Vals + LS vals Flashcards
(36 cards)
What purchasers costs did you include in your Valuation?
Stamp duty - 5%
Agent fees - 1%
Solicitors fees - 0.5%
6.5%
What are the current stamp duty states for non residential and mixed use properties?
Up to £150,000 - nil
£150,000 - £250,000 - 2%
£250,000 + - 5%
What is a head lease and how does it differ from a standard lease?
Head lease is a top lease between the head leaseholder and FH which gives the right to occupy and manage the property including subletting.
Does a profit method of valuation include or exclude purchasers costs?
Purchasers are excluded as the valuation assesses the business trading performance, not the specific costs incurred by a purchaser
Was the yield used in your profit’s method net or gross?
Gross, excludes any purchasers costs.
Definition of Fair Value?
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
- price to sell or transfer liability
- orderly transaction
- market participants
- measurement date
What was included in the lease summary?
Landlord
Tenant
Lease Date
Term
Break Clause
Rent
Rent Review
Basis of Review
Repairs
Insurance
User
Alienation
In/outside 1954 Act
What index linked basis?
An index that tracks inflation
What is a cap and collar review?
Mechanism that sets a max and min increases on each review
Why is having no cap or collar an unfavourable term?
Increased likelihood of tenant default as rental payment could increase massively
Definition of Market Value
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 arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
- Amount for an asset or liability should exchange
- Willing buyer and selling
- Arms length transaction
- Proper marketing
- Parties acted knowledgeably, prudently and without compulsion
Definition of market rent?
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 arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
- Est amount for an interest
- should lease on val date
- willing lessor and willing lessee
- appropriate terms
- arm’s length
- Property marketing
- Parties acted knowledgeably, prudently and without compulsion.
What is FMT?
Level of trade a REO would expect to achieve assuming the property equipped, repaired, maintained and decorated.
What is FMOP?
Level of profit stated prior to EBITDA that a REO would expect to derive from FMT. Costs should be aligned to reflect all costs and outgoings of a REO.
When do you make adjustments?
Finance costs
Non recurring costs
abnormal costs
Deprecation costs
How to calculate a Yield from the multiple
100 / multiple
What are the minimum levels of PII
Based on TO
TO = Min level of indemnity
£100,000 or less = £250,000
£100,000 - £200,000 = £500,000
£200,000+ = £1,000,000
What were the main changes between the 2022 & 2025 red book?
Changes to the Valuation Professional Standards
Removing areas of repetition
Adapting to technological advancements and ESG
Five methods of valuation?
1 - Comparable
2 - Residual
3 - Investment
4 - Profits
5 - DRC
What is an SLA
Contractual obligation between a firm and client which states the scope of work
What is a possessory title?
Where someone does not have all the necessary documentation to meet the Land Registry’s criteria for absolute title.
Difference between special assumption and assumption
Assumption is factually true at the valuation date, whilst a special assumption is assumes facts differ from the actual facts at the valuation date
What is a special purchaser?
A particular buyer whom an asset has a particular value because of an advantage which is not applicable to other buyers.
Three approaches to valuation?
Cost, income & market
