CPD Record Flashcards
What are the implications of the ‘green agenda’?
There will be properties which do not meet the green requirements. Some of these properties will be able to be retrofitted for a reasonable sum but there will be some for which is is uneconomic to do so and these will become ‘stranded assets’ which will need to be demolished.
What is the difference between a residual valuation and a development appraisal?
A residual valuation calculates a land value for the site whereas a development appraisal calculates profit to be achieved through undertaking the development
What topical matters impact land value and or profit?
- Biodiversity Net Gain
- Interest rates
- Construction costs
- Inflation
What is the Law of Agency?
Agency is the relationship which exists between two persons when one, called the agent, is considered in law to represent the other, called the principal, in such a way as to be able to affect the principals legal position in respect of strangers to the relationship by the making of contracts of the disposition of property.
Agents have a duty of care, a duty of loyalty, and a duty of disclosure to their principals.
What is your understanding of negligence?
It is a tort - a civil wrong (although some can be criminal). It is an ‘act or omission, other than a breach of contract or trust, which causes damage to another, in his person, pocket or reputation for which the Common Law provides a remedy in unliquidated damages’.
CASE LAW - Donoghue v Stephenson [1932] (snail in bottle):
- Duty of Care
- Breach of Duty of Care
- Causation of damage or loss
- Damages - loss or injury (not too remote)
CASE LAW - Bolam v Friern Hospital [1957]:
- Has professional duty been breached?
- Bolam Test: if a professional person reaches the standard of a responsible body of professional opinion skilled in that particular art, he will not be negligent
What data sources do you use in your day to day work?
Land Registry, Companies House, Planning Portals
What is the difference between a survey and an inspection?
Surveys relate to inspection and investigation of the construction and services of a property in sufficient detail to facilitate advice on the impact of condition and circumstances on the client.
Inspections are non-invasive, visual approaches to evaluate the nature and condition of property and its component elements internally and externally together with its location and situation credentials.
The key difference is surveys are much more detailed!
How does sustainability impact property/construction decisions?
Sustainability credentials or a lack of can be viewed as having a “green premium” or “brown discount” respectively. This affects the level of value attributed to a property at disposal or acquisition.
When constructing buildings, sustainability can increase costs as efforts to incorporate sustainable building methods/technologies are adopted. This can command a premium when it comes to value the constructed asset and improves the lifespan of the building as legislation becomes ‘greener’. Alternatively, purchasers may think the building commands a brown discount as it will be a stranded asset in future.
What is your understanding of general trends in the property market over the last few decades?
1975 - Post-war inflation, real estate seen as investment medium, prime commercial leases were 25 years, LLs dominated market and therefore leasing terms, upwards only reviews, link with GILTs broken, evolution of explicit techniques
Post 2008 - crash, liquidity issue , difficult to obtain finance, Basel III accord (2017) - international regulatory framework for banks
2016 & 2019 - Brexit position, damaged economy, border and trade barriers, devalued currency,
2021 & 2021 - covid pandemic, major impact on UK economy, government borrowing up, semi permanent change to work & home life, acceleration of e-commerce (67% consumers reported change), major change in structure of investment markets
2022 - War in Ukraine, loss of life and property, economic impact on fossil fuel prices (gas) and food prices (wheat and corn), fuelling of imported inflation, stagflation (slow growth, high unemployment and rising prices)
2024 - Interest rate @ 5.25% we’ve had a couple of nil increases which may indicate reduction on Thursday 9th May 2024. BoE have set a target of 2% and we are currently at 3.4%.
What is the purpose of a rent review?
Original purpose was to offset inflation but it is reasoned that the purpose is to ensure the rent reflects market levels. British Gas v. Universities Superannuation Scheme held that commercial purpose was to allow a market correction in the level of rent to be paid.
What is the difference between yield and return?
Both are used to describe performance of an investment.
Return is retrospective (but can be projected!) Looks at past performance from ‘buy’ to ‘sell/value’.
Yield is prospective (looks forward), is income-based only (unless it becomes explicit), can be based on a fixed term or into perpetuity.
Yield = income divided by price (multiplied by 100 to express percentage)
Return = income plus gain/loss divided by purchase price (multiplied by 100 to express percentage)
