Case Study Flashcards
You mention above the base rate. what is the bank of England base rate
5.25%
How much would late interest cost the tenant
£17,000 (a quarters rent) × 0.0925 (percent charge) × 0.25 (3 months late) = £393.13
- We note from the lease summary a RD was obtained when the lease commenced, could you advise how your firm handles these sums and is there any RICS guidance to support this?
Yes, a rent deposit was obtained at lease commencement. My firm holds rent deposits in accordance with the RICS Client Money Handling professional statement (2019). Each deposit is held in a designated client account, clearly labelled with the tenant’s name and lease reference. These accounts are managed by our client accounts team, ensuring funds are held separately and transparently.
We ensure that interest is handled in line with the lease terms.
How did you know demand was low for units in Thurrock?
- Client kept saying
- Agents stating they had little demand
- Two vacant units on the estate for years.
You then mention you drew down on this account, how did you advise the tenant of this? Is there any mechanism your Client could of issued to ensure the RD was topped up?
Yes, we advised the tenant in writing that we would draw down £57,684 from the rent deposit if the arrears remained unpaid after seven days. This was clearly communicated in advance, and the drawdown was made in accordance with the lease provisions.
The lease also contains a top-up clause, requiring the tenant to replenish the rent deposit following any drawdown. After the withdrawal, we notified the tenant of their obligation to restore the deposit to its original level.
- You note in your case Study that your first step under option 1 was to serve a CRAR and if not effective start forfeiture proceedings. Could you please explain the process of forfeiture?
To forfeit a lease for non-payment of rent, no notice is required. The landlord can proceed straight to peaceable re-entry, provided the lease contains a forfeiture clause. This typically involves attending the unit outside the tenant’s trading hours, changing the locks, and placing a Torts notice on the premises for any tenant goods left behind. The process must only be carried out when the premises are unoccupied, as it must be done peaceably.
How do you forfeit a lease for repair clause or something else that’s not non payment of rent
Firstly check the lease, check there is a forfeiture clause. Forfeiting a lease for a breach (like failure to repair) involves issuing a Section 146 notice of the law of property act 1925 to the tenant, giving them a reasonable period to remedy the breach. If they don’t, the landlord can proceed with forfeiture through peaceful re-entry or by applying to the court for an order.
How can you prevent waiving rights to forfeiture
Avoid accepting rent after becoming aware of the breach.
Act promptly in serving the Section 146 notice.
Avoid communication or behavior that suggests the lease is continuing (e.g. negotiating new terms or demanding rent).
Waiver happens if the landlord treats the lease as ongoing after knowledge of the breach, so caution is key.
What is the business rate value for this unit?
£51,000. based off £125 per square meter multiplied by the unit area.
could your client apply for rates relief if the unit became vacant
Yes, 6 months rate relief for industrial buildings.
What is the user clause for this unit (case study)
B1(c) – Light industrial use (e.g. workshops) that can operate in residential areas without causing nuisance.
B2 – General industrial use (heavier manufacturing/industrial processes).
B8 – Storage or distribution (e.g. warehouses).
Where are user clauses defined?
Town and Country Planning Order 1987
What is CRAR
CRAR is a statutory procedure allowing landlords of commercial premises only to recover pure rent arrears by instructing enforcement agents (bailiffs) to seize tenant goods.
When was CRAR introduced
2014
What did CRAR replace
The old common law remedy of distress for rent.
What are the timelines with a CRAR notice.
- Notice of enforcement giving 7 days notice (not incl Sundays)
- After notice period agent attends to take control of goods. A notice of sale is then issued giving 7 clear days.
- Before the sale a further 48 hour default notice is required
How much does it cost to CRAR
Flat fee of £75 (notice of enforcement)
£235 for site visit and 7.5% of arrears over £1,500.
Total for this case £3,750 + VAT.
- tenant liable for auctioneers fees and storage.
How many units are there on the estate
12
what is a micro company accounts
less than 632k turnover, 316k balance sheet and less than 10 employees (needs 2/3 for 2 years to qualify)
what is a small company accounts
less than 10.2m turnover, 5.1m balance sheet and less than 50 employees.
what is a medium company accounts
less than 36m turnover, 18m balance sheet and less than 250 employees
what is a large company accounts
exceeds any of these: 36m turnover, 18m balance sheet and 250 employees
What were the accounts you reviewed?
I reviewed the tenant’s management accounts.
While these are not audited, the P&L showed substantial interest costs, showing they were servicing a high-interest loan.
The Balance Sheet also showed low cash in the bank, which supported their request to move to weekly rent payments.
Although the company was small and their filed statutory accounts were micro-entity format, they provided internal management accounts upon request. These included a basic profit and loss and balance sheet.
For forfeiture what is on the torts notice.
[Landlord’s Name]
[Landlord’s Address]
[Tenant’s Name]
Notice of Breach and Forfeiture of Lease
[Describe breach, e.g., failure to pay rent, unauthorized alterations, etc.]
Property Retrieval:
Should you choose not to remedy the breach and the lease is forfeited, you are entitled to retrieve any personal belongings left inside the premises. Please contact us to arrange a suitable time within [insert period, e.g., 7 days] to collect your items.
Can tenant apply for relief for forfeiture with non payment of rent?
- Tenant can apply for relief from forfeiture
Time limit: Tenant has 6 months from the date of forfeiture to apply (County Courts Act 1984, s138(9)).
Tenant must:
Admit the forfeiture,
Request the lease to be reinstated,
Prove they are willing and able to pay arrears + interest + landlord’s costs.
example of respect rule 4
I maintain a respectful and professional tone in all correspondence and meetings with tenants.
taking new starters in the team for a lunch.
Inspection. Features of an industrial unit? Versatile and stones specifically
7.5m eaves height, 30kn /m2 floor loading capacity, steel portal frame, concrete screed flooring, micro rib cladding. Full height electric rolling shutter. Wc. 3 phase electricity.
I note the rent review actioned in 2023. Has that been actioned?
No, the rent review has not been completed yet. This is with a rent review surveyor. A few of the rent reviews on this estate have been delayed and had to go to a third party decision.
So the unit is under rented with the RR not being actioned. How did this impact your advice.
It only emphasised the tenants arrears and the fact it will be harder for them to catch up and clear the balance. Along with needing to top up the deposit as well, I repeatedly asked the client if there was any interest in the unit since the tenant can’t keep up with payment plans.
what due diligence did you carry out before inspecting the unit.
reviewing the lease to confirm obligations and access rights,
checking any H&S documentation
reviewing the tenant’s arrears status and previous inspection notes,
coordinating access with the tenant.
