Kate Taylor continues her APC series with a look at residential valuation
The RICS assessment of professional competence has 22 pathways to chartered status. There is one valuation pathway that covers all sectors of the valuation profession: commercial property, residential survey and valuation, as well as machinery and business assets. The Valuation Pathway Guide, which sets out the assessment criteria, provides examples of competence evidence at each level and will apply to all valuers, notwithstanding the requirement for a valuer specialising in residential survey and valuation to show competence in building pathology to level 3.
In the residential field, this can cause confusion because in the past, residential survey and valuation had a distinct pathway and, furthermore, at associate level assessment, many residential valuers follow the residential pathway. This means that a large body of residential valuers change pathways from residential to valuation when they come forward to be assessed at the higher level.
The valuation assessors will be RICS-registered valuers and experts in all aspects of valuation. One of the panel will be a residential specialist but the general assessor and/or the chairperson may well be from the commercial world. This means that candidates will need to broaden their horizons and think about the breadth of the valuation competency at level 1 (knowledge).
The importance of residential valuation to the economy and society generally cannot be over emphasised. There are 27m dwellings changing hands regularly in an active transactional market supported by surveys and valuations that facilitate the decision-making process in purchase and sale, as well as mortgage valuation. Competence in this area is essential in a chartered surveyor and the RICS Registered Valuer Scheme provides further checks and balances. As a result, there is no doubt that residential valuation is an important and challenging competency at APC.
Level 1
Level 1 competence assessment is about what the candidate knows. This will be related to the area of practice but at an overview level should cover the breadth of the valuation competency. Let me be explicit about this, since there are urban myths in this area. I would expect a valuation pathway candidate to know about the basic steps in all five methods of valuation and when those methods are applicable, whether or not they had experience in those areas. I would not expect experience in methods that apply only to commercial property, such as the profits method.
RICS Valuation – Professional Standards 2014 (The Red Book) is central to level 1 knowledge. Candidates need a good overview of the global Red Book professional statements and valuation practice statements as well as a more in‑depth understanding of the areas that apply to residential. These are UK Valuation Standard 3 – The Valuation of Residential Property – and UK Appendix 10 & 11, which relate to residential mortgage specification. Bear in mind that one of the latest Red Book updates in April 2015 was an amendment to UK Appendix 10: the unexpired lease term assumption was adjusted from 70 years to 85 years (applies when it is not possible to inspect the lease). Candidates may have standard terms of engagement and reporting in a well-run efficient practice, but for the purposes of APC, return to the source document and demonstrate your understanding.
Bear in mind also, relevant to level 1 in residential: leasehold enfranchisement, the valuation of new-build homes, projected market value, houses in multiple occupation and automated valuation models. Research all of these areas and read the relevant RICS guidance in your preparation.
Level 2
Level 2 assessment is applying that knowledge in real life specific examples using a range of methods for a range of purposes. This is where I would expect to see comparable method applied competently with detailed analysis that follows the guidance set out in RICS Guidance Note: Comparable Evidence in Property Valuation. Comparable method will be the residential valuers’ main area of work and you need to be thorough and technical with evidence to justify your opinion of value.
Breadth can be a challenge at level 2 but candidates should use all the methods at their disposal during the stand back and look phase of a valuation as a cross check. For example, carry out some yield analysis on a buy-to-let property or produce a quick residual valuation of a house with development potential.
Level 3
Level 3 will be the more complex valuations and the resulting reasoned advice to client. Leasehold enfranchisement is an excellent example, as is valuation of mixed-use or let property. Homebuyer survey and valuation reports can also be good evidence of competence, with adjustment and analysis of comparables further complicated by the survey results and condition ratings. At level 3, candidates should ensure that the main area of focus is the advice to client and its form, with the reasons for that advice being clearly explained.
The assessment at level 3 is whether a candidate is ready to be let loose on the client and provide complex advice unsupervised.
Central message
Candidates may not have much competency evidence that is not straightforward comparable residential valuation. In the run‑up to assessment, candidates should actively seek out experience that will help to demonstrate the breadth of the competency. This should be highlighted to the assessor.
Kate Taylor FRICS is an APC chair and a DeLever APC consultant trainer. Follow Kate Taylor and Jon Lever on Twitter: @katetay73593006 and @deleverapc
Hot topics
Recent RICS publications:
• Leasehold Reform in England and Wales (RICS Guidance note, 3rd edition, 2015)
• Surveys of Residential Property (3rd edition, 2016)
• The valuation of buy-to-let properties and HMO properties (1st edition, 2016)
• IPMS for Residential Buildings (1st edition, 2016)
• Negligent Valuation: Its Development in the UK and the Role of Professional Standards (Research paper, 2016)
Useful resources
• APCeye magazine
Critical APC information in a free monthly magazine from DeLever.
www.mydelever.com
• APC presentation
Online masterclass discussing key elements of the APC final assessment interview. Hints and tips on best practice.
www.delever.com
• APC mock interviews
Practice your APC final assessment interview, including your presentation and specific competency-based questioning. A full hour interview just like the real thing and immediate constructive feedback from the two assessors including hints and tips on best practice.
www.delever.com
• APC final assessment competency revision workshop
Land, property and built environment APC candidate preparation day. Understand everything you need to know for the APC plus useful resources. www.delever.com
• Free supervisor and counsellor APC training – formal CPD
Managing candidates and
feeling a little out of your depth? Get key tips on how to manage and support your candidates.
www.delever.com
• Commercial property quick start revision guide 2016, by kate Taylor FRICS
Available at www.delever.com
• Free APC explained masterclass
This helps candidates to understand what needs to be done to achieve the APC, including a walk-through of the DeLever APC process timeline and myAPC diary with an explanation of what to do at
each milestone:
www.delever.com
• Free trial: myAPCDiary
This resource can save up to 60% of a candidate’s day-to-day APC administration: www.apcdiary.com
• Free timeline wallchart
A2 pictorial view of the whole APC process, based on the RICS guides and Jon Lever’s professional knowledge and experience of the APC. A new version containing enhanced features and the latest RICS updates will be available in
early 2017. www.delever.com
• RICS APC guides
These should be read at least once every three to four months and fully understood. Candidates from outside the UK also need to check their regional websites for any local APC requirements: www.rics.org
• WhatsApp: APC 101
A new WhatsApp group supported by Jon Lever and DeLever APC expert coaches. Ask APC questions and receive considered and professional answers. Join the group using:
https://chat.whatsapp.com/ 2Urbr1McRsW4YdVZ2Z1g5e
Example questions
Level 1
• Tell me what you know about the Red Book? Which bits apply to your area of work?
• What are the steps in the investment method of valuation?
Level 2
• Describe your weighting and analysis of your comparable evidence in… (the specific example in the experience record).
• What were the factors that affected your quantitative analysis in… (the specific example in the experience record)?
Level 3
• Describe your advice to client in the homebuyer report. Why was that the outcome?
• Talk me through the reasoning behind your recommendation to the lender.
*Don’t assume that the questions given here will be asked at an APC assessment. Assessors will focus on and pose questions on the basis of the candidate’s declared competencies, pathway guide requirements, up-to-date developed knowledge base and the examples provided in their summary of experience, etc.
Supervisors and counsellors: how to help
Encourage candidates to think about the processes that they follow and articulate the knowledge base and steps in a valuation.
Ask your candidate regularly to justify a valuation outcome with reference to comparable analysis.
Try to pass anything onto the candidate that will help them to demonstrate any of the other methods of valuation and share your more complex tasks.
