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APC Mock Questions - BDG > Case study > Flashcards

Case study Flashcards

1
Q

What is an IRI?

A

Internal Repairing and Insuring

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2
Q

Section 23 of the Landlord and Tenant Act 1954 states that to gain protection under the Act, there must be a business tenancy with what 6 basic elements?

A
  1. It is a tenancy
  2. The premisis must be used for a business
  3. There must be occupation of at least part of the premisis by the tenant
  4. There must be occupancy of more than 6 months
  5. It must not be an exempted or excluded tenancy (such as a tenancy at will or service tenancy)
  6. There must be a competent landlord (freeholder or superior tenant with more than 14 months to run)
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3
Q

What is the Use Class of the unit?

A

E(a) - Commercail, Business and Service - Display or retail sale of goods, other than hot food.

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4
Q

What is a freehold?

A

Permanent and absolute tenure of land or property with freedom to dispose of it at will.

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5
Q

What is The Commercail Rent (Coronavirus) Act 2022?

A

The Act aims to support the resolution of commercial rent debt accrued during the pandemic.

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6
Q

Which company was used to perform the credit check?

A

Creditsafe

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7
Q

In working out whether a dispute is eligible for arbitration, a party should check which four points?

A

a. am I party to a “business tenancy”?

b. is there unpaid rent in the form of “protected rent debt” in relation to that business tenancy?

c. is there a dispute in relation to the matter of relief from payment of that protected rent debt?

d. is the tenant the subject of a CVA, IVA, or compromise or arrangement?

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8
Q

What is an CVA?

A

Company Voluntary Arrangement - If your limited company is insolvent, it can use a CVA to pay creditors over a fixed period. If creditors agree, your limited company can continue trading.

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9
Q

What is an IVA?

A

Individual Voluntary Arrangement - Is an agreement with your creditors to pay all or part of your debts. You agree to make regular payments to an insolvency practitioner, who will divide this money between your creditors.

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10
Q

What is contained within a public limited company accounts?

A
  1. Chairman’s statement
  2. Independent auditor’s report
  3. Income statement (balance sheet)
  4. Statement of financial position (balance sheet)
  5. Corporate governance report
  6. Remuneration report
  7. Other statutory information
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11
Q

Explain a Balance Sheet.

A

Balance Sheet (statement of financial position) is a statement of the business’s financial position showing its assets and liability’s at a given date.

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12
Q

Explain Profit and Loss Account.

A

Profit and Loss Account (income statement) is the summary of the business’s income and expenditure transactions.

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13
Q

What is the difference between management and statutory accounts?

A

Management accounts - are prepared for internal use by a business and are not audited.

Statutory accounts - are prepared by a Chartered or Certified Accountant.

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14
Q

What is a cash flow statement?

A

A cash flow statement shows all the actual receipts and expenditure to include VAT.

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15
Q

What is the difference between NIA and IPMS3?

A
  1. Perimeter measurements are taken to the ‘Internal Dominant Face’
  2. No exclusions for restricted height of less than 1.5m
  3. All columns are included
  4. Area occupied by the reveals of a window when measured and assessed as the internal dominant face are included
  5. On floors with multiple occupiers, the area is taken to the midpoint of the partition wall between tenancies
  6. Covered gallerias and balconies for the exclusive use of one tenant are included and stated separately.
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16
Q

What are the Bases of Measurement in the RICS Code of Measuring Practice 2015?

A
  1. GEA - Gross External Area - Town planning, council tax, valuations and building cost estimates for housing.
  2. GIA - Gross Internal Area - Estate agency, rating, building cost estimation for commercial assets & valuation of industrial warehouses and valuation /7 rating of retail warehouses and food stores plus new homes valuations (approx. 2-3% deduction from GEA)
  3. NIA - Net Internal Area - As above but for shops (approx. 15% deduction from GIA)
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17
Q

What does ITZA stand for?

A

Area in terms of Zone A

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17
Q

What does IPMS stand for?

A

International Property Measurement Standards

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18
Q

When did the RICS Guidence Note ‘ Surveying Safely - Health and safety principles for property professionals’, second edition, 2018 come into effect?

A

February 2019

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19
Q

Health and Safety - What must RICS Regulated Firms ensure they provide?

A
  1. A safe working environment
  2. Safe work equipment
  3. Safe systems of work
  4. Competent staff
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20
Q

Health and Safety - What does the RICS consider the concept of a ‘safe person’?

