Tricky Qs I keep Getting Wrong

Question 2

What are the 5 exemptions from the PS1?

Answer 2

• 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

Question 3

What is Professional Standard 2 of the Redbook?

Answer 3

• 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.

Question 4

Can you tell me the minimum requirements under VPS1?

Answer 4

• 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

Question 5

What Special Assumptions are you aware of?

Answer 5

• Vacant possession.
• Restricted Marketing period.
• Anticipation of a physical change.
• Anticipation of a new letting.
• Existence of a special purchaser.

Question 6

What are the minimum requirements to be stated in a report under VPS3?

Answer 6

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

Question 7

What does VPS3 in the Redbook state about preliminary (draft) advice?

Answer 7

• 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

Question 8

What is Market Value?

Answer 8

• 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.

Question 9

What does VPS stand for?

Answer 9

Valuation Technical and Performance Standards - Valuation Approaches and Methods

Question 10

What does Part 5 of the red book cover?

Answer 10

• Valuation applications (Valuation Practice Guidance Application- VPGA’s) Advisory worldwide
• 10 VPGAs.

Question 11

What is VPGA8?

Answer 11

• 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).

Question 12

What is a discounted cash flow?

Answer 12

• 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.

Question 13

What is Net Present Value?

Answer 13

• The sum of the discounted cash flows of the project.
• A NPV can be used to determine if an investment gives a positive return.

Question 14

What is an Exit Value?

Answer 14

• 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.

Question 15

What is the internal rate of return?

Answer 15

• 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.

Question 16

What is Hope value?

Answer 16

• 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.

Question 17

What is Marriage value?

Answer 17

• 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.

Question 18

What are purchaser’s costs for a SALE?

Answer 18

• Agents Fees- 1%
• Legal Fees - 0.50%
• Stamp Duty - see below
• VAT - 20%

Question 19

What are the Stamp Duty Land Tax brackets?

Answer 19

• 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.

Question 20

What is the investment purchasers costs?

Answer 20

• Circa 6.8% (depends on stamp duty brackets)

Question 21

What is a Building Cost Reinstatement Valuation?

Answer 21

• 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.

Question 22

How do you calculate a WAULT?

Answer 22

1. Multiply the current rent by the remaining lease term for each of the tenants.
2. Sum the total of results from step 1.
3. Divide the result from step 2 by the sum of current rent for each of the tenants.

Question 23

What is a ransom strip?

Answer 23

Piece of land or property that controls access to a less developable piece of land.

Question 24

What is zoning?

Answer 24

• 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.

Question 25

What are the aims of the RICS VRS?

Answer 25

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

Question 26

What sort of statutory due diligence would you carry out prior to undertaking your valuation?

Answer 26

* EPC certificate * Asbestos register * Flood risk * Planning history and policy * Rateable value * Title

Question 27

What would you do if a CreditSafe report was not available?

Answer 27

* 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.

Question 28

How did you assess the covenant strength?

Answer 28

* 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.

Question 29

What document uses the categories A, B and C for the comparable method?

Answer 29

* RICS Guidance Note: Comparable Evidence in Real Estate Valuation, October 2019.

Question 30

What is a yield?

Answer 30

* A yield is a return on an investment and a measure of risk.

Question 31

How do you calculate a yield?

Answer 31

* Yield= annual income/ capital value x 100

Question 32

What is an all risks yield?

Answer 32

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.

Question 33

What is an equated yield?

Answer 33

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.

Question 34

What is the difference between a growth implicit valuation and a growth explicit valuation?

Answer 34

* 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).

Question 35

How would you establish the years purchase?

Answer 35

* 100/yield * Years purchase is the number of years required for its income to repay its purchase price.

Question 36

What is the methodology of the profits method?

Answer 36

* 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

Question 37

What is the methodology for residual?

Answer 37

 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.

Question 38

What is the difference between a development appraisal and a residual valuation?

Answer 38

* 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.

Question 39

What is the methodology for DRC?

Answer 39

 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.

Question 40

Is DRC Redbook?

Answer 40

* Yes, but it is not suitable for secured lending valuations.

Question 41

Why are valuations undertaken?

Answer 41

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

Question 42

What due diligence did you carry out in your multi-let office in Windsor?

