Tricky Qs I keep Getting Wrong Flashcards
1
Q
A
2
Q
What are the 5 exemptions from the PS1?
A
- Agency (In anticipation of receiving instructions to dispose of a property)
- Litigation & negotiation eg. RR’s
- Internal purposes only
- Expert witness - duty to court
- Statutory basis- where carried out by statutory officer
3
Q
What is Professional Standard 2 of the Redbook?
A
- COMPETENCY Relates to ethics and an individual’s competency to deliver.
- Relates to having the appropriate knowledge and experience of dealing with a particular property (asset class) and location.
- RULES OF CONDUCT Ethics (members must act in accordance with RICS Rules of Conduct)
- CONFLICTS OF INTEREST Includes detailed advice on conflicts of interest.
4
Q
Can you tell me the minimum requirements under VPS1?
A
- Identification and status of valuer
- Identification of client
- Identification of any other intended users
- The asset to be valued
- Currency
- Purpose of valuation
- Basis of value
- Valuation date
- Extent of investigation
- Nature and source of information to be relied upon
- Assumptions and special assumptions to be made
- Format of report
- Restrictions of use, distribution and publication
- Confirmation of Redbook/IVS compliance
- Fee basis
- CHP
- Statement that the valuation may be subject to compliance by RICS
- Limitation on liability agreed
5
Q
What Special Assumptions are you aware of?
A
- Vacant possession.
- Restricted Marketing period.
- Anticipation of a physical change.
- Anticipation of a new letting.
- Existence of a special purchaser.
6
Q
What are the minimum requirements to be stated in a report under VPS3?
A
identification and status of valuer
* b) client and any other intended users
* c) purpose of valuation
* d) Identification of asset to be valued
* e) Basis of Valuation
* f) Valuation date
* g) Extent of investigation
* h) Nature of source of info relied upon
* i) Assumptions and special assumps
* j) restrictions on use, distribution& publication
* K) instruction undertaken in accordance with IVS standards
* l) Valuation approach & reasoning
* M) Valuation figure(s)
* n) Date of Valuation report
* o) Comment on market uncertainty
* p) Statement setting out any limitations on liability that have been agreed
7
Q
What does VPS3 in the Redbook state about preliminary (draft) advice?
A
- It can be given but MUST:
- be marked as a draft
- for internal purposes only
- cannot be relied upon
- or no account can it be published or disclosed
- subject to the completion of final report
- can be discussed with the client but the valuer must not be influenced by the client in any way
- any changes to draft must be noted and reasoned
- any additional info supplied following discussion must be stated
8
Q
What is Market Value?
A
- The estimated amount for which an asset or liability should exchange at the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing where both parties has acted knowledgably, prudently and without compulsion.
9
Q
What does VPS stand for?
A
Valuation Technical and Performance Standards - Valuation Approaches and Methods
10
Q
What does Part 5 of the red book cover?
A
- Valuation applications (Valuation Practice Guidance Application- VPGA’s) Advisory worldwide
- 10 VPGAs.
11
Q
What is VPGA8?
A
- Valuation of real property interests – covers inspections and investigations, with particular emphasis on ESG and sustainability issues.
- Including the need to consider direct valuation factors (e.g flood risk), indirect valuation factors (carbon emissions), physical risks (through heat or wildfire).
12
Q
What is a discounted cash flow?
A
- DCF is an investment method technique.
- DCF valuation involves projecting estimated cash flows over an assumed investment holding period, plus an exit value at the end of that period, usually arrived at on a All Risks Yield basis. The cash flow is then discounted back to the present day at a discount rate (the desired rate of return) that reflects the perceived level of risk.
- DCF works by examining a property’s projected future income or projected cash flow from the investment, and then discounting that cash flow to arrive at an estimated current value of the investment. This estimated current value is commonly referred to as net present value, or NPV.
- Simple methodology to establish MARKET VALUE;
1. Estimate the cash flow (income less expenditure)
2. Estimate the exit value at the end of the holding period
3. Select the discount rate
4. Discount cash flow at discount rate
5. Value is the sum of the completed discounted cash flow to provide the NPV.
13
Q
What is Net Present Value?
A
- The sum of the discounted cash flows of the project.
- A NPV can be used to determine if an investment gives a positive return.
14
Q
What is an Exit Value?
A
- The value of an investment asset at the end of the holding period. Holding period is the amount of time the investment is held by an investor.
15
Q
What is the internal rate of return?
A
- The rate of return at which all future cash flows must be discounted to produce a NPV of zero.
- The IRR is used to assess the total return from an investment opportunity making assumptions regarding rental growth and re-letting.
- IRR is calculated using the same concept as net present value (NPV), except it sets the NPV equal to zero.
16
Q
What is Hope value?
A
- The value arising from an expectation that future circumstances affecting the property may change. Such as:
o The future prospect of securing planning permission for the development of land, where no planning permission exists at the present time. Or the realisation of marriage value arising from a merger of two interests of land.
17
Q
What is Marriage value?
A
- The merging of two interests.
- An additional element of value created by the combination of two or more interests where the combined value is more than the sum of the separate values.
- Undertake a before and after valuation and calculate the level of marriage value created.
- Typical negotiation outcome is to split the marriage value created 50:50.
18
Q
What are purchaser’s costs for a SALE?
A
- Agents Fees- 1%
- Legal Fees - 0.50%
- Stamp Duty - see below
- VAT - 20%
19
Q
What are the Stamp Duty Land Tax brackets?
A
- Commercial property:
o £0 -£150,000 – Nil
o £150,000-£250,000 – 2%
o Over £250,000 – 5% - The brackets are different in England, Wales and Scotland depending on government.