A

A ‘safe person’ mans that each individual assumes individual behavioural responsibility for their own, their colleagues’ and others’ health and safety while at work

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21
Q

Health and Safety - What are the key areas of advice?

A
  1. RICS Regulated Firms must ensure they provide:
    - A safe working environment
    - Safe work equipment
    - Safe systems of work
    - Competent staff
  2. ‘Safe person’
  3. Seek to ensure that individuals accept responsibility
  4. A requirement for up-to-date personal and corporate responsibilities for property professionals
  5. Legal considerations and duties
  6. Advice on health, well-being and mental health
  7. How to address fire safety
  8. An audit template is provided to assist Members.
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22
Q

Health and Safety - What needs to be observed when visiting premises and sites?

A
  1. Tell someone where you are going and when you leave the site
  2. Wear appropriate PPE
  3. Sign in and out of the building
  4. Consider whether safe to inspect alone
  5. Check dated tag if going on scaffolding
  6. Wear non-slip sole shoes/boots when going up a ladder
  7. Emphasis is places on Members having correct operational practices in place.
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23
Q

What does CRAR stand for?

A

Commercail Rent Arrears Recovery

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24
Q

The Tribunals, Courts and Enforcement Act, 2007 replaced what with what?

A

Replaced the ancient law of distress for rent with a modified regime known as the Commercail Rent Arrears Recovery Scheme (CRARS) in April 2014

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25
Q

What are the main points of the CRAR Scheme?

A
  1. Only available to commercail property landlords where a minimum level of rent is due under commercial lease
  2. There is no minimum amount of arrears
  3. Can only be used for basic rent demanded plus VAT and interest payable
  4. Purely for commercial premisis
  5. It provides a set of conditions which will need to be met before the landlord can exercise CRARS
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26
Q

What is the timeline for the CRAR Scheme?

A
  1. Minimum of 7 days unpaid rent
  2. minimum of 7 clear days warning notice.
  3. Enforcement agents visit
  4. 2 clear days to follow
  5. Re-entry by enforcement agent to seize goods
  6. Allow 7 clear days before sale of goods

7 Fees must be specified on the entry notice.

27
Q

What is an AGA?

A

Authorised Guarantee Agreement

28
Q

Which Section of the Landlord and Tenant (Covenants) Act 1995 sets out a struct timetable for the recovery of rent arrears from a assignor within 6 months?

A

Section 17

29
Q

What section of the Coronavirus Act 2020 prohibits landlords from forfeiting a business tenancy for non-payment of rent?

A

Section 82

30
Q

Between what dates does the Coronavirus Act 2020 apply to?

A

21st March 2020 - 25th March 2022

31
Q

What prevented landlords from using CRAR during the Coronavirus Pandemic?

A

The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020

32
Q

What year was the Arbitration Act?

A

1996

33
Q

What are the two fundamental principles of rent collection?

A
  1. Accuracy of information
  2. Timing
34
Q

What is the Prescribed Rate on interest for late payments?

A

4% per annum above base.

35
Q

What is the definition of an internal valuer?

A
  1. Employed by company to value the assets of the company/enterprise
  2. Valuation for internal use only
  3. No third party reliance
36
Q

What is the definition of an external valuer?

A
  1. Has no material links with the asset to be valued or the client
37
Q

What is 743 sq. ft in m. sq.?

A

69.027 sq. m.

38
Q

What are the steps associated with a valuation instruction?

A
  1. Receive instruction from the client
  2. Check competence (Skills, Understanding and Knowledge (SUK))
  3. Conflict of interest check
  4. Issue terms of engagement to the client
  5. Receive terms of engagement signed by the client
  6. Gather information - leases
  7. Undertake due diligence
  8. Inspect and measure
  9. Research market and assemble, verify and analyse comparables
  10. Undertake valuation
  11. Draft report
  12. Have valuation and report considered by another surveyor for checking purposes
  13. Finalise report and sign
  14. Report to client
  15. Issue invoice
  16. Ensure valuation file in good order for archiving
39
Q

Give examples of Landlord void costs.

A
  1. Ground rent
  2. Rates
  3. Service charges
  4. Insurance premiums
  5. Management fees
  6. Repair and maintenance
  7. Utilities
40
Q

When are rates payable by a Landlord?

A
  1. After property is vacant for 3 months (industrial is 6 months)
  2. For listed buildings, nothing payable until occupied
  3. Buildings with RV below £2,900, nothing payable until occupied
41
Q

When did the use classes change?

A

Came into force on 1st September 2020

42
Q

What changed in the most recent use class update?

