Case Study Flashcards
What are different methods of sale?
Private Treaty - Fexible, confidential, relatively inexpensive. Potential withdrawls and can be over / under offered
Traditional Auction - Short and certain timescales, sold with certainty, immediate exchange of contracts. Expensive advertising, not confidential, little control over buyer identity
Modern Auction - Online, flexible, 5% reservation fee, exclusivity period of 28 days to exchange and 28 days to complete. No legal obligation to complete
Formal Tender - Public accountability, expensive admin, tender pack and blind bids
Informal Tender - Sealed bids, after private treaty, best & final offers, not legally binding
Different types of Title
Absolute - Definitive ownership, difficult to dispute, higher sale value
Possessory - Cannot be definitively proven, can be disputed, maybe lower sale price
Reversionary - Interest a landlord or freeholder has in a property that will revert back to them once the term or interest expires
What does it mean for a tenancy to be ‘Surrendered by Operation of Law’?
- That a tenancy with no formal agreement or documentation has been terminated
- No formal deed or written agreement required
- Both parties must accept the tenancy has ended by showing unequivocal conduct - returning keys
How did you know the tenants daughter had authority to surrender the tenancy?
I saw proof of her Power of Attorney documents
What act would this tenancy have fallen under?
The Rent Act 1977
Could the tenants daughter have remained in occupation if she wished?
Yes, as she succession rights under The Rent Act 1977 would have applied
Stamp Duty Land Tax (SDLT)
£125k = 0%
£250k = 2%
£925k = 5%
£1.5m = 10%
Above £1.5m = 12%
+ 5% on top if another property is owned
Applied to individuals and companies but not charities
How much SDLT would have been paid on 16a if payable?
0% on £125k = £0
2% on £125k = £2,500
5% on £26,873 = £1,193.80
= £3,693.80
What was the EPC rating for 16a and what were the reccomendations?
D - 57
Potential of B - 88
1. Increase loft insulation to 270mm - £350
2. Internal / external wall insulation = £4k - £14k
3. Solid floor insulation = £4k - £6k
4. Heating controls = £350 - £450
5. Solar water heating - £4k - £6k
6. Double glazed windows - £3.3k - £6.5k
2.5kWp photo volteics - £3.5k - £5.5k
What tax is a chairty exempt from?
- IHT
- CGT
- SDLT
- Income Tax
What is the average net yield in your area?
5 - 7%
What is the difference between RICS Red Book & Blue Book
Red Book = RICS Global Valuation Standard - Mandatory practise and guidance - Used for tax or legal reasons such as investment or mortgage
Blue Book = RICS UK Resi Property Standards - Resi lettings and sales best practise guide
UK Resi Real Estate Agency Professional Statement 6th Edition
What sales particulars are legall required and under what legislation?
Consumer Protection from Unfair Trading Regulations 2008
1. Property address and description
1. Tenure type
1. Council Tax Band
1. Other material information such as price
What legislation governs Title Deeds?
Land Registration Act 2002
* Modernised and streamlines land registration
* Ensures ownership is based on registration not possession
* Provided electronic framework for electronic conveyancing
* Enhanced security of registered titles, reduced disputes
* Set out clear rules for validity of Adverse Possession
What is the purpose of Net Yield and how is it calculated?
The annual return on a property investment after deducting all associated costs like maintenance, insurance, and agent fees
= annual rental income - annual maintainance costs / capital value x 100
Why was your clients net yeild threshold 8%?
What are the disadvantages of a Possessory Title?
What is the deadline for you / an agent to notify a client of an offer?
How would your advice change if you were acting for a private landlord?
If the property was listed, would this change your advise and what considerations would have to be made to your options?
What impact does a Conservation Area have on refurbishment / rennovations?
Did you consider any other methods of sale and why did you choose private treaty / informal tender?
How is CGT calculated?
In accordence with the governments CGT calculator
net capital gain = capital proceeds - cost base
18% for basic rate tax payers
24% for higher rate tax payers
IHT releif for charities
If 10% or more of an estate is donated to charity, the IHT rate reduced from 40% to 36%
Rent Act 1977 Discretionary Cases for Possession
(Schedule 15)
- Rent arrears or breach of tenancy
- Nuisance, annoyance, illegal or immoral use of the property
- Deterioration in the condition of the property
- Deterioration of furniture
- Tenants notice to quit
- Assignment or sub-let without consent
- Former employee of the LL
- Occupation by the LL or family member
- Tenant has overcharged sub-tenant
- No-right to rent
Rent Act 1977 Mandatory Cases for Possession
(Schedule 15)
- Returning owner / occupier
- LL retirement home
- Holiday let
- Student let
- Minister of religion
- Agricultural employee
17..
18.. - Rare historical grounds
- Lettings by armed forces personel
What are the current inflation and interest rates?
Inflation = 2.6% BoE target = 2%
Interest = 4.5%
What is ‘cost of money’?
the amount it costs to obtain and use funds, essentially the price one pays for the use of capital
What is ‘opportunity cost’?
the potential forgone profit from a missed opportunity—the result of choosing one alternative over another
What forms forms did you fill in prior to completion?
TA6 & TA10
What is a TA6 form?
Sellers property information form / questionnaire
Designed to disclose important information about the property being sold inclusing potential issues that might impact the buyers decision
What is a TA10 form?
‘Fixture & Contents Form’
A form used to clearly outline what fixtures and fittings are being included in the sale / left behind
Agents deadline to disclose offer?
No strict deadline but is legally obligated to disclose an offer to vendor as soon as is reasonably possible