20
Q
What is the investment purchasers costs?
A
- Circa 6.8% (depends on stamp duty brackets)
21
Q
What is a Building Cost Reinstatement Valuation?
A
- Used for building insurance purposes.
- It is the cost to reinstate the building without profit.
- Calculated using the RICS Building Cost Information Service (BCIS) adopting a GEA for commercial properties.
22
Q
How do you calculate a WAULT?
A
- Multiply the current rent by the remaining lease term for each of the tenants.
- Sum the total of results from step 1.
- Divide the result from step 2 by the sum of current rent for each of the tenants.
23
Q
What is a ransom strip?
A
Piece of land or property that controls access to a less developable piece of land.
24
Q
What is zoning?
A
- A valuation TECHNIQUE not a method.
- Used for the comparison of retail property
- The first 6.1m is most valuable then halved ERV technique.
- Sometimes 9.14 m in Central London
- Basements/first floors are usually treated as A/10.
25
What are the aims of the RICS VRS?
1. Improve the quality of valuation and ensure the highest possible professional standards
2. To meet the RICS requirement to self-regulate effectively
3. To protect and raise the status of the valuation profession as the leading expertise in valuation
26
What sort of statutory due diligence would you carry out prior to undertaking your valuation?
* EPC certificate
* Asbestos register
* Flood risk
* Planning history and policy
* Rateable value
* Title
27
What would you do if a CreditSafe report was not available?
* Use the Profits Test-
* net profit” test where the net profits of the tenant are shown to equal or exceed a multiple (usually 3 times) of the rents reserved by the lease for up to 3 years and the “net assets” test where the net assets of the tenant are equal to a multiple (often 5 times) of the rents reserved by the lease.
* This is a measure used to indicate that no deposit is required.
28
How did you assess the covenant strength?
* Obtained a CreditSafe report, which summarised the past 3 years’ worth of audited accounts. This generates a ‘Risk Score’ based on the combination of the key financials including a company’s turnover, pre-tax profit, shareholders’ funds and credit limit.
29
What document uses the categories A, B and C for the comparable method?
* RICS Guidance Note: Comparable Evidence in Real Estate Valuation, October 2019.
30
What is a yield?
* A yield is a return on an investment and a measure of risk.
31
How do you calculate a yield?
* Yield= annual income/ capital value x 100
32
What is an all risks yield?
Takes growth into account within the yield and is used for calculating growth implicit valuations. Also takes into account differences in comps, return on capital, security on income, selling costs etc.
33
What is an equated yield?
A yield which builds in assumptions about future rental growth drawn from general market knowledge. Used in growth explicit valuation models such as a DCF.
34
What is the difference between a growth implicit valuation and a growth explicit valuation?
* A growth implicit valuation assumes rental growth and this is reflected in the yield (IE Term and reversion). Growth explicit does not assume this and values the income which is certain (such as a DCF).
35
How would you establish the years purchase?
* 100/yield
* Years purchase is the number of years required for its income to repay its purchase price.
36
What is the methodology of the profits method?
* Methodology:
1) Annual turnover (income received) LESS costs = Gross Profit of business
2) LESS working expenses = unadjusted net profit
3) Less operators remuneration = adjusted net profit known as Fair Maintainable Operating Profit or EBITDA (Earnings before interest, taxation, depreciation and amortisation.
4) Half it for rent to landlord
5) Capitalise the 1/2 EBITDA
37
What is the methodology for residual?
GDV - the market value based on the special assumption that the development is complete as at the date of valuation.
Deduct costs such as:
Planning costs
Professional fees (10%)
Contingency/construction costs (5-10%)
Marketing costs (1%)
Developers Profit (15-20%)
Sensitive to its inputs therefore specialist software is used to realistically manage inflow and outputs.
38
What is the difference between a development appraisal and a residual valuation?
* A development appraisal will typically give you the profitability of a proposed development and a residual valuation will give you the value of the land.
39
What is the methodology for DRC?
Value of land in its existing use (assume planning permission exists)
Add current cost of replacing the building plus fees less a discount for depreciation and deterioration.
40
Is DRC Redbook?
* Yes, but it is not suitable for secured lending valuations.
41
Why are valuations undertaken?
Statutory reasons e.g
a) Rating
b) Council tax
c) Compulsory Purchase
Non Statutory e.g
a) Rental value
b) Purchase or Disposal
c) Secured Lending
d) Accounting
42
What due diligence did you carry out in your multi-let office in Windsor?
1) EPC Certificate
2) Abestos Register
3) Flood Risk
4) Planning History and Policy
5) Rateable Value
6) Title
7) Leases, rent review memorandum and additional documentation
43
If you already factored in a rent free and void period into your term and reversion, why did you still account for risk in a higher yield?
The WAULT was 5.7 years. I still incorporated a higher yield because there is still a degree of risk associated with the second tranche of the income due to market factors such as the war in Ukraine, interest rates uncertainty etc.
44
Talk me through your valuation of the multi-let office building in Windsor.
1) Received instruction
2) Checked a) competency b) Independence via COI check c) Put together TOE in line with VPS 1
3)Obtained lease documentation and undertook DD
4) Arranged to inspect
5) Inspected and Measured
6) Took photos and records
7) Obtained and verified comparable data
8) Input dates into KEL (RR and LR)
9) 7% to Term
10) 7.5% to Reversion
11) added together, took off agency, legal costs and stamp duty
12) YP into perp at 7.5% deferred for 6 months for Special Assumption of Vacant Possession minus buyers costs.
