on a $/m2 basis an accommodation hotel can cost more than 700% more than a warehouse building.
Quality of the improvements - $/m2 basis, a Premium Grade office building can cost 350% more than a D Grade office building.
Services provided
Nature of site - for example, more remote locations can often be more expensive to build on than sites in a metropolitan location
Other assets - Fencing, Paving Site security, etc.
Reinstatement Value
Reinstatement Value of an asset is its all-up cost to replace with an asset that is substantially the same as but not better or more extensive than when it was new. without deduction for depreciation. The pre-loss condition of the property is not relevant. Two ways to calculate:
Quantity Surveying approach
The reinstatement value of an asset is established by breaking up a building into its respective components and then placing current costs on each separate part of the building. This method is very extensive and complex therefore is rarely used by valuers to calculate reinstatement values in Australia.
Value per unit of comparison approach.
The most commonly used method to assess reinstatement values in Australia. Under this approach, each building on a site is measured, and then an estimated overall reinstatement value to replace that building is applied to the calculated area.
There are numerous construction cost guides to provide indicative costs and these guides are updated on a regular basis.
Whichever approach to calculating a Reinstatement Value is adopted, it is important to ensure that the stated value meets the definition of value — in particular, that the value should be for a like-for-like replacement of the building, and not just a modern equivalent replacement cost for the asset. For example, much older-style warehouse buildings were constructed with brick walls, whilst most modern-day warehouses are constructed with concrete tilt-panel walls. Concrete tilt-panel walls can be up to 25% cheaper to build than concrete brick walls and so if your Reinstatement Value is based on the cost of a concrete tilt-panel wall warehouse, you could end up understating your Reinstatement Value.
Indemnity Values
An asset’s indemnity value is its market value at the date of assessment, its replacement cost less allowance for depreciation taking into account its age, condition, and remaining useful life.
For many properties, the indemnity value of a building and any associated improvements will be its Market Value less the Market Value of the land upon which it is located (as land cannot be insured).
Any calculations should be based on the total physical life of an asset rather than its economic life. For example, the economic life of a building is often considered to be in the order of 40 years, however, its total physical life (that is how long the building will stand assuming normal maintenance) could be more like 60 – 80 years.
Torrens Land Title System
Robert Torren was responsible for the creation and early implementation of the Torrens title system of land certification, still used in many parts of the world. For most land in Australia, ownership of land can normally be proved by the production of a document known as a certificate of title issued by the government and registered with the land title office. It is a system designed to provide a public register recording all material facts relative to the title, including the name of the registered proprietors, the nature of the interest or estate that is held, and all the registrable encumbrances.
Strata Title
Strata title allows individual ownership of part of a property called a lot and generally as an apartment or townhouse, combined with shared ownership in the remainder called common property also called tenants in common e.g. driveways, gardens, etc through a legal entity called owners corporation.
Fee Simple/Freehold
It is the highest form of land ownership and gives the owner the most rights in regard to their land. Fee simply infers the right to destroy, neglect, develop, dispose of, lease, etc. If an owner of a fee simple estate fails to transfer his estate during his lifetime, the law ensures that it passes to the next of Kin or relatives.
Co-ownership
There is two types of co-ownership joint ventures and tenants in common.
Joint Tenants: parties own the entire property concurrently and co-exclusively with the others; if one of the owners dies, the survivor becomes the sole owner.
Tenants in Common: Parties hold the whole concurrently as an undivided, defined share. The tenant can separate their interest from it by a will or transfer.
Leasehold Interest
Is the right to use for a specified period of time under specified conditions. Under the lease, the landlord maintains ownership, with the right to use and occupancy being conveyed to the tenant. It is a contractual relationship, and the lessor receives a non-permanent right to use the leased property in return for rental.
Life Estate
A life estate is a freehold estate where ownership is limited to the duration of some person’s lifetime.
Adverse Possession
Adverse possession occurs when the occupier of a piece of land can obtain ownership if uninterrupted and exclusive possession of the land for at least 15 years can be proven e.g. a fenceline. Can not be claimed against crown land, council-owned land and land owned by other authorities or bodies.
Easement
An easement is a section of land registered on your property title, which gives someone the right to use the land for a specific purpose even though they are not the landowner. Or to prevent the owner of other lands from utilizing his land in a particular manner, relating to neighboring properties.
The principal of land with the benefit of the easement is called the benefited land
The parcel of land burdened by the easement is called the burdened land.
Positive easement: Right to entry to enable something to be done on land.
Negative easement: Rights to prevent something from being done.
Caveat
A caveat is a document that any person with a legal interest in a property (but for the registered owner of the property) can lodge at the Land Title Office. After recording, a note appears on the title giving anyone searching the title notice that a third party claims rights over the property.
Covenant
A Covenant is essentially a rule or obligation imposed on the property title and are rules you need to abide by as the title owner. The obligations can include big things like how many dwellings can be built on a block. Or the permitted height of a dwelling through unusual things such as the property not being permitted to be used for the making of pottery or tiles.
Section 173 Agreement
Arises under section 173 of the Planning and Environment Act 1987 (the Act). The responsible authority can negotiate an agreement with an owner of land to set out conditions or restrictions on the use or development of the land or to achieve other planning objectives in relation to the land. Like other agreements, a section 173 agreement is a legal contract. However, the benefit of a section 173 agreement is that it can be recorded on the title to the land so that the owner’s obligations under the agreement bind future owners and occupiers of the land. A section 173 agreement can also be enforced in the same way as a permit condition or planning scheme.
The purpose of an agreement is to make it easier to achieve planning objectives for an area or particular parcel of land than is possible when relying on other statutory mechanisms.
Heritage Protection in Victoria.
Heritage protection in Victoria is essentially delivered at two levels with clear separations of responsibilities between state and local government.
State-level heritage: Protect and conserve places and objects of State-level heritage significance. The Heritage Register includes places and objects of State-level heritage significance. E.g The Flinders Street Railway Station. Heritage Victoria makes the final decision.
Local-level heritage: The Planning and Environment Act 1987 obliges all of Victoria’s councils to use their Planning Schemes to conserve and enhance buildings, areas, or other places that are of significance within their municipalities through the use of Heritage Overlays. Minister for Planning makes the final decision.
Section 154 of the Local Government Act 1989.
All land is rateable with the following exemptions which are set out in section 154 of the Local Government Act 1989.
-Unoccupied land owned by the Crown
-Land used for public or municipal purposes
-Land used for charitable purchase
-Land used for religious purposes
-Land used exclusively for mining purposes
-Land held in trust and used exclusively for returned service League or airforce.
How are rates assessed
Rates are assessed on occupancy, not ownership, rates will be assessed separately for an office building or block of flats.
How often are valuation for rates carried out
Previously valuations have been carried out by a valuation authority either a council or VGV on nomination by a council and revaluations were completed in each of victoria’s municipalities every two years. From 2019, valuations are conducted annually and the valuer general will be the sole valuation authority.
