RICS APC Measurement and Valuation 2

Question 1

What is the 'Years' Purchase' (YP) in the investment method of valuation?

Accepted Answer

The multiplier applied to income to determine capital value, derived from the yield

Answer

Years' Purchase is the multiplier (reciprocal of the yield) applied to income to calculate capital value. For example, a 5% yield gives a YP of 20 (100/5 = 20).

Question 2

Under the RICS Red Book, what is a 'Red Book Valuation'?

Accepted Answer

A valuation carried out in accordance with RICS Valuation - Global Standards

Answer

A Red Book Valuation is one carried out in accordance with RICS Valuation - Global Standards (the 'Red Book'), which sets mandatory requirements for RICS members undertaking valuations.

Question 3

What is the 'contractor's method' of valuation primarily used for?

Accepted Answer

Properties that rarely change hands and for which there is no market evidence, such as schools and hospitals

Answer

The contractor's method (or cost approach) is used for specialised properties that rarely sell on the open market, such as schools, hospitals, and churches, where comparison evidence is scarce.

Question 4

In the context of leasehold property valuation, what is a 'ground rent'?

Accepted Answer

The rent paid by a leaseholder to the freeholder for the use of the land

Answer

Ground rent is the payment made by a leaseholder to the freeholder for the right to occupy and use the land on which the property stands, typically much lower than market rent.

Question 5

What does 'IPMS' stand for in the context of property measurement?

Accepted Answer

International Property Measurement Standards

Answer

IPMS stands for International Property Measurement Standards, developed to provide a consistent global standard for measuring and reporting property floor areas.

RICS APC Practice Test

RICS APC Practice Test

RICS APC Measurement and Valuation 2