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RICS APC Valuation Pathway > Weak Areas > Flashcards

Weak Areas Flashcards

1
Q

What happened to the subject after the lease expired?

A

Lease was renewed
Agreed rent at £65,000 - £1,170/m2

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2
Q

So is your employer just going to allow these mistakes to happen again? (case study)

A

In line with rule 2 – where we need to look at the quality of our services and reflect on past performance..
I identified there is a training need to ensure those working on check are diligent in their work and make reasonable attempts to determine the number of hereditaments.

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3
Q

What does IFRS say about development property?

A

Properties under construction or development Real estate that meets the definition of ‘investment property’ is accounted for in accordance with IAS 40, even during the period when it is under construction.

an investment property under redevelopment for continued future use as investment property also continues to be recognised as investment property.

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4
Q

What can you deduct from the capital gain before determining the amount of capital gains tax?

A

Allowable deductions:

Improvements such as extension or new kitchen
Costs of buying and selling the property such as stamp duty, solicitor and agent fees.
Private residence relief

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5
Q

what regulations are there in relation to sustainability / climate change?

A

2008 climate change act

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6
Q

what is the climate change act?

A

sets out emission reduction targets.

In 2019 the UK became the first major economy to commit to a ‘net zero’ gas emissions by 2050.

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7
Q

What is mediation?

A

-without prejudice discussions with a mediator
- informal process to resolve dispute.

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8
Q

What is arbitration?

A

Method to resolve conflict which is in accordance with Arbitration act 1996
Parties are bound by the decision made.

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9
Q

What is adjudication?

A

Method of dispute resolution common in construction payment disputes
Legally binding process.
Uses a subject expert.

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10
Q

What is expert determination?

A

Where an expert uses their own opinion or evidence to decide on an area of conflict.
Parties are bound by the decision.
Expert can be appointed by parties or RICS dispute resolution service.

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11
Q

How is a data breach dealt with?

A

Inform effected parties
Notify line manager
Report within 72 hours
Inform data protection officer at firm
May need to report to information comissioners office if there is a risk to people’s rights (within 72 hours)
Max fine of 20 million euros or 4% global turnover

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12
Q

Rights under GDPR / DPA

A

Informed

Access
Rectification
Erasure

Data portability
Object
Restric processing
Automated decision making

I ARE DORA

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13
Q

GDPR / DPA Priniciples

A

Processed lawfully in a transparent manner
Adequate data for the purpose
Collected for legitatme purposes
Kept for no longer than needed
Accurate and kept up to date
Processed securely

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14
Q

Mandatory requirements for anti-money laundering

A

Not facilitate or be complicit in money laundering or terrorist financing activities

have systems and training in place to comply with these laws, and ensure these are followed

report any suspicions of money laundering or terrorist financing activities to the relevant authorities

verify the identity of clients by undertaking basic identity checks.

take appropriate measures to understand the client and the purpose of the transaction

record and retain information detailing how the firm has met the requirements of the professional statement on countering bribery and corruption, money laundering and terrorist financing

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15
Q

Is it possible for you to apply a greater discount than 15% to an undivided share when valuing for IHT?

A

Yes

I would refer to Charkham v Commissioners of Inland Revenue, in this case higher discount percentages were deemed appropriate due to the taxpayer holding minority shares of differing percentages across a property portfolio of commercial retail and residential properties, the discount percentages reflecting the likelihood of management differences between shareholders.

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16
Q

Definition of Market value for IHT and where is it found?

A

the price which the property might reasonably be expected to fetch if sold in the open market at that time

but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time.

Section 160 IHT Act (1984)

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17
Q

What is benchmark land value?

A

The value to be established on the basis of the existing use value (EUV) plus a premium for the landowner.

PPG paragraph 014 is clear that there ‘may be a divergence between benchmark land values and market evidence; and plan makers should be aware that this could be due to different assumptions and methodologies used by individual developers, site promoters and landowners.

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18
Q

Did you dismiss any of the evidence in your case study?

A

Not completely.