12) Put together report, signed off by RV, Issued to client
45
What Stamp Duty did you assume?
4.45%
46
What is the structure of the RICS?
1. The Royal Charter and Bye-Laws - Governed under the terms of the Royal Charter, it was amended in 2020. (amendments enabled a more globally diverse Governing Council, a new role of "Chair of Governing Council" and Established a new "Standards and Regulation" Board.
2. Governing Council - Over 20 members and provides direction, strategy and management.
3. The Standards and Regulation Board - Regulatory Functions eg. tribunal, Dispute Resolution Appointments, Assessments, CPD etc. They all resigned in June 2023 and there is currently an interim board.
3. (both at same level) - The Management Board - Audit, Finance, Knowledge
4. 17 Specialist Professional Groups.
47
What recommendations did the Bichard Review make?
1.New management board
2. new strategy and regulatory board0
3. elections to be held for RICS committees
4. amendment to royal charter
5. MATRICS reinvigorated
6. diversity and inclusion panel
7. Public Interest Panel to be made
8. review into public interest piece every 5 years
9. Fund set up for public interest activity to undertake pro-bono work and scholarships for students in communities that are not well represented in surveying.
48
What has the RICS done so far to adopt the changes recommended in the Bichard Review?
1. April 2023 - new governing council elections
2. April 2023 - Support package for members, including CPD events
3. New diversity equality and inclusion panel chair
4. new sustainability panel chair
49
When did the new rules of conduct come into force?
2nd Feb 2022
50
What are members obligations under the Rules of Conduct 2022?
1. Record and do CPD
2. Cooperate with the RICS
3. Provide information to RICS promptly
51
What are firms obligations under the Rules of Conduct 2022
1 Have Complaints Handling Procedure with ADR and complaints log
2. Have PI cover
3. have professional arrangements in place if a sole trader
4. cooperate with the RICS
5. Share info with RICS promptly
6. Display regulated by RICS on material
7. Report to RICS what is required to be reported each year (i.e PI cover, annual return etc).
52
What are some example behaviours in the Rules of Conduct for Rule 2?
1. Only undertake work they have knowledge skills and resources to carry out competently
2. reflect on work they have undertaken and consider how they might apply learnings to future work
2. Supervise employees undertaking work for them and ensure they have the correct knowledge skills and resources
4. keep up to date and comply with relevant legislation etc.
53
What are some example behaviours in the Rules of Conduct for Rule 1?
1. Do not mislead by action or omission
2. Do not be improperly influenced
3. Open and transparent about fees
54
What are some example behaviours in the Rules of Conduct for Rule 3?
1. Understand clients objectives
2. Undertake work in a timely manner
3. Keep proper records
4. Encourage sustainable solutions
5. understand risk and benefits of using technology
55
What are some example behaviours in the Rules of Conduct for Rule 4?
1. Treat others with courtesy
2. Do not bully
3. Work cooperatively
4. Develop inclusive culture in workplace and identify and address unconscious bias
56
What are some example behaviours in the Rules of Conduct for Rule 5?
1. respond to complaints promptly, openly and professionally
2. manage professional fiannces responsibly
3. Do not dissuade complainants from approaching ADR
4. Public statements made by the firm do not undermine public confidence
5. Question practices which are not right
57
Can you give me two examples of the case study scenarios outlined in the Rules of Conduct?
You have seen worrying social media content from a member
1. Rule 1 applies - must be honest
2. Rule 4 applies - you must not bully
3. Rule 5 applies - must not make statements which undermine the profession
Your client is breaking the law and dumping hazardous waste
1. Rule 1 - protect confidential information and only disclose what is necessary or permitted by law
2. Question practices which are not right
58
What was the old document hierarchy?
International standards - mandatory
Professional Statements - mandatory
Practice statements - mandatory
Guidance Notes - not mandatory and best practice
59
What must you avoid in terms of setting your fee structure?
fee fixing
aggressive fee cutting
colluding with competition
60
What must a data controller do?
Decide how and why personal data is processed
61
What are the fines for not complying with the data protection act?
4% global turnover or £17.5 million whichever is the higher
62
What are your rights under the Data Protection Act?
1. Right to be informed
2. Right to access
3. Right to rectification
4. Right to erasure
5. Right to restrict processing
6. Right to data portability
7. Right to object
8. Right to not be subject to automated decision making
63
What is the RICS guidance on Client money handling and what document status does it have?
professional standard, Client Money Handling 2019
64
What is the RICS guidance on complaints handling and what is its status?
RICS professional standard - Complaints Handling 2016
65
What is the Avison Young complaints handling timescale?
1. Respond to complaint within 7 days of formal complaint explaining understanding of complaint and that you will be investigating
2. Within 28 days you must write with outcome of investigations
3. If they are unhappy, they can refer the matter to ADR
66
What RICS guidance is there on conflicts of interest?
RICS professional standard Conflicts of Interest Global
67
What is the RICS guidance on Social Media use?
Use of social media, Guidance for RICS members 2021 it is a regulation
68
Which part of the RICS deals with disciplinary procedures?
Standards and Regulation Board
69
What are some of the requirements of the RICS for PI insurance?
Ensure adequate protection for each instruction
Consider potential liabilities
Ensure it is underwritten by an RICS approved insurer
Have a minimum level of cover if your turnover is.... £100,000 or less = £250,000 £100,001-£200,000 = £500,000 and £200,001 + = £1,000,000
Maximum levels of uninsured excess to be insurance up to £500,000 = the greater of 2.5% of the sum insured, or £10,000 whichever is the greater, or is over £500,000 = 2.5% of the sum insured
Fully retroactive policy
70
What act relates to when someone can bring a case for negligence against you?
