e-news Professional Indemnity Insurance survey Course endorsement South Australian conference South East Queensland conference VALE CONTENTS

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1 THE LATEST PROPERTY NEWS ISSUE 08-6 August 2008 CONTENTS Professional Indemnity Insurance survey... 1 Course endorsement... 1 South Australian conference... 1 South East Queensland conference... 1 Provisional Membership Rules of Conduct... 2 Retail tenancy inquiry... 4 Western Australia Regional conference... 4 Valuation work experience wanted... 5 GST & Property... 6 Property Investment Research Conference th Pan Pacifi c Congress... 6 CONTACT DETAILS API e-news is produced by the Australian Property Institute National Offi ce. Editor: National Communications Manager Tel: Fax: national@api.org.au 6 Campion Street Deakin ACT Professional Indemnity Insurance survey The Institute would like to thank all Members who completed the Professional Indemnity Insurance survey in August. The results will be collated and provided to the Professional Standards Council in the next step towards establishing a Capped Liability Scheme for members who undertake real estate valuations. Course endorsement Members are advised that the Bachelor of Property & Real Estate course delivered by Deakin University has been endorsed for Associate Membership with CPV. South Australian conference The South Australian Divisional Conference is to be held on Friday 19th September at Adelaide Convention Centre, Adelaide. Members seeking further information are directed to the website at (under Events & Awards) South East Queensland conference The Queensland Division will be holding its SE Queensland Conference over 7-8th November at the Gold Coast Casino. For further information Members should go to QLD website VALE Members are advised that Mr. Harry Carter, LFAPI of Queensland passed away late last week. The Institute acknowledges the contribution Mr. Carter made to the valuation profession during his lifetime and offers its condolences to his family.

2 PAGE 2 Provisional Membership Rules of Conduct National Council has recently endorsed the Rules of Conduct governing the conduct of Provisional Members. All Members should make themselves familiar with those rules which are as follows; 1.23 A Member must not co-sign a valuation undertaken by a Provisional Member, other than a valuation to which Rule 1.24 applies, unless; the Member holds the certifi cation of Certifi ed Practising Valuer; the Member has formed an independent opinion as to value based upon reasonable grounds; the Member is noted, adjacent to the Member s signature, to be the primary signatory; and the Member has co-inspected the subject property A Member must not co-sign a valuation of Residential Property (as defi ned in Rule 2.5) undertaken by a Provisional Member who holds the designation of Residential Valuer, unless; the Member holds the certifi cation of Certifi ed Practising Valuer; the purpose of the report is a purpose for which the Provisional Member is authorised by Rule 2.4 to undertake the valuation; the valuation has been undertaken under the supervision of the Member For the purposes of Rule 1.24, supervision requires that the supervising Member has reviewed the valuation and working papers prepared by the Provisional Member and, based upon, such review and appropriate questioning of the Provisional Member obtained reasonable satisfaction that the value opinion contained in the valuation has been reached by the Provisional Member based on reasonable grounds. Supervision does not require the Member to physically inspect the subject property (unless otherwise stated). RULE 2: PROFESSIONAL CONDUCT OF PROVISIONAL MEMBERS 2.1 A Provisional Member who holds the designation of Residential Property Valuer, can undertake the valuation of residential properties on the condition that the valuation report is co-signed by the supervising valuer, who must be an API member who holds the certifi cation of Certifi ed Practising Valuer. 2.2 A Provisional Member who holds the designation of Residential Property Valuer can undertake the valuation of non-residential properties on the condition that the subject property is co-inspected (by the supervising valuer) and the valuation report is co-signed by the supervising valuer. The supervising valuer must be an API member who holds the certifi cation of Certifi ed Practising Valuer. 2.3 A Provisional Member who has completed an Institute approved valuation qualifi cation (as referenced in the Institute s By-laws) may undertake the valuation of residential and non-residential property on the condition that the subject property is co-inspected (by the supervising valuer) and the valuation report is co-signed by the supervising valuer. The supervising valuer must be an API member who holds the certifi cation of Certifi ed Practising Valuer. 2.4 A Provisional Member who holds the designation of Residential Property Valuer may undertake the valuation of residential property for the purposes of; Mortgage security valuations, Rating and Taxing valuations, Valuing entitlements under a Strata Scheme or similar group title scheme, other private residential property uses, excluding; - Land or a lot that is used wholly for non-residential purposes; - Real Property valuations for compensation or resumption purposes; - Valuations related to the provision of expert evidence or Family Court related proceedings. 2.5 For the purposes of Rule 2, residential property is defi ned as;

