Case Study Questions Flashcards
Did you note any defects in the building onsite? What would you be looking for with this type of building?
- Damp
- Roof leaks
- Condensation / poor ventilation
- Structural movement
- Defective materials -> that degrade with age
- Hazardous materials
- Defective floors / Defective ceilings
- Defective bathroom fittings
- Defective gutters, down pipes and external drainage
- Defective windows / doors
- Invasive species around car park
Do you know why the tenant had fallen into arrears or why they were paying late?
Did not get a handover and could not contact tenant
Why did you measure in NIA and GIA if it is an office?
As its mixed use office and industrial and the total property sq ft is in GIA, I therefore also measured in GIA.
I understand this is not the standard and NIA and IPMS 3 are required as per RICS Property Measurement 2018
Why did you measure in NIA and GIA if it is an office?
As its mixed use office and industrial and the total property sq ft is in GIA, I therefore also measured in GIA.
I understand this is not the standard and NIA and IPMS 3 are required as per RICS Property Measurement 2018
Why was the later objective introduced and how did it affect the other objectives?
Was introduced as it became evident the tenant was not occupying the premises for the use set out in the lease. Other tenants also complaining.
This led to us recommending that we forfeit the lease and seek to regain possession of the unit. This became the main priority and the recovering of arrears became less important.
What is a section 146 notice and what legislation does it relate to?
Section 146 Law and Property Act 1925.
Notice of intent to forfeit the lease for a breach of lease covenant.
Why would entering the premises on the second inspection waive the right to forfeit?
The bed was no longer visible through the window, however, could not determine if it was removed without entering the premises. Entering the premises in accordance with the lease would arguably be acknowledging the continuance of the lease and may waive the right to forfeit.
- Aired on the side of caution.
How did the COVID moratorium affect your options?
Could not CRAR or serve stat demand (stat demand was available from October 2021, however not for COVID affected arrears).
- best option would be payment plan in this time if tenant was responsive
How did you consider business rates during COVID 19 moratorium and after?
Unsure how tenant was dealing with their business rates as had no contact.
Once the lease was forfeited, we did not consider rates relief due to redecoration of the unit and the Clients desire to get the unit let.
When are rates payable for a landlord
- After property is vacant for 3 months (industrial is 6 months)
- For listed buildings, nothing payable until occupied
- Buildings with RV below £2,900, nothing payable until occupied
When are rates payable for a landlord
- After property is vacant for 3 months (industrial is 6 months)
- For listed buildings, nothing payable until occupied
- Buildings with RV below £2,900, nothing payable until occupied
Were dilapidations considered as part of your recommendations?
No as only painting and carpet cleaning was required. This cost £4,000 and the Client was happy to cover this cost in order to get the unit marketed as soon as possible
What was your conclusion of market rent for the property and on what lease terms? were there any incentives?
£15.00 per square foot hypothetical term of 5 years and no incentives
What is the typical size of an office in that location?
Roughly 2,000 sq ft
How much rent did you recover?
nothing beyond the rent deposit
What were your key achievements?
Regaining possession of the unit and avoiding disputs with other tenants on the estate who were unhappy with the occupier
What is a TORT notice and what are the timescales
a legal document alerting the owner of items that have been abandoned on private land or property
- 14 days to respond/collect items
Had the tenant responded and offered to pay some arrears how would that change your approach?
I would have contacted them to discuss their financial position and agree a way forward, most likely with a payment plan
What is FRI?
Fully Repairing and Insuring Lease
- The tenant is responsible for the cost of all the repairs and upkeep of the property and also the cost of buildings insurance
What is IRI?
Internal Repairing and Insuring Lease
- Tenants have less repairing and maintaining obligations - only the cost of internal repairs falls on the tenant
What is an effective FRI lease?
The tenant is not directly resposible for all repairs but the landlord is able to recover the cost of repairs from the tenant
i.e to the common structure
- common for offices
I can see on your lease terms you have said the tenant is on an IRI lease, is this normal for an office in this location?