The Limitation Act 1980
71
Under the limitation act 1980, what is the period in which someone can come forward to make a claim under both tort and contract?
Contract = 6 years from date of negligent act, or 3 years from date of knowledge of the damage, subject to 15 years from the negligent act
Tort = within 6 years when the claimant suffered the loss
72
What does the Economic Crime (Transparency and Enforcement) act 2022 do?
Strengthens investigative powers regarding unexplained wealth orders (they are an investigatory order placed on a respondent whose assets appear disproportionate to their income to explain the origins of their wealth).
Set up an beneficial owners register of overseas entities owning properties in the UK
Allows easier prosecution of those involved in sanctions
73
What does the Proceeds of Crime Act 2002 do?
Provides power for UK authorities to recover money and assets deemed to be proceeds of crime
Creates criminal offences to combat money laundering
74
What are the main principles of the Bribery Act 2010?
Proportionality
Top level commitment
Risk Assessments
Due Diligence
Communication
Monitoring and Review
75
What is the RICS guidance on bribery?
Countering Bribery and Corruption, Money Laundering and Terrorist Financing 2019 (RICS professional standard)
76
Who policies the bribery act 2010?
The Serious Fraud Office
77
What is the law relating to money laundering?
Terrorist Financing and Transfer of Funds Regulations 2017
78
Who does the MLRO report to?
National Crime Agency
79
What happens if you break the Terrorist Financing and Transfer of Funds Regulations 2017?
Maximum of 14 years in prison or unlimited fine for assisting
Max 5 years and unlimited fine for a tip off or a failure to report.
80
If you acted for a sanctioned individual, can you accept payment from them?
No, it needs to be dealt with by the Office of Financial Sanctions Implementation and you cannot receive a payment without first obtaining an OSFI license. OFSI can authorise a payments.
guidance on this called UK Financial Sanctions: General Guidance August 2022 issued by the Office of Financial sanctions Implementation who is part of HM Treasury.
81
What are the RICS requirements for opening regulated firms?
Must ensure members log cpd online and have a staff training plan
Provide annual returns
Have adequate PI cover and send certificate to RICS
Client money handling including protection scheme
have a complaints handling procedure with ADR, log and appoint a Complaints handling Officer (external person if sole trader).
Appoint a responsible principle
register for valuer registration
Inform RICS you are opening a firm using the Firm Details Form
82
What statutory things must you consider when opening a new firm?
Register on Companies House
Comply with employment law
Compliance with the Equality Act 2010
Compliance with Data Protection Act 2018
Comply with Bribery Act 2010
Comply with Health and Safety Act 1974
Asbestos Regulations 2012
Inform HMRC for registration and VAt if turnover is over £85,000 PA
Appoint a money laundering reporting officer to comply with Money Laundering Regulations 2017
83
What is your gifts and entertainment policy?
Public Sector - everything must be preauthorised, but Gifts are a max of £15 and Entertainment a max of £30
Private Sector - Entertainment over £120 you must report and over £500 must preauthorise
Gifts over £60 you must report and over £500 must be preauthorised
84
Why do you want to be RICS?
Give clients confidence with STATUS
Markets will RECGONISE I am good and I will have a COMPETITIVE ADVANTAGE
I must comply with cpd so i will have up to date KNOWLEDGE and I have access to RICS professional standards etc
I would have a NETWORK of 125,000 members.
85
What is the role of the RICS?
The RICS promotes and enforces the highest professional qualifications and standards for the development and management of land, real estate, construction and infrastructure.
86
What is RICS guidance on conflicts of interest?
Professional Standard on Conflicts if Interest 2017
87
What is the statutory guidance on money laundering?
Terrorist Financing and the Transfer of Funds Regulations 2017
88
What is the rics guidance on complaints?
PS on Complaints Handling 2016
89
What is the RICS guidance on firm registration?
Rules for the Registration of Firms 2022
90
What is the RICS guidance on PI insurance?
Professional Indemnity Insurance Requirements 2022
91
What is the main legislation relating to bribery?
The Bribery Act 2010
92
How would you apply to CEDR if a complaint couldn't be dealt with in house?
1. Claimant would submit an application to CEDR
2. CEDR would review
3. Independent Adjudicator would make a proposed decision and then a final decision
4. Consumer can then accept or reject the final decision
5. If accepted, the RICS firm would then have to comply with the adjudicators decision.
93
What is your firms 5 year strategy?
new 5 year plan in 2022,
focus on growth,
expanding capabilities in new areas (geographically and sectors),
supported by annual plans to clarify years activities and prioritise investment and resources
94
What is a balance sheet?
A statement of financial position that shows assets and liabilities on a given date.
95
What might be included in balance sheets?
Assets = cash, property, debtors, investments held.
Liabilities = borrowings, overdrafts, loans, creditors, obligation to pay rent
96
What is a profit and loss account?
A summary of the business's income and expenditure, usually prepared annually
97
What is usually contained in a set of public limited company accounts?
Chairman's Statement (letter to shareholders setting out company condition, activities and personal perspective of future)
Independent Auditors Report (make sure accounts are correct and free from misstatement)
Profit and Loss Account
Balance Sheet
Corporate Governance Report (where the company meets compliance and areas where more work is needed)
Remuneration Report (what directors have been paid and their remuneration policy)
98
What is a cash flow statement?
shows receipts and expenditure including VAT
99
What is the LEASE accounting standard that all companies have to comply with when using IFRS?
IFRS16 - full cost of leases must be accounted for obligation to pay rents must be included as a liability but service charge is accounted for separately.