3 PAGE 3 Land on which is situated (or in the course of construction) not more than 2 dwellings and any other improvements incidental thereto; Vacant land on which the construction of a single dwelling is not prohibited by law; A lot or lots (including a proposed lot or lots) under a Strata Scheme or other group title scheme comprising not more than one dwelling and other improvements incidental thereto, whether constructed or in the course of construction; Includes Rating and Taxing valuation, mortgage security valuations and valuations of other private residential properties; Includes the ability to value individual entitlements under Strata Title or similar; and the residential use must be the highest and best permitted use. Residential Property does not include; Land or a lot that is used wholly or predominantly for non-residential purposes; Land that is capable of being sub-divided into two or more parcels; Real Property Valuations for compensation or resumption; or Provision of any expert evidence and Family Law Court related valuations. 2.6 (a) A Provisional Member, when co-signing a report (other than for a residential property as defi ned in 2.5 above) must state that they are a Provisional Member of the Australian Property Institute (fully in words). (b) A Provisional Member, who holds the designation of Residential Property Valuer must state that they are both a Provisional Member of the Australian Property Institute and a Residential Property Valuer (both fully in words) when signing a report for Residential Property as defi ned in 2.5 above. A complete copy of the Rules of Conduct are available on the Institute website at (at API National and then API Governance).

4 PAGE 4 Retail tenancy inquiry The Productivity Commission has just released it s report into The Market for Retail Tenancy Leases in Australia. The Commission recommends that the states and territories examine the potential to relax planning and zoning controls that limit competition and restrict retail space. The Commission s recommendations also include: Western Australia Regional conference The Western Australian Division will be holding its regional conference in Albany over October. Members interested in attending should go to the WA website at for further information. Encouraging the use of simple (plain English) language in all tenancy documentation; Encouraging the inclusion of a one-page summary of all key lease terms and conditions in retail lease documentation; That lease documentation include clear and obvious points for information on lease negotiation, registration and dispute resolution; and Encouraging the development of a national reference lease. The Government will now work with state and territory governments through the Council of Australian Governments (COAG) Business Competition and Regulation Working Group on implementation of the Commonwealth s response. To maintain important protections provided to small retailers through retail tenancy laws, the Government has rejected the Commission s recommendation that restrictive clauses in retail tenancy legislation be removed. The Productivity Commission s report can be found at while the Government s response can be seen at

5 PAGE 5 Valuation work experience wanted The China Appraisal Society (CAS) would like to send a number of recent graduates to Australia to undertake work experience in the area of valuation. The API in conjunction with the CAS would like valuation fi rms wishing to engage a recent graduate from China in achieving professional work experience (over a one year period) to complete and return the following form. All graduates from China will be fl uent in English (both written and oral) and the CAS will cover costs of API Member fi rms engaging a graduate member of the CAS. Name of API Member:... Name of Firm:... Firm Address:... State/Territory:... Postcode:... Primary types of Valuations undertaken by Firm (e.g. Residential, Commercial, Retail, Industrial, Rural, Plant & Machinery, Business, Personal Property, Other please specify): Purpose of Valuations (e.g. Sales/acquisitions, Rent Reviews, Financial Reporting, Mortgage Security, Compulsory Acquisitions, Statutory, Other please specify): Is rental accommodation readily available within proximity to your fi rm s offi ce? What is the weekly rental range of medium level type rental property in your area? What is the average range of weekly/monthly living expenses (food, utilities, transport) in this area? What are the valuation registration requirements in your State/Territory? What types of professional valuation experience could your fi rm provide to a recent graduate from China?

6 PAGE 6 GST & Property: Division 129, rentals and sales of residential premises Following discussion at the Public Rulings Panel on 24 July 2008, the Tax Offi ce has revised its view in relation to how Division 129 applies in circumstances where new residential premises are constructed for sale, but are rented prior to sale. Under the Tax Offi ce s revised view, for the purposes of calculating relevant Division 129 adjustments, there will be an application of new residential premises for a creditable purpose to some extent when the premises are actively marketed for sale. Consequently, if the premises are actively marketed for sale, while also being used to make input taxed supplies of residential rent, the premises will be applied to some extent for the creditable purpose of sale as well as the non creditable purpose of making input taxed supplies of residential rent. Previously the Tax Offi ce s view on the application of Division 129 to the above circumstances had been that if at the end of the fi rst adjustment period the premises remain unsold the entity will have a 100% increasing adjustment for the input tax credits as there has been no application of the premises for a creditable purpose. The revised view will be published as a draft GST Determination. The draft GST Determination is expected to be published for comment within the next three months. Property Investment Research Conference The 15th Annual PIR Property Funds Industry Forum is to be held over October 2008 at the Hyatt Regency Coolum on the Sunshine Coast. The Forum will provide unique market intelligence and professional insights into the domestic and global property funds industry. World-class presenters will examine both local and global issues that impact the continuous growth, the future development, the market demand and investment opportunities of this lucrative market. The registration form for the forum can be found on the PIR website Members are advised that the 24th Pan Pacifi c Congress is to be held in Seoul, South Korea, at the Lotte Hotel over September Members interested in attending the Congress are directed to the Congress website NEW STANDARDS The Benchmark of Professional sional Practice available now at