Answer 42

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

Question 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?

Answer 43

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.

Question 44

Talk me through your valuation of the multi-let office building in Windsor.

Answer 44

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

Question 45

What Stamp Duty did you assume?

Answer 45

4.45%

Question 46

What is the structure of the RICS?

Answer 46

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.

Question 47

What recommendations did the Bichard Review make?

Answer 47

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.

Question 48

What has the RICS done so far to adopt the changes recommended in the Bichard Review?

Answer 48

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

Question 49

When did the new rules of conduct come into force?

Answer 49

2nd Feb 2022

Question 50

What are members obligations under the Rules of Conduct 2022?

Answer 50

1. Record and do CPD 2. Cooperate with the RICS 3. Provide information to RICS promptly

Question 51

What are firms obligations under the Rules of Conduct 2022

Answer 51

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).

Question 52

What are some example behaviours in the Rules of Conduct for Rule 2?

Answer 52

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.

Question 53

What are some example behaviours in the Rules of Conduct for Rule 1?

Answer 53

1. Do not mislead by action or omission 2. Do not be improperly influenced 3. Open and transparent about fees

Question 54

What are some example behaviours in the Rules of Conduct for Rule 3?

Answer 54

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

Question 55

What are some example behaviours in the Rules of Conduct for Rule 4?

Answer 55

1. Treat others with courtesy 2. Do not bully 3. Work cooperatively 4. Develop inclusive culture in workplace and identify and address unconscious bias

Question 56

What are some example behaviours in the Rules of Conduct for Rule 5?

Answer 56

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

Question 57

Can you give me two examples of the case study scenarios outlined in the Rules of Conduct?

Answer 57

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

Question 58

What was the old document hierarchy?

Answer 58

International standards - mandatory Professional Statements - mandatory Practice statements - mandatory Guidance Notes - not mandatory and best practice

Question 59

What must you avoid in terms of setting your fee structure?

Answer 59

fee fixing aggressive fee cutting colluding with competition

Question 60

What must a data controller do?

Answer 60

Decide how and why personal data is processed

Question 61

What are the fines for not complying with the data protection act?

Answer 61

4% global turnover or £17.5 million whichever is the higher

Question 62

What are your rights under the Data Protection Act?

Answer 62

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

Question 63

What is the RICS guidance on Client money handling and what document status does it have?

Answer 63

professional standard, Client Money Handling 2019

Question 64

What is the RICS guidance on complaints handling and what is its status?

Answer 64

RICS professional standard - Complaints Handling 2016

Question 65

What is the Avison Young complaints handling timescale?

Answer 65

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

Question 66

What RICS guidance is there on conflicts of interest?

Answer 66

RICS professional standard Conflicts of Interest Global

Question 67

What is the RICS guidance on Social Media use?

Answer 67

Use of social media, Guidance for RICS members 2021 it is a regulation

Question 68

Which part of the RICS deals with disciplinary procedures?

Answer 68

Standards and Regulation Board

Question 69

What are some of the requirements of the RICS for PI insurance?

Answer 69

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

Question 70

What act relates to when someone can bring a case for negligence against you?

Answer 70

The Limitation Act 1980

Question 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?

Answer 71

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

Question 72

What does the Economic Crime (Transparency and Enforcement) act 2022 do?

Answer 72

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

Question 73

What does the Proceeds of Crime Act 2002 do?

Answer 73

Provides power for UK authorities to recover money and assets deemed to be proceeds of crime Creates criminal offences to combat money laundering

Question 74

What are the main principles of the Bribery Act 2010?

Answer 74

Proportionality Top level commitment Risk Assessments Due Diligence Communication Monitoring and Review

Question 75

What is the RICS guidance on bribery?

Answer 75

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

Question 76

Who policies the bribery act 2010?

Answer 76

The Serious Fraud Office

Question 77

What is the law relating to money laundering?

Answer 77

Terrorist Financing and Transfer of Funds Regulations 2017

Question 78

Who does the MLRO report to?

Answer 78

National Crime Agency

Question 79

What happens if you break the Terrorist Financing and Transfer of Funds Regulations 2017?

Answer 79

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.

Question 80

If you acted for a sanctioned individual, can you accept payment from them?