100
What is a publicly listed company?
A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public company can be listed on a stock exchange, which facilitates the trade of shares
101
What is a private limited company?
A limited company is a type of business structure whereby a company is considered a legally distinct body. If you choose to run your business as a limited company, the business will: Be legally distinct from the people who run it. Keep business finances separate from the owner's personal finances.
102
Give me some more information on reasonable adjustments under the Equality Act 2010?
When faced with an obstacle for a disabled person the act requires:
removal or alteration of the feature
provide reasonable means of avoiding the obstacle
The test for reasonable is - how effective will it be, how practical is the change, how much does it cost and how disruptive is it?
103
What have the RICS done to promote diversity and inclusion?
Signed a memorandum of understanding to create a more diverse and inclusive sector which is representative of the society it serves and looks to determine the reasoning for poor performance.
104
What other changes might the RICS do to combat issues around diversity and inclusion?
The Bichard review outlined a number of things that the RICS could do, including using money generated from fines to give back to under represented communities. New RICS diversity Equity and Inclusion board with Louise Brooke-Smith as the chair.
105
What part of the Red Book Global relates to consideration of sustainability in valuation?
VPGA 8 "consideration of sustainability, environmental and social governance matters"
106
What act set targets for net zero? What are the targets?
The Climate Change Act 2008 amended in 2019 - Net Zero by 2050 and reducing emissions by 78% by 2030 compared to 1990 baseline.
107
What is the main RICS guidance on sustainability and ESG? What are some things it considers?
Sustainability and ESG in commercial property valuation and strategic advice - Professional Standard 2022 - consideration of benchmarking, certification, wellbeing amenity etc.
108
Under what act is the Carbon Budget set, how often is it set and what affect does this have on buildings?
Climate Change Act 2008 sets carbon budget every 5 years, meaning that energy performance requirements in building regs get tighter as a result, there are minimum standards when when buildings leased and sold, mandatory inspections for boilers and air conditioning.
109
What is NABERS? Can you tell me a bit about it?
National Australian Built Environment Rating System - star system (* = bad ***** = market leading) looks at energy, water , waste indoor environment
110
What is BREEAM? Can you tell me a bit about it?
Building Research Establishment Environmental Assessment Method - looks at environmental ratings across energy waste water transport waste health and wellbeing. Pass, Good, very Good, Excellent, Outstanding.
111
Tell me about the changes to EPC methodology?
The methodology to calculate an EPC changed in June 2022 and it now considers electricity is "greener" (record high of around 53% of all electricity within the grid came from renewable sources). therefore, gas heater buildings being reassessed after 2022 might find that there is a deterioration in their certificate.
112
What are the fines if you do not comply with EPC legislation?
For not displaying EPC on marketing material = 12.5% of RV (min £500 and max £5,000)
Not complying with MEES =
Less than 3 months non-compliance - up to £5,000 or 10% of RV (max of £50,000)
More than 3 months - up to £10,000 or 20% of RV (max £150,000).
113
What are the three documents relating to measurement of properties?
Code of Measuring Practise - 2015
RICS Property Measurement - 2018 (introduced IPMS to resi and office)
IPMS All Buildings - not adopted by RICS yet
114
Ina report conducted by Knight Frank looking at the way in which different countries measured buildings, what was the variance in floor spaces between differing measuring standards?
24% (around 20%).
115
what is EBITDA and what does it show?
Earnings before interest, tax, depreciation and amortization - shows profitability
116
When was the latest RICS Business Plan?
2021-2022
117
What are the principles of article 5?
1. LAWFUL - Data must be processed lawfully, fairly, transparently
2. LEGITIMATE AND EXPLICIT - Collected for specific legitimate and explicit purposes and not processed further in a manner not compatible with those purposes
3. LIMITED TO WHAT IS NECESSARY - Adequate, relevant and limited to only what is necessary
4. ACCURATE - accurate and kept up to date via rectification or erasure
5. KEPT FOR ONLY AS LONG AS NECESSARY - Kept in a form which permits identification of individuals for only as long as is necessary for purposes outlined
6. KEPT SECURE - Processed in a manner that ensures security using appropriate measures,
118
What are the key points of the Data Protection Act 2018?
1. RISK ASSESSMENTS - conduct Data Protection Impact Assessments for high risk holding of data
2. RIGHTS - grants 8 rights
3. DATA CONTROLLER - firms need to appoint a data controller who decides how and why personal data is use and is directly responsible
4. COMPLIANCE - Must prove compliance to the ICO
119
What are the fines involved with not complying with GDPR?
4% global turnover or £17.5 million, whichever is the higher
120
Explain to me your freedom of information request situation?
Working for a private client, so it wasn't technically a Freedom Of Information request because it wasn't a public body. The phrase that was used.
Under Data Protection Act, I understand that you must respond within one calendar month (with the possibility to extend for 2 months if the request is complex).
For freedom of information requests under the freedom of information act 2000, public bodies must respond within 20 working days.
My firm aimed to respond within the 20 working days, although they didn't need to in this case and could have taken a calendar month.
121
What is the main RICS guidance on Health and Safety?
Surveying Safely 2018 (still a guidance note?)
122
What is the structure of Surveying Safely?
1. Personal Responsibilities
2. Assessing Hazzards and Risks
3. Workplace Health and Safety
4. Occupational Hygeine and Health
5. Visiting Premises and Sites
6. Fire Safety
7. Residential
8. Procurement and management of contractors
123
What are some main take aways from surveying safely?
1. Concept of a safe person - they have tools they need, competent, has safe systems, assumes responsibilities for themselves, colleagues and others.