A

Introduced Use Class E – brings together A1, A2, A3, B1 and D1, D2
Introduced use class F1 and F2

43
Q

What use class legislation is there?

A

Town and Country Planning (Use Classes) Order 1987

44
Q

What section of the coronavirus act is protected rent defined in?

A

Part 1

45
Q

How can protected rent be collected according to the Coronavirus Act?

A

Tenants have 6 months to apply for arbitration. This ended on 24th September 2022 after which there are no restrictions on collecting protected rent.

46
Q

Can you confirm what other uses fall under Use Class E?

A

Use class E brings together A1(shops), A2 (financial and professional services), A3 (restaurants and café) and B1 (business) as well as parts of D1 and D2
Allows for changes of use without need for planning permission (more flexibility)

47
Q

Is the lease inside or outside the act?

A

Outside

48
Q

What does high risk in a credit report mean?

A

It means they are likely to fail / default – opinion based on computer modelling of accounts

49
Q

What are the traditional and English quarter days?

A

Traditional:
25 March, 24 June, 29 September, 25 December

English:
1 April, 1 July, 1 October, 1 January

50
Q

In your case study you outlined you assessed the covenant strength of the Tenant by carrying out a check please can you confirm what factor this credit rating assessment is based on?

A
  1. Balance Sheet
  2. Financial Performance – including a financial stress test
  3. Perceived risk level of your business
  4. Trade References
  5. Outstanding Debt
  6. Payment History
51
Q

Thinking about the Coronavirus Act, what changes came into place on the 25 March 2022?

A
  1. On 25 March 2022, the restrictions introduced by Section 82 Coronavirus Act 2020 and amendments to the Taking Control of Goods Regulations 2013 ceased.
  2. The Government consulted and announced earlier this year that it will introduce binding Arbitration for some ringfenced arrears resulting from tenants impacted by Covid 19 compulsory business closures during lockdown periods.
  3. The Commercial Rent (Coronavirus) Act 2022 has created new Arbitration laws relating to remaining commercial rent arrears which will operate in conjunction with a new Code of Practice for Commercial Property Relationships following the COVID-19 pandemic (effective from 9 November 2021) to guide commercial landlords and tenants in their negotiations.
52
Q

Thinking about your case study, now the property is vacant, what actions do you need to take from an insurance perspective?

A
  1. Void inspection;
  2. Informing insurers
  3. Key holding
53
Q

What is NIA?

A

The useable area within a building measured to the internal dominant face of the perimeter wall at each floor level

54
Q

What is IMPS3?

A

Used for measuring the occupation of floor areas in exclusive use, excluding standard facilities and shared circulation areas

55
Q

What did you take out of GIA to arrive at NIA?

A
  1. Walls and pillars
  2. Protrusions over 0.25m from the wall (heating protrusions)
  3. Areas under 1.5m in headroom
56
Q

Generally, what are the differences between NIA and IPMS 3

A
  1. Includes reveals of windows as measured to the internal dominant face of the perimeter wall
  2. Walls and pillars included
  3. Generally accessible roof terrace, balconies and covered ways in exclusive use included but stated separately
  4. Areas under 1.5m in headroom included but stated separately
57
Q

What do you understand the internal dominant face to be

A

Inside surface finish comprising of 50% or more of a vertical section of the perimeter wall

58
Q

What is effective FRI?

A

Landlord is responsible for external but can recharge the cost to the tenant

59
Q

What would a balance sheet show you

A
  1. Assets
  2. Liabilities
  3. Shareholders equity
60
Q

You determined the market rent by comparison, what makes a property transaction comparable with the property you are valuing?

A
  1. Similar in size
  2. Construction
  3. Design
  4. Location
  5. Lease terms
  6. Lease length
  7. Transaction date
61
Q

If there had been a guarantor, how would you have pursued this?

A

In accordance with the Landlord and Tenants (Covenants) Act 1995

62
Q

What does section 17 say in terms of timescales of pursuing a guarantor?

A

Within 6 months of the debt arising

63
Q

You refer to the landlord and tenants covenants act 1995, what did that replace?

A

Privity of Contract

64
Q

What were the main principles of the Code of Practice for Commercail Property Relationships During The COVID-19 Pandemic?

A
  1. Transparency and collaboration
  2. A unified approach
  3. Government support for businesses
  4. Landlords and tenants to work together to resolve issues such as rent arrears and rent reductions
65
Q
A

APC Mock Questions - BDG (18 decks)

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