Valuation Level 2 - Kensington Flashcards
Talk me through your Level 2 example on the leasehold flat in Kensington?
I was instructed to value a long leasehold flat in Kensington for loan security purposes
I carried out a conflict of interest check and ensured I was competent in line with the Red Book (PS2)
I issued terms of engagement and proceeded once client has signed
I carried out due dilligence checks on the property I then inspected and measured the property on a GIA basis
I researched the market and comparable evidence
I then drafted the valuation report before finalising and issuing to the client.
Describe the property
3 bedroom flat within an interwar block of apartments
red brick stone elevations
multi pane sash windows
pitched roof
internally - first floor flat, wooden flooring inside condition was dated and could benefit from refurbishment
How would you value a short leasehold differently?
find comparable evidence of short leasehold properties
apply a discount to the market value to reflect the declining asset value
What would you consider to be a short leasehold?
80 years or less
What is the difference between a freehold and a leasehold?
Freehold - exclusive rights and ownership into perpetuity
Leasehold - ownership for a fixed number of years
How did you consider this property to be suitable for loan security?
liquid asset
no onerous clauses in the lease - high ground rent / service charge?
Why did you measure the property on a GIA basis?
GIA market norm for residential
How did you establish market value?
Comparable method of valuation, analysed transactions on a psf basis
looked at assets of a similar condition, I also looked at assets in a better and worse condition to cross check on a rate psf.
What did the local agents say about the market?
good demand in area
shortage of supply of larger flats like the subject.
How did you adhere to Covid 19 Guidelines?
- wore masks
- stayed within a safe distance from the tenant
During Covid 19 what did you think about when preparing your report?
VPGA10 - Market Uncertainty Clause
reliance on reports can not be considered in usual market terms it was a unique event in a pandemic, the market was not usual.
What due diligence did you undertake on the property?
Checked the lease - had sight of the ground rent
checked the EPC rating
checked the council tax
How long was the leasehold?
99 years
What legislation are you aware of in relation to ground rent?
As part of the Leasehold Reform (Ground Rent) Act 2022, ground rent has been abolished for new leases of flats and houses in England and Wales.
How will the kings speech affect values?
Increase values, as new laws may enable leaseholders to buy the freehold of a propertyas assets value won’t diminish