2. Dynamic risk assessments when on site - try and keep notes of decisions in file.
3. If RICS members feel uncomfortable or are not competent to manage the risks at any time during their visit, they should stop all activities immediately and obtain the assistance of a competent person
124
What is the main piece of legislation relating to health and safety at work?
Health and Safety at Work 1974
125
Who polices the Health and Safety at Work 1974? what can they impose?
Health and Safety Executive
1. Makes it a criminal offence to not comply with fines and imprisonment
126
What are the regulations relating to PPE?
PPE at work regulations 2022
127
What is the Six Pack of H&S regulations?
1. msanagement of H&S at work
2. Display Screen Equipment
3. Manual Handling
4. PPE at work
5. Provision of work equipment
6. Workplace health safety and welfare
128
What is the history of the six pack of H&S regulations?
introduced in 1993
implement various EU directives on health and safety
clarify how employers comply with Health and Safety at Work Act 1974
129
What is RIDDOR?
Reporting of injuries, Diseases and Dangerous Occurences Regulations 1995
130
Under RIDDOR when must you report injuries?
If you have an injury which has cause incapacitation for over 7 days it must be reported to HSE.
You must report the injury to HSE within 15 days of the accident
131
Under RIDDOR when must injuries be recorded?
3 day plus injuries need to be kept in the accident book
132
How long do you need to keep information in your accident book?
3 years after the injury/accident
133
What is the corporate manslaughter and corporate homicide act 2007?
It relates to gross breaches of duty of care that lead to a persons death
134
What is the fire safety Act 2021?
It followed the Hackitt Review in 2018. relates to residential block buildings.
Requires all responsible persons to assess, manage and reduce fire risk posed by teh building
Allows the fire services to take enforcement action against responsible persons who fail to comply.
135
What is the Building Safety Act 2022?
Relates to resi buildings again, but introduced a "Building Safety Regulator" to ensure the safety of those in the building and improve standard of building
136
What is the Occupiers Liability Act 1957?
It places a duty on those in control of a building to take reasonable care to ensure the safety of visitors for the purpose that they are there.
137
What are the three types of asbestos?
Brown - Amosite
Blue - Crocidolite
White - Chrysotile
138
When has white asbestos been banned?
illegal to use since 1999
139
When was blue and brown asbestos banned?
1985
140
What are the regulations relating to asbestos?
"The control of asbestos regulations 2012"
141
What must the duty holder do regarding asbestos management?
1. identify where it is
2. Assess risk and formulate a management plan
3. Produce an asbestos register
4. make the register available
5. have a priority score on the register which outlines which is the priority to remove. 1 is good and 3 is bad. Looks at condition, how frequently it will be moved, the type etc.
6. Review register every 6 months
142
What is the RICS guidance on asbestos?
GUIDANCE NOTE Asbestos: legal requirements and best practice for property professionals and clients 2021
143
What act outlines the offences under health and safety regulations and what are the maximum penalties?
Health and Safety Offences Act 2008
£20,000 max and 12 month prison sentence
144
What are the statutory obligations for a commercial property owner?
1. Asbestos Management
2. Contamination
3. Equality Act Compliance
4. EPC
5. Fire Safety
6. Legionnaires disease
7. Occupiers Liability
8. PAT testing for electrical equipment
9. Waste Management
145
What are some other deleterious materials?
high alumina cement, calcium chloride, wood wool shuttering.
146
What are the signs of wet rot?
wet wood, high damp meter reading, fungal growth, musty smell
147
What is the RICS guidance on Japanese Knotweed?
RICS professional standard to Japanese Knotweed and Residential Property 2022
148
What is the act surrounding contamination?
Environmental Protection Act 1990
149
How long do you have to appeal an arbitrator's award? Is there any case law on this?
Within 28 days, but minister of Finance v International Petroleum Investment Company had an extension to appeal due to "unusual and special case" which resulted in the appeal being served 511 days after the award.
150
What are some reasons that an arbitrator may have acted "with serious irregularity"?
Failure to comply with duties outlined in s.69 of the Arbitration Act 1996.
151
What is the hierarchy for evidence in the Handbook of Rent Review?
1. Open Market Lettings
2. Lease renewals (it makes a difference whether it is inside or outside the act)
3. Rent Reviews
4. RR - Independent Expert
5. RR - Arbitrator
6. Court Determination under LL&T Act
7. Heresay
8. Sale and Leaseback
9. Surrender and Renewal
10. Intercompany arrangement
152
What are the characteristics of a Part 36 Offer?
1. Governed by the Civil Procedure Rules Part 36 (hence name)
2. Only applies where CPR applies - i.e court
3. Must state that it is intended to have the consequences of the s1 of part 36
4. Its much more prescriptive than a calderbank offer and requires legal counsel to decide
5. Has specific additional consequences if the Part.36 offer is made and refused and then not beaten at trial.
6. Provides more certainty on how litigation costs will be treated
153
What are some cases relating to not using ADR as a method prior to court?
Dunnet v Railtrack Plc 2002 - cost sanctions where one party fails to accept the offer to mediate
Halsey v Milton Keynes NHS Trust - Shouldn't force truly unwilling parties to refer to ADR, as it imposes unacceptable obstruction in their right of access to court
154
What is the process of going to court under the LL&T act 1954?
1. serve the relevant notice
2. Make application by deadline in notice (unless agreed an extension in writing)
3. Once application is made the Civil Procedure Rules apply.
4. Application made by solicitor under part 8 of CPR
5. Court will decide whether they want to allow certain evidence, based on the overriding objective in CPR 1.1 "must consider whether the costs are proportionate" and can refuse expert witnesses for example if it is felt the costs are not proportionate.
