RICS APC Measurement and Valuation — Questions and Answers
Question 1: Under the RICS Code of Measuring Practice (6th Edition), what does 'GIA' stand for?
- General Internal Assessment
- Gross Internal Area (Correct answer)
- Gross Investment Appraisal
- Ground Internal Area
Correct answer: Gross Internal Area
GIA stands for Gross Internal Area, which is the area of a building measured to the internal face of the perimeter walls at each floor level, including internal walls and partitions.
Question 2: Which of the five methods of valuation is most commonly used for standard residential properties in the UK?
- Investment method
- Comparison method (Correct answer)
- Profits method
- Residual method
Correct answer: Comparison method
The comparison method (or comparative method) is the most commonly used approach for valuing standard residential properties, using evidence from recent comparable sales.
Question 3: In the RICS Red Book, what does the term 'Market Value' represent?
- The price a developer would pay
- The estimated amount for which an asset should exchange on the valuation date between a willing buyer and seller in an arm's-length transaction (Correct answer)
- The insurance replacement cost
- The forced sale price
Correct answer: The estimated amount for which an asset should exchange on the valuation date between a willing buyer and seller in an arm's-length transaction
Market Value is defined as 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.
Question 4: What is a 'yield' in property investment valuation?
- The total rental income received
- The relationship between income and capital value, usually expressed as a percentage (Correct answer)
- The profit from selling a property
- The cost of building a property
Correct answer: The relationship between income and capital value, usually expressed as a percentage
A yield expresses the relationship between the rental income and the capital value of a property as a percentage, reflecting the return an investor receives relative to the price paid.
Question 5: What does 'NIA' measure in commercial property?
- Net Investment Appraisal
- Net Internal Area (Correct answer)
- New Interior Assessment
- National Investment Area
Correct answer: Net Internal Area
NIA stands for Net Internal Area, which is the usable area within a building, excluding common areas, lobbies, toilets, lift rooms, and other non-usable spaces.
Question 6: Which valuation method would typically be used to value a hotel or petrol station?
- Comparison method
- Profits method (Correct answer)
- Contractor's method
- Residual method
Correct answer: Profits method
The profits method (or accounts method) is used for properties where value is derived from the business carried on, such as hotels, pubs, and petrol stations, using trading accounts.
RICS APC Measurement and Valuation
Under the RICS Code of Measuring Practice (6th Edition), what does 'GIA' stand for?