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Essentials Flashcards

1
Q

What comes after the VPGAs in the Red Book?

A

International Valuation Standards (IVS)

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2
Q

Which sections of the red book are mandatory & advisory?

A

Mandatory - PS & VPS

Advisory - VPGA

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3
Q

What is in the RICS Conflicts of Interest (2017)?

A

Rules for identifying and managing conflicts

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4
Q

What would your first thought be if a client wanted to pay using cash?

A

Money laundering red flag

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5
Q

What would the problem be with accepting gifts

1) During an instruction

2) When hoping for more work

A

1) impartiality e.g., pushing values up

2) decision about whether to accept gift influenced by wanting to keep the client happy rather than proportionality

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6
Q

What is the RICS Professional Standard on Money Laundering and Bribery called?

A

Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)

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7
Q

What should members do with regards to AML? (2 things)

A

Stay up to date with training

Comply with company policy

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8
Q

What is the definition of Market Value?

A

The estimated amount for which:

  • An asset or liability should exchange
  • On the Valuation Date
  • Between a willing buyer and a willing seller
  • In an arms length transaction
  • After proper marketing
  • Where the parties acted knowledgeably, prudently, and without compulsion
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9
Q

What is the definition of Market Rent?

A

The estimated amount for which an interest in real property should be leased

  • On the valuation date
  • Between a willing lessor and willing lessee
  • On appropriate lease terms
  • In an arms length transaction
  • After proper marketing
  • Where the parties acted knowledgeably, prudently, and without compulsion
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10
Q

What is the definition of Fair Value?

A

The price which would be received

To sell an asset or transfer a liability

In an orderly transaction

Between market participants

On the measurement date

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11
Q

How many principles are there in the Bribery Act?

A

6

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12
Q

What are the six principles?

A

1) proportionality
2) risk assessment
3) due diligence
4) top line commitment
5) monitor and review
6) communication

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13
Q

How many types of discrimination are there in the Bribery Act?

A

4

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14
Q

What are the four types of discrimination?

A

1) Direct

2) Indirect (e.g., fixed lunchtime)

3) Harassment

4) Victimisation (treating different because of a report)

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15
Q

How many protected characteristics under the Equality Act?

A

9

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16
Q

What are the 9 protected characteristics?

A

1) sex
2) gender reassignment
3) marriage
4) pregnancy
5) age
6) disability
7) race
8) religion
9) sexual orientation

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17
Q

What is Rule 1?

A

To act with honesty, integrity and comply with obligations, including to the RICS

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18
Q

What is Rule 2?

A

To maintain professional competence and ensure that all services are provided by competent individuals with the necessary expertise

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19
Q

What is Rule 3

A

To provide good quality and diligent services

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20
Q

What is Rule 4?

A

To treat each other with respect and encourage diversity & inclusion

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21
Q

What is Rule 5?

A

To act in the public interest, take responsibility to prevent harm and maintain public confidence in the profession

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22
Q

What does PS 1 say?

A

All valuations should be Red Book, aside from:

1) agency
2) negotiations
3) expert witness

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23
Q

What does PS 2 say?

A

Valuers should:

1) act with objectivity
2) act with expertise
3) disclose previous involvement

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24
Q

When should Fair Value be used according to the VPGA 1?