I had regard to Garton v Hunter – “all evidence is admissible, issue to be decided is the weight to be applied to that evidence”.
I applied very little weight to the agents comparables 5 and 6 and little weight to comparable 2.

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19
Q

Weighting of evidence case law

A

Garton v Hunter (1969)
Lotus and Delta v Culverwell and Leicester City Council (1976) - Shoe shop in Leicester

K Shoe Shops LTD v. Hardy (1973)
“Locality” an area within which there would be sufficient evidence to produce a reasonably expected rent and outside which that rent might be different
Basically - rents in the locality are acceptable!
Rent on Oxford and Regent Street.
Also established AVD

Specialeyes v. Felgate (1992)
Timing of evidence, most weight closest to AVD.

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20
Q

Tell me about expert witnesses

A

It is the duty of an expert to help the Tribunal on matters within the expert’s expertise and this duty overrides any obligation to the person from whom the expert has received instructions or by whom the expert is paid.

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21
Q

Define Internal dominant face

A

The inside finished surface comprising 50% or more of the surface area for each vertical section that forms an internal perimeter.

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22
Q

Define Standard facilities (IPMS)

A

Part of a building providing shared/common facilities that do not change over time e.g. stairs, escalators, lifts, WC’s, cleaners cupboards, plant rooms and maintenance rooms.

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23
Q

Value significant features you noted for the nursery?

A

Location
Construction type
Age
Parking
Access
Neighbouring properties
Proximity of schools and houses
Internal layout
Accommodation
A/C / Heating
Condition and defects
External land

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24
Q

Value significant features you noted for driving test centre

A

Location
Parking
Access
External land
A/C / Heating
Construction
Age
Condition and defects
Internal layout

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25
Q

Value significant features you noted for your case study?

A

Location
Footfall
Voids in proximity
Use
Planning permission
Shape
Masking
Return frontage
A/C
Transport links
Parking
Neighbouring properties
Building construction and age
Condition and defects
Goodwill

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26
Q

What is a special purchaser? And give an example of one.

A

A particular buyer for whom a particular asset has special value because of advantages arising from its ownership that would not be available to other buyers in a market.

e.g leaseholder buying the freehold
Merge several land interests – leads to development of marriage value

27
Q

Talk me through the valuation calculation at the house in Billesley.

A

£155,000 was agreed MV following negotiations
(155,000 / 2) x.90 =£69,750

28
Q

Talk me through the valuation calculation at the house in Shirley.

A

£205,000 was agreed MV following additional comps and information regarding condition
(205,000/2) x.85

29
Q

Tell me about a recent CPD you’ve done

A

Types of Damp – most common defect, especially condensation. Remedies, window, extractor, dehumidifier, anti-damp paint.

Contamination – 100% soil cont. In most cases they leave and build over it.

CRCA Act – we can disclose data in light with section 18 – but proportionate and to relevant people for our function.

30
Q

What must a complaints handling procedure include?

A

The RICS provides a model form
Must include a redress mechanism
Detail should be issued to the client with the terms of business / TOE
Must be clear quick transparent and impartial and free
Names and contact details of the nominated investigating person must be stated.
Complaint must be investigated within 28 days
All complaints, progress and outcomes must be recorded
Note the need to advise PI insurers of a complaint
Must have two stages as a minimum
Consideration of the complaint by a senior member of the firm
If not resolved, referred to an independent third party with the authority to award redress

31
Q

You said you advised on the inaccuracies of the appellants claim for warranting an end allowance, what do you mean by this?

A

I advised the court to dismiss the appellant’s claim as it was not relevant evidence.
Decisions to apply an allowance on the above shopping centres were made on their own particular facts affecting those properties. This does not mean the same allowance should automatically be applied to The Maltings.
I referred to the evidence at the subject holding the most weight - The new letting rent of 28-30 the maltings @£171 which was a rent agreed based on all the advantages and disadvantages of the subject property.

32
Q

Caselaw other than Lotus and delta?

A

Specialeyes vs Felgate 1992
Considered timing of evidence, most weight closest to AVD.

33
Q

Define Market rent

A

Estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

34
Q

What are the 8 GDPR rights?