Answer 80

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.

Question 81

What are the RICS requirements for opening regulated firms?

Answer 81

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

Question 82

What statutory things must you consider when opening a new firm?

Answer 82

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

Question 83

What is your gifts and entertainment policy?

Answer 83

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

Question 84

Why do you want to be RICS?

Answer 84

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.

Question 85

What is the role of the RICS?

Answer 85

The RICS promotes and enforces the highest professional qualifications and standards for the development and management of land, real estate, construction and infrastructure.

Question 86

What is RICS guidance on conflicts of interest?

Answer 86

Professional Standard on Conflicts if Interest 2017

Question 87

What is the statutory guidance on money laundering?

Answer 87

Terrorist Financing and the Transfer of Funds Regulations 2017

Question 88

What is the rics guidance on complaints?

Answer 88

PS on Complaints Handling 2016

Question 89

What is the RICS guidance on firm registration?

Answer 89

Rules for the Registration of Firms 2022

Question 90

What is the RICS guidance on PI insurance?

Answer 90

Professional Indemnity Insurance Requirements 2022

Question 91

What is the main legislation relating to bribery?

Answer 91

The Bribery Act 2010

Question 92

How would you apply to CEDR if a complaint couldn't be dealt with in house?

Answer 92

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.

Question 93

What is your firms 5 year strategy?

Answer 93

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

Question 94

What is a balance sheet?

Answer 94

A statement of financial position that shows assets and liabilities on a given date.

Question 95

What might be included in balance sheets?

Answer 95

Assets = cash, property, debtors, investments held. Liabilities = borrowings, overdrafts, loans, creditors, obligation to pay rent

Question 96

What is a profit and loss account?

Answer 96

A summary of the business's income and expenditure, usually prepared annually

Question 97

What is usually contained in a set of public limited company accounts?

Answer 97

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)

Question 98

What is a cash flow statement?

Answer 98

shows receipts and expenditure including VAT

Question 99

What is the LEASE accounting standard that all companies have to comply with when using IFRS?

Answer 99

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.

Question 100

What is a publicly listed company?

Answer 100

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

Question 101

What is a private limited company?

Answer 101

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.

Question 102

Give me some more information on reasonable adjustments under the Equality Act 2010?

Answer 102

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?

Question 103

What have the RICS done to promote diversity and inclusion?

Answer 103

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.

Question 104

What other changes might the RICS do to combat issues around diversity and inclusion?

Answer 104

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.

Question 105

What part of the Red Book Global relates to consideration of sustainability in valuation?

Answer 105

VPGA 8 "consideration of sustainability, environmental and social governance matters"

Question 106

What act set targets for net zero? What are the targets?

Answer 106

The Climate Change Act 2008 amended in 2019 - Net Zero by 2050 and reducing emissions by 78% by 2030 compared to 1990 baseline.

Question 107

What is the main RICS guidance on sustainability and ESG? What are some things it considers?

Answer 107

Sustainability and ESG in commercial property valuation and strategic advice - Professional Standard 2022 - consideration of benchmarking, certification, wellbeing amenity etc.

Question 108

Under what act is the Carbon Budget set, how often is it set and what affect does this have on buildings?

Answer 108

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.

Question 109

What is NABERS? Can you tell me a bit about it?

Answer 109

National Australian Built Environment Rating System - star system (* = bad ***** = market leading) looks at energy, water , waste indoor environment

Question 110

What is BREEAM? Can you tell me a bit about it?

Answer 110

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.

Question 111

Tell me about the changes to EPC methodology?

Answer 111

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.

Question 112

What are the fines if you do not comply with EPC legislation?

Answer 112

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).

Question 113

What are the three documents relating to measurement of properties?

Answer 113

Code of Measuring Practise - 2015 RICS Property Measurement - 2018 (introduced IPMS to resi and office) IPMS All Buildings - not adopted by RICS yet

Question 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?

Answer 114

24% (around 20%).

Question 115

what is EBITDA and what does it show?

Answer 115

Earnings before interest, tax, depreciation and amortization - shows profitability

Question 116

When was the latest RICS Business Plan?

Answer 116

2021-2022

Question 117

What are the principles of article 5?

Answer 117

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,

Question 118

What are the key points of the Data Protection Act 2018?