A

When IFRS is used in the entity

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25
What should the report include according to the Red Book?
1) clear conclusions 2) dealing with all ToEs 3) in accordance with IVS reporting requirements
26
What does the red book say about Methods?
They should have regard for: 1) nature of asset 2) purpose of assignment 3) jurisdiction
27
What are 3 ADR methods?
1) mediation 2) arbitration 3) independent expert determination
28
What is the difference between an arbitrator and an independent expert?
Arbitrator cannot be sued Arbitrator uses parties evidence rather than forming own opinion
29
What is the message of the Health and Safety at Work Act (1974)
Employers have a duty to protect the h&s of employees
30
What does GEA stand for, who uses it, and what does it include?
Gross External Area Planning/ Building Surveyors Thickness of walls and external projections
31
What does GIA stand for, who uses it, and what does it include?
Gross Internal Area Business Rates Common Areas
32
What does NIA stand for, who uses it, and what does it include?
Net Internal Area Valuations Usable areas
33
What are three things outlined in Property Measurement (2018)
1) IPMS should be used OR advised and documented 2) scales of plans should be clarified 3) basis of measurements should be clarified
34
What does BCIS stand for?
Building Cost Information Service
35
Where should a conflict of interest be documented if you proceed?
Terms of Engagement
36
What are the three types of conflict?
Party Own Interest Confidential Information
37
What are 3 sections in Surveying Safely?
1) responsibilities of members (safe person) and firms (E,E,S,S) 2) attending site (risk assessment and lone working) 3) hazards vs risks
38
What is the Practice Information on risk and what does it say?
Risk, Liability, and Insurance (2021) - liability cap should be agreed & advice should not be relied upon by third parties
39
What is the Practice Information on DCF and what does it say?
Discounted Cash Flow Valuations (2023) - in some places implicit income capitalisation model remains prevalent, but DCF is becoming increasingly consider appropriate
40
What are five things to include in terms of engagement?
1) client/ property 2) fees 3) basis of value 4) inspections 5) assumptions/ special assumptions
41
What is the definition of a liability cap?
Contractual agreement that a client can only make a claim up to the agreed amount
42
What is professional indemnity insurance?
Insurance to cover the cost of damages from negligent services
43
What sets out the PII requirements and what are they?
RICS PII Requirements (2024) Under £100K = £250K £100K to £200K = £500K Over £200K = £1M
44
What is the max excess for PII?
Up to £10M - £10,000 or 2.5% (of the sum insured) Over £10M - no limit
45
What is the punishment for a breach of MEES under 3 months?
10% of RV (£5K to £50K)
46
What is the punishment for a breach of MEES over 3 months?
£20% of RV (£10K to £150K)
47
What are three principles of UK GDPR?
1) collected for legitimate purposes 3) processed lawfully 4) kept accurate
48
How many rights are there in the UK GDPR?
8
49
What are three rights under UK GDPR?
1) informed 2) access 3) erasure
50
Who was in a company is responsible for monitoring GDPR compliance?
Data Controller
51
According to VPGA 2, what could a conflict be?
Long-standing relationship with the borrower
52
What does Commercial Property in England and Wales (2011) say?
Primary duty is to the landlord Model ToE Advice on rent colllectiom
53
How much of a discount from prime yields was the St James’s example?
100 bips (4% > 5%)
54
What does BREEAM stand for?
The Building Research Establishment Environmental Assessment Method
55
How many weighted categories does BREEAM look at?
9
56
What are 3 examples of the weighted characteristics?
Energy Use Water Consumption Waste Management
57
How many BREEAM ratings?
5
58
What are the 5 BREEAM weightings?
1) Pass 2) Good 3) Very Good 4) Excellent 5) Outstanding
59
What is the RICS guidance on comparable evidence?
Comparable Evidence in Real Estate Valuation (2019)
60
what is an example of Category B evidence?
Historic evidence
61
What is an example of Category C evidence?
Transactions from another market or property type
62
What is the hierarchy of rental evidence?
Open Market Lettings Lease Renewals Rent Reviews
63
What are three possible consequences of the trump tariffs?
1) Inflation 2) Delays to interest rate cuts 3) Delayed investment decisions
64
What is a side letter?
Binding agreements that supplement/ modify lease terms
65
What is a turnover deed?
An agreement for turnover rent which is separate from the lease
66
Where would you find the rent in a lease?
The lease particulars
67
What are three changes to the new Red Book?
Introduction of VPS 5 on valuation models Latest version of the IVS (2024) Sustainability (ToE, data request, stating and justifying if no impact on value)
68
What does Section 17 of the Landlord and Tenant (Covenants) Act 1995 say?
If you want to pursue the latest former tenant you must serve S17 notice within 6 months of start of arrears
69
What are the advantages and disadvantages of DCF?
Adv: - allows for rental growth - enables sensitivity testing Dis: - less familiarity - assumption heavy
70
What is a casement window?
A window hinged at the side which swings open
71
72
When would you use: Profits Method Residual Method DRC Method DCF (investment method)
Profits - trade related property where value is linked to business profitability Residual - when you are trying to determine the value of land DRC - last resort for specialised properties DCF - when that is how an investor would appraise the particular property e.g. short leaseholds
73
What is the basic methodology for the Profits Method
Turnover (FMT) of a Reasonably Efficient Operator (REA) Deduct costs to reach the Fair Maintainable Operating Profit (FMOP) Capitalise income at a yield derived from comps
74
What is the basic methodology for the Residual Method?
Determine Gross Development Value (GDV) using comps (income/cap rate) Subtract developers costs (including architectural costs & developers profit) Amount remaining = Residual Land Value (RLV)
75
What is the basic methodology for DRC
Determine the cost of building a Modern Equivalent Asset (MEA) Depreciate for obsolescence (functional, economic, physical) Add to the cost of land = value
76
What is the basic methodology for DCF?
Select discount rate for ALL cash flows Estimate cash flows for the holding period The final cash flow will be the exit value derived from trad val Sun of all cash flows = NPV
77
What are three red flags for money laundering?
1) unwillingness to provide identity documents 2) unusual transactions, such as sudden urgency 3) payment of fees in unusual currencies
78
What is the act on money laundering which provider wider sanctions in light of Ukraine War?
Sanctions and Anti-Money Laundering Act (2018)
79
What are the three offences under the Proceeds of Crime Act (2002)?
1) concealing criminal property 2) arranging for others to use criminal property 3) acquisition or use of criminal property
80
What is the main regulation on money laundering?
The Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017)
81
Has the main regulation on money laundering been amended since 2017?
Yes several times
82
What is the definition of money laundering?
Where the proceeds of crime are disguised as legitimate assets
83
What are the three key provisions of the AML regulations?
1) Staff AML training 2) AML checks - CDD & EDD 3) Risk Assessment
84
What is the maximum penalty for money laundering?
14 years for engaging 5 years for tipping off
85
What are 3 things Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019) says about bribery considerations for members and firms “?
1) Not offer or accept a bribe 2) Procedures to comply with Bribery Act 3) Report suspicions
86
What are 3 things Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019) says about AML considerations for members and firms “?
1) Must not facilitate AML 2) Must do ID checks 3) Must report suspicions
87
What is the JLL AML check called? What does it look at?
Know Your Client (Sales Force) Sanctions List

APC (18 decks)

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