A

The right to be informed
The right of access
The right to rectification
The right to erasure
The right to restrict processing
The right to data portability
The right to object
Rights in relation to automated decision making and profiling.

35
Q

When you inspect land what do you make a note of?

A

Site boundary
Use
Condition
Access
Topography
Shape
Size
Adjoining properties
Planning considerations
Overhead power lines / pylons
Trees

36
Q

what are the BREEAM levels?

A

Unclassified
Pass
Good
Very good
Excellent
Outstanding

37
Q

Data protection principles

A

Processed lawfully, fairly in a transparent manner (PLT)
Adequate, relevant, and limited to what is necessary
Collected for specified explicit and legitimate purposes
Kept in a form that permits identification of data for no longer than is necessary
Accurate and kept up to date, where necessary
Processed in a manner that ensures appropriate security of personal data.

PACKAP

38
Q

Tell me about Gilbert v Hickinbottom 1956?

A

Concerned a bakery on one side of a public highway and a mechanic’s workshop, which serviced the bakery’s vans, on the other side of the road.

The case turned on whether the two properties should be assessed as one hereditament or two.

Denning LJ held that where 2 or more properties are within the same curtilage, or are contiguous to one another, and are in the same occupation, they are as a general rule to be treated for rating purposes as if they formed parts of a single hereditament.
An exception to this is where one part is used for an entirely different purpose.
Non-contiguous properties will generally be treated as separate hereditaments, even if occupied by the same person.
Where properties in the same occupation have a strong functional connection, they may be shown as a single hereditament, even if something such as a public highway separates them.
The court determined that the mechanic’s workshop was so essential to the operation of the bakery that the bakery could not exist without it and, as such, that the two properties should be assessed as one hereditament. This rule became known as ‘functional essentiality’.

39
Q

Tell me about Lotus and Delta case

A

This case established the procedure for considering evidence and created the ‘hierarchy of evidence’.

40
Q

What is an equated yield?

A

Yield on an investment which takes into account growth in future income.

41
Q

What is an equivalent yield?

A

Weighted average between term and reversion yields (used in hardcore).

42
Q

How is CIL calculated?

A

CIL is calculated by multiplying the new floorspace that a development will be creating (sqm) by the relevant CIL rate set out in the CIL Charging Schedule. The measurements should include all floors of a building, not just the footprint.

43
Q

what is a Monte Carlo simulation?

A

A Monte Carlo simulation is used to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables.

It is a technique used to understand the impact of risk and uncertainty.

44
Q

What is a reasonably efficient operator?

A

Concept where the valuer assumes that the market participants are competent operators, acting in an efficient manner befitting of a business using the premises.

Involves estimates the trading potential rather than adopting the actual level of trade which is specific to the strengths and weaknesses of the existing operator.

45
Q

What do we mean by Highest and best use?

A

The use of the property that would produce the highest value of the asses. It must be physically possible, financially feasible and legal.

46
Q

Name me some IHT exemptions?

A

-Foreign properties owned by a person living abroad
- Annual exemption of £3,000 for lifetime transfers
- Transfers to charities.
- Transfers between husband and wife or between civil partners are exempt. This applies to both lifetime and death transfers

FACT
Foreign. Annual. Charities. Transfers

  • Lifetime transfers as wedding gifts
  • Outright gifts of up to £250 to any one person are exempt

GG
GIFT.GIFT

47
Q

Name me the IHT reliefs?

A
  • Quick succession relief
  • Agricultural and Woodland relief
  • Business property relief
  • Fall is in value relief
48
Q

What are the IHT Chargeable assets:

A

Property
Money
Possessions
Gifts

49
Q

What are the CGT Chargeable assets?

A

Personal possessions which are worth more than £6,000
Property which is not your main home
Business assets
Shares (other than those held in a tax-free scheme or investment)

P.P.B.S

50
Q

Name me some CGT exemptions?

A

Personal home
ISA
Betting/lottery winnings
UK bonds

51
Q

Name me some CGT Reliefs?