6. Costs and Case Management Conference (Order case management directions up to trial; and consider estimated costs of the dispute and consider how proportionate the costs are to the value of the dispute).
7. Trial
8. Put together trial bundles
9. Consequential hearing following judgement
10. New lease usually issued 3-4 months after trial
155
What can you do as a tenant if you do not like the courts judgement?
Must apply under S.36 of the LL&T act for a revocation order within 14 days of the judgement. The current tenancy will then continue for a period considered reasonable for the landlord to relet the premises.
156
What must expert witnesses outline in their reports?
1. Detail qualification and experience
2. Substance of instruction
3. Consider all matters material to the dispute
4. Make it clear when something falls out of your competence
5. Reference literature
6. Distinguish between fact and opinion
7. If you cant make an opinion without qualification then you need to outline that qualification
8. Statement of Truth and Declaration
157
What would you include in the statement of truth?
"I confirm I have made clear which facts and matters which are within my knowledge and which are not. Those in my knowledge are true, The opinions expressed represent my true and complete professional opinion. understand that contempt of court may be bought to anyone who make a false statement in a document verified by a statement of truth".
158
What does a declaration include in an expert witness report?
1. Report has identified all material facts
2. Complied with duty to court/arbitrator etc
3. Confirm you're not on a success based fee
4. Have no conflicts
5. Complied with tribunal requirements
6. Confirm the report complies with RICS "Surveyors Acting as Expert Witnesses"
159
Can an expert witness be sued for negligence?
Didn't used to be able, but since Jones v Kearny in 2011 the expert may be held to account for his/her failings; however, a proper reading of the case informs the reader that this is likely to be so only in very rare situations.
160
Is a statement of agreed facts binding?
Ordinarily yes, but in the case of Great Dunmow Estates v Crest Nicholson Operations Ltd 2019 it was held under the court of appeal that a misinterpretation of either party when compiling a statement of agreed fact may not be binding.
161
Why did you advise your client in Mayfair that they should explore mediation?
1. Under CPR 56 It makes it clear that parties should make appropriate attempts to resolve dispute via ADR before going to court and if you fail to engage ADR then it might have adverse cost implications
2. Mediation has 76% sucess rate on the day and 93% settled shortly after
3. Mediation is cheaper
4. Help craft settlement of dispute that court cant, such as rent free period
5. mediators are trained and accredited by a recognised body
162
What does pre-action protocol state?
Stresses that litigation should be a last resort
163
What is the process of applying for a DCO?
1. Granted under the planning act 2008 for Nationally Significant Infrastructure Projects (NSIPs)
2. Pre-application Stage - front ended process, applicant must scope and refine before submission. Must consult with Statutory Consultees, Local Authorities, Affected Landowners, Communities. Once submitted it cannot be changed and so need to have a through consultation process.
3. Acceptance stage - Must decide whether all relevant information has been received within 28 days. If refused you have 6 weeks to challenge, If accepted all documentation will go on the planning inspectorate website.
4. Pre-examination Stage - Must advertise that it has been accepted and encourage people to get involved in the examination. An examining authority is appointed and they hold a preliminary hearing to discuss and set timetable.
5. Examination Stage - starts day after preliminary hearing. Must be completed within 6 months, hearings held and written representations are considered.
6. Recommendation and Decision Stage - 3 months to make your recommendation and submit to relevant secretary of state. They have 3 months to grant consent.
7. Post Decision Stage - applicants and interested parties must legally challenge within 6 weeks.
164
What section of the planning act allows compulsory purchase?
S.122 of the Planning Act 2008 - allows compulsory purchase of land which is required for the scheme or facilitation of it
165
What act enables the compulsory purchase of rights?
Schedule 3 of the Acquisition of Land Act 1981
166
What is a section 158 notice under the Water Industry Act?
lay pipes under streets, erect street notices detailing location of pipe.
167
What is a section 159 notice under the Water Industry Act?
Power to lay, keep inspect etc pipes.
168
What are the timescales associated with a S.159 notice?
1. usually 3 months for new pipes
2. 42 days for alteration to an existing pipe
3. 21 days if a requisition
4. Shorter periods if it is an emergency
169
What is a S.168 notice? What are the timescales?
allows access for intrusive surveys - usually 7 days
170
What is a S.169 notice? what are the timescales?
allows access for non-intrusive surveys such as newts, bats, water collection. 7days notice.
171
What is a S.101a scheme?
First time rural sewerage scheme. It is designed to only provide effective drainage where the current drainage is unsatisfactory. It is to resolve existing environmental problems caused by existing properties' private drainage arrangements, not new builds
172
What schedule of the Electricity Act 1989 would you need to use to obtain a necessary wayleave?
Schedule 4
173
What schedule of the Electricity Act 1989 would you need to use to obtain a permanent easement?
Schedule 3
174
If you obtain a necessary wayleave or a permanent easement, what might you then have to do?
obtain s.37 consent from the secretary of state
175
What are the four requirements of a lease?
1. Exclusive occupation
2. Payment of rent
3. Duration of a specified period
4. If more than 3 years, must be in writing signed and registered as a deed.
176
What is the difference between a license and a lease?
1. Lease provides an occupier with an estate in land, a license just makes it lawful for them to use the land.
2. Lease can be assigned, license cannot
3. Lease cannot be revoked until expiry, break, license can be terminated usually at any time.
177
When is a license not a license?
1. If exclusive posession is granted over a defined area for over 6 months it is likely to be a lease.
2. Street v Mountford sets out differences.
178
When letting a property, what document is useful to consult?