Answer 118

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

Question 119

What are the fines involved with not complying with GDPR?

Answer 119

4% global turnover or £17.5 million, whichever is the higher

Question 120

Explain to me your freedom of information request situation?

Answer 120

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.

Question 121

What is the main RICS guidance on Health and Safety?

Answer 121

Surveying Safely 2018 (still a guidance note?)

Question 122

What is the structure of Surveying Safely?

Answer 122

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

Question 123

What are some main take aways from surveying safely?

Answer 123

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

Question 124

What is the main piece of legislation relating to health and safety at work?

Answer 124

Health and Safety at Work 1974

Question 125

Who polices the Health and Safety at Work 1974? what can they impose?

Answer 125

Health and Safety Executive 1. Makes it a criminal offence to not comply with fines and imprisonment

Question 126

What are the regulations relating to PPE?

Answer 126

PPE at work regulations 2022

Question 127

What is the Six Pack of H&S regulations?

Answer 127

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

Question 128

What is the history of the six pack of H&S regulations?

Answer 128

introduced in 1993 implement various EU directives on health and safety clarify how employers comply with Health and Safety at Work Act 1974

Question 129

What is RIDDOR?

Answer 129

Reporting of injuries, Diseases and Dangerous Occurences Regulations 1995

Question 130

Under RIDDOR when must you report injuries?

Answer 130

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

Question 131

Under RIDDOR when must injuries be recorded?

Answer 131

3 day plus injuries need to be kept in the accident book

Question 132

How long do you need to keep information in your accident book?

Answer 132

3 years after the injury/accident

Question 133

What is the corporate manslaughter and corporate homicide act 2007?

Answer 133

It relates to gross breaches of duty of care that lead to a persons death

Question 134

What is the fire safety Act 2021?

Answer 134

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.

Question 135

What is the Building Safety Act 2022?

Answer 135

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

Question 136

What is the Occupiers Liability Act 1957?

Answer 136

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.

Question 137

What are the three types of asbestos?

Answer 137

Brown - Amosite Blue - Crocidolite White - Chrysotile

Question 138

When has white asbestos been banned?

Answer 138

illegal to use since 1999

Question 139

When was blue and brown asbestos banned?

Answer 139

1985

Question 140

What are the regulations relating to asbestos?

Answer 140

"The control of asbestos regulations 2012"

Question 141

What must the duty holder do regarding asbestos management?

Answer 141

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

Question 142

What is the RICS guidance on asbestos?

Answer 142

GUIDANCE NOTE Asbestos: legal requirements and best practice for property professionals and clients 2021

Question 143

What act outlines the offences under health and safety regulations and what are the maximum penalties?

Answer 143

Health and Safety Offences Act 2008 £20,000 max and 12 month prison sentence

Question 144

What are the statutory obligations for a commercial property owner?

Answer 144

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

Question 145

What are some other deleterious materials?

Answer 145

high alumina cement, calcium chloride, wood wool shuttering.

Question 146

What are the signs of wet rot?

Answer 146

wet wood, high damp meter reading, fungal growth, musty smell

Question 147

What is the RICS guidance on Japanese Knotweed?

Answer 147

RICS professional standard to Japanese Knotweed and Residential Property 2022

Question 148

What is the act surrounding contamination?

Answer 148

Environmental Protection Act 1990

Question 149

How long do you have to appeal an arbitrator's award? Is there any case law on this?

Answer 149

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.

Question 150

What are some reasons that an arbitrator may have acted "with serious irregularity"?

Answer 150

Failure to comply with duties outlined in s.69 of the Arbitration Act 1996.

Question 151

What is the hierarchy for evidence in the Handbook of Rent Review?

Answer 151

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

Question 152

What are the characteristics of a Part 36 Offer?

Answer 152

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

Question 153

What are some cases relating to not using ADR as a method prior to court?

Answer 153

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

Question 154

What is the process of going to court under the LL&T act 1954?

Answer 154

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

Question 155

What can you do as a tenant if you do not like the courts judgement?

Answer 155

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.

Question 156

What must expert witnesses outline in their reports?

Answer 156

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

Question 157

What would you include in the statement of truth?

Answer 157

"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".

Question 158

What does a declaration include in an expert witness report?