A

Private residence relief
Rollover relief
Spouse transfer

52
Q

name at least 10 headings you would expect to find in a red book valuation report

A

Identification and status of valuer
Identification of client and other intended uses
Identification of asset or liability to be valued

Valuation date
Valuation approach and reasoning
Valuation amount

Purpose of valuation
Basis of value adopted
Date of valuation report

Assumptions and special assumptions
Confirmation the assignment is in accordance with the IVS
Nature and source of information relied upon
Extent of investigation

A Commentary on any material uncertainty in relation to the valuation
A Statement setting out any agreed limitations on liability
Restrictions on use, distribution and publication of report
REMEMBER - III VVV PBD ACNE AAR

53
Q

Why do we follow the red book?

A

To provide assurance/confidence to clients and recognised users alike, that a valuation provided by an RICS-qualified valuer anywhere in the world will be undertaken to the highest professional standards overall.

Issued by the RICS as the highest standards in valuation – which our clients expect us to follow - helps us to maintain public trust in valuation professionalism and quality.

Details mandatory practices for RICS members undertaking valuation services.

54
Q

What is the health and safety six pack regulations

A

management of health and safety at work regulations
manual handling operations regulations
display screen equipment regulations
workplace regulations
Work equipment regulations
PPE regulations

55
Q

What is hope value and how would you reflect in a valuation?

A

An element of market value in excess of the existing use value, reflecting the prospect of a more valuable use in the future.
Could be reflected by an uplift in the £ per acre. The amount of which is dependant on the likelihood/risk of a new alternative use occurring in the future.

56
Q

Tell me about the requirements of a firm in relation to money laundering.

A

This is detailed in Countering bribery and corruption, Money laundering and Terrorist financing 2019 1st edition

Firms must
- Not facilitate money laundering or terrorist financing activities
- have systems and training in place to ensure compliance
- report suspicions to the relevant authorities
- verify the identity of clients by undertaking basic identity checks.
- take measures to understand the client and the purpose of the transaction
- record and retain information detailing how the firm has met the requirements of this professional statement.

57
Q

what is rule 5 and can you give an example?

A

Member and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession
Example – questioning any suspectable behaviour and be a whistle blower if required.

58
Q

Tell me about the VOA’s business plan

A

Produce efficient and trusted valuations
Deliver excellent customer experience
Be a great place to work

59
Q

ESG Examples

A

Environment – Climate change, water efficiency, energy efficeicy
Social – Equal opportunities, Health and safety, human rights, child labour
Governance – Business ethics, compliance

60
Q

What are the MEES requirements
Commercial

A

1 APR 2018 - no new lease below E rating EPC
1 APR 2023 - no letting of space with below E
Residential
1 April 2020 - No letting of space below E
2030 - Target of B and above

61
Q

Which can be the basis for a Material Change of Circumstance appeal?

A

The mode and category of occupation of the hereditament
The quantity of minerals or other substances in or extracted from the hereditament
The use or occupation of other premises situated in the locality of the hereditament
Matters affecting the physical state of physical enjoyment of the hereditament
Matter affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there

62
Q

Can you name typical examples of Material Changes of Circumstance that might be successful?

A

The opening of a new shopping centre on the traditional High Street
Scaffolding erected around a shop
Roadworks outside an office for a year

63
Q

name at least 10 headings you would expect to find in a terms or engagement

A

Identification and status of valuer
Identification of client
Identification of any other intended uses
Identification of asset or liability being valued

Valuation date
Valuation currency
Purpose of the valuation
Basis of value adopted

Nature and extent of the valuer’s work, investigations and limitations
Nature and source of information which the valuer will rely

Format of report
All assumptions and special assumptions to be made
Confirmation that the valuation will be undertaken in accordance with the IVS
The Basis on which the fee will calculated

Where a firm is RICS regulated, reference to complaints handling procedure
A statement that compliance with these standards may be subject to monitoring under RICS conduct and disciplinary regs
A Statement setting out agreed limitations
Restrictions on use, distribution and publication of report

REMEMBER - IIII VVPB NN FACT WAAR

RICS APC Valuation Pathway (11 decks)

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