RICS professional standard "The code of leasing business premises 2020".
179
Tell me about the Law of Property Act 1925.
1. Prior to this act, property law was fragmented and complex.
There were numerous statutes and common law principles that governed different aspects of property ownership, making it difficult for individuals to navigate the legal landscape.
2. The Law of Property Act 1925 was introduced to address these issues and provide a comprehensive legal framework for property transactions.
3. One of the key provisions of the Law of Property Act 1925 is the consolidation of registering land.
4. Also relevant for forfeiture and dilapidations claims. Serve a S.146 notice which notifies the tenant of a breach and requires them to 1. specify the breach complained of 2. importantly if the breach is capable of remedy, require the leaseholder to remedy the breach 3. in any case require the leaseholder to make compensation in money for the breach.
180
Tell me some more about dilapidations, what is the S.146 process?
I have not had experience in this, but I understand that you would be required to:
1. Serve a S.146 notice in line with the Law of Property Act 1925 which notifies the tenant of a breach and requires them to:
A. specify the breach complained of
B. importantly if the breach is capable of remedy, require the leaseholder to remedy the breach
C. in any case require the leaseholder to make compensation in money for the breach.
181
Tell me some more about forfeiture?
I have not had experience with this, but I understand that:
1. Consider whether you want to forfeit the lease - is there a rent deposit, guarantor, do you need to serve a 146 notice under the law of property act 1925?
2. Check that the lease contains a clause allowing you to re-enter the premises in certain circumstances - chances are slim if not, are there any preconditions like serving notice etc
3. Avoid wavering your rights by (a) know of your tenant’s breach; and (b) do something which unequivocally recognises the lease as existing or continuing. Need legal advice on this.
4. Physical re-entry and changing the locks. - Sometimes you are not allowed to do this unless consent from the court.
182
Sometimes you are not allowed to use physical re-entry in forfeiture proceedings unless you have consent from the court - when would this apply?
1. When the tenant is insolvent
2. where the forfeiture is for breach of a covenant to repair and the tenant has claimed the benefit of the Leasehold Property (Repairs) Act 1938.
183
How is a dilapidations claim limited?
Under the Landlord and Tenant Act 1927 a dilapidations claim is limited to cost of the works or under s.18 - the diminution in value of the reversionary interest. If the landlord is redeveloping or refurbishing then the reversionary interest may be nil.
184
What are some of the types of insolvency and what does this mean for forfeiture?
1. Company voluntary arrangement - No moratorium unless "small company” – so no restriction on forfeiture.
2. Administration - there is a Moratorium so you must get court’s permission or administrators’ consent for:
‒ Forfeiture
‒ CRAR
‒ Legal proceedings
* Rent deposit deed may allow drawdown
* No restriction on recovering under guarantees
3. Compulsory Liquidation - Moratorium – must get court’s permission or liquidators’ consent for:
‒ Forfeiture
‒ CRAR
‒ Legal proceedings
No restriction on enforcing security of rent deposit
* No restriction on pursuing guarantors
4. Voluntary liquidation
No moratorium on landlord taking action
* Court may restrain action on application
* No restrictions on security enforcement
185
What is the case law regarding the grant of break clauses under 1954 act renewals?
Under National Car Parks Limited v The Paternoster Consortium Ltd [1990] The test to be applied is whether there is a “real possibility (as opposed to a probability) that the premises in question will be required for reconstruction during the continuance of the proposed new tenancy” If there is, then a break option should be included
186
What are the grounds for opposition?
A - Not repairing
B - Persistent delay in rent
C - Breaches of other lease terms
D - Suitable Alternative Accommodation
E - Uneconomic subdivision due to subletting
F - Demolish or reconstruct
G - Occupy Themselves (must also have been the landlord for at least 5 years)
187
What is part 34 of the LL&T Act 1954?
Basis of Valuation for new lease
188
What is part 37 of the LL&T Act 1954?
Compensation provisions
189
What is part 38 of the LL&T Act 1954?
Contracting out
190
How do you contract out of the landlord and tenant act?
Contract out of the provisions of 24-28 of the LL&T Act.
Simple declaration - if 14 days or more until new term starts
Statutory declaration - less than 14 days of the start of the tenancy, independent solicitor must witness
191
What is part 44 of the LL&T Act 1954?
Definition of a competent landlord
192
Who is a competent landlord?
The default answer is the immediate landlord; ie the sublease landlord. However, that party must have at least 14 months left to run on its headlease.
193
What are the timelines associated with a S.27 notice?
giving not less than 3 months notice
194
What part of the 1954 act refers to tenants not accepting the terms ordered by the court and what is it called?
Part 36 - Revocation Order
195
When was R22 refrigerant banned?
2004 - Banned for new systems
2015 - Banned to replace in existing systems
196
197
What discount rates did you apply for your High Wycombe Rent review?
subjective and discussed these at length with my supervisor and other members of the lease advisory team
GIA to NIA - 15% uplift on GIA rent to reflect areas which would usually be NIA
Fragmentation - £1.50 off industrial rates
Date, location, quantum - 50%
198
What are the usual quarter days?
25th March
24th June
29th Sept
25th Dec
199
200
What is included in a rent review memorandum?
Address
Parties
Date of tenancy agreement
Review Date
New Rent
Signed by authorised members of both parties (director or someone with delegated power of authority)
201
What was the Old use class for retail? What is the new one?
Was Class A1
Now since Sept 2020 it is E
202
What are the two uses that have stayed the same?
B2 Industrial and B8 Storage and Distribution