Answer 158

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"

Question 159

Can an expert witness be sued for negligence?

Answer 159

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.

Question 160

Is a statement of agreed facts binding?

Answer 160

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.

Question 161

Why did you advise your client in Mayfair that they should explore mediation?

Answer 161

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

Question 162

What does pre-action protocol state?

Answer 162

Stresses that litigation should be a last resort

Question 163

What is the process of applying for a DCO?

Answer 163

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.

Question 164

What section of the planning act allows compulsory purchase?

Answer 164

S.122 of the Planning Act 2008 - allows compulsory purchase of land which is required for the scheme or facilitation of it

Question 165

What act enables the compulsory purchase of rights?

Answer 165

Schedule 3 of the Acquisition of Land Act 1981

Question 166

What is a section 158 notice under the Water Industry Act?

Answer 166

lay pipes under streets, erect street notices detailing location of pipe.

Question 167

What is a section 159 notice under the Water Industry Act?

Answer 167

Power to lay, keep inspect etc pipes.

Question 168

What are the timescales associated with a S.159 notice?

Answer 168

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

Question 169

What is a S.168 notice? What are the timescales?

Answer 169

allows access for intrusive surveys - usually 7 days

Question 170

What is a S.169 notice? what are the timescales?

Answer 170

allows access for non-intrusive surveys such as newts, bats, water collection. 7days notice.

Question 171

What is a S.101a scheme?

Answer 171

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

Question 172

What schedule of the Electricity Act 1989 would you need to use to obtain a necessary wayleave?

Answer 172

Schedule 4

Question 173

What schedule of the Electricity Act 1989 would you need to use to obtain a permanent easement?

Answer 173

Schedule 3

Question 174

If you obtain a necessary wayleave or a permanent easement, what might you then have to do?

Answer 174

obtain s.37 consent from the secretary of state

Question 175

What are the four requirements of a lease?

Answer 175

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.

Question 176

What is the difference between a license and a lease?

Answer 176

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.

Question 177

When is a license not a license?

Answer 177

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.

Question 178

When letting a property, what document is useful to consult?

Answer 178

RICS professional standard "The code of leasing business premises 2020".

Question 179

Tell me about the Law of Property Act 1925.

Answer 179

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.

Question 180

Tell me some more about dilapidations, what is the S.146 process?

Answer 180

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.

Question 181

Tell me some more about forfeiture?

Answer 181

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.

Question 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?

Answer 182

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.

Question 183

How is a dilapidations claim limited?

Answer 183

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.

Question 184

What are some of the types of insolvency and what does this mean for forfeiture?

Answer 184

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

Question 185

What is the case law regarding the grant of break clauses under 1954 act renewals?

Answer 185

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

Question 186

What are the grounds for opposition?

Answer 186

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)

Question 187

What is part 34 of the LL&T Act 1954?

Answer 187

Basis of Valuation for new lease

Question 188

What is part 37 of the LL&T Act 1954?

Answer 188

Compensation provisions

Question 189

What is part 38 of the LL&T Act 1954?

Answer 189

Contracting out

Question 190

How do you contract out of the landlord and tenant act?

Answer 190

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

Question 191

What is part 44 of the LL&T Act 1954?

Answer 191

Definition of a competent landlord

Question 192

Who is a competent landlord?

Answer 192

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.

Question 193

What are the timelines associated with a S.27 notice?

Answer 193

giving not less than 3 months notice

Question 194

What part of the 1954 act refers to tenants not accepting the terms ordered by the court and what is it called?

Answer 194

Part 36 - Revocation Order

Question 195

When was R22 refrigerant banned?

Answer 195

2004 - Banned for new systems 2015 - Banned to replace in existing systems

Question 197

What discount rates did you apply for your High Wycombe Rent review?

Answer 197

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%

Question 198

What are the usual quarter days?

Answer 198

25th March 24th June 29th Sept 25th Dec

Question 200

What is included in a rent review memorandum?

Answer 200

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)

Question 201

What was the Old use class for retail? What is the new one?

Answer 201

Was Class A1 Now since Sept 2020 it is E

Question 202

What are the two uses that have stayed the same?

Answer 202

B2 Industrial and B8 Storage and Distribution