Yes they are on an IRI lease and therefore don’t contribute to works requried to the exterior of the building structure/roof
- Not normal, common for it to be effective FRI whereby the landlord can recover these costs
What effect might an IRI lease have and why do you think this lease is IRI?
IRI lease might have increased rent
Stated in the lease, potentially to attract the letting (i.e as an incentive)
What is CRAR and what legislation does it fall under?
Commercial Rent Arrears Recovery
- Tribunals Court and Enforcment Act 2007
When did CRAR restrictions get lifted following COVID-19?
25th March 2022, however the government introduced ‘protected rent’
What is protected rent and what legislation is it under?
protected rent is rent that cannot be pursued if there was forced closure between 21st March 2020 and 19th July 2021.
Commercial Rent (Coronavirus) Act 2022
- Arbitration for protected rent - if application made
What legislation was CRAR not permitted during covid
Coronavirus Act 2020
When was protected rent restrictions lifted?
Moratorium period ended on 23rd September 2022. All restrictions now lifted
When did statutory demands become available?
1st October 2021 but cannot present a winding up petition in respect of commercial rent which is unpaid because of the financial effects of COVID-19
When did statutory demand procedures return to normal?
1st April 2022
What use class would selling/repairing cars fall under?
Town and Country Planning (Use Classes) Order 1987 – B2 (general industrial). Car show rooms are Sui Generis
When did the use classes change?
Came into force on 1st September 2020
What changed in the most recent use class update?
Introduced Use Class E – brings together A1, A2, A3, B1 and D1, D2
Introduced use class F1 and F2
What additional clause did the tenant breach?
User clause – not to allow anyone to sleep on the premises
User clause – not permit or do anything which shall be a nuisance to the estate or to the occupiers of any part of the estate
User clause – not to use the Premises otherwise for the purpose of offices falling within Use Class B1(a), now E(g)
What makes a S.146 notice invalid?
It must:
Specify the exact breach of the covenant
Require the Tenant to remedy the breach, if it is capable of being remedied
Require the tenant to monetarily compensate for the breach
Give the tenant reasonable time to remedy the breach
What types of breach were there?
Breach of rent payment – once and for all
Breach of use clause – continuous
What use class legislation is there?
Town and Country Planning (Use Classes) Order 1987
What section of the Coronavirus Act is the rent moratorium defined in?
Section 82
What period does the coronavirus moratorium cover?
21st March 2020 to 25th March 2022
What is protected rent?
Rent that is unpaid and accrued as a direct result from closures due to COVID-19
What section of the coronavirus act is protected rent defined in?
Part 1
How can protected rent be collected according to the coronavirus act?
Tenants have 6 months to apply for arbitration. This ended on 24th September 2022 after which there are no restrictions on collecting protected rent.
When the planning class change?
1st September 2020
Can you confirm what other uses fall under Use Class E?
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)
Did you put anyone else on notice that you were concerned the use of residential was potentially happening in the building?
Insurers
Can you explain to me the service charge of the site and what this is running at?
Split into 2 Schedules – whole estate and office only
Total psf £1.60
Total Psf for Lincoln House: £8.50
Did you have any other vacant units in the building?
2 in Lincoln House and 2 rest of estate
How big is Lincoln House in comparison to the estate
- Lincoln house is 14,622 sqft and the estate is 136,000
- What were the void costs for 9 months?
Roughly £15,000 for 1 year, so £11,250,000 for 9 months.
Although rates relief for 3 months post forfeit date so around £9,000 total
What was the RV and rate payable
RV: £11,750. Rates payable £5,900
What is the SC for that unit?
£8.50 psf. £8,400
Is the lease inside or outside the act?
Outside
Were your comparable inside or outside the act?
Outside
How would you have changed it if it they were inside the act?
Less weight applied to inside the act comparable
Why did you want to obtain vacant possession? You’ve gone from a tenant paying £15.49 psf, to increased vacant costs and no recovery of rent. Why was this your recommendation?
Tenant was being a nuisance to other tenants on the estate
We did not believe funds would be recovered and therefore decided to aim at getting a new tenant in to secure some income
How long does the tenant have to dispute forefeiture and what would they need to do?
Make an application to court and it would be granted if they pay all arrears.