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1
Q

What did you do before accepting the instruction?

A

Conflict of Interest check
Check competence (SUK)
Signed Terms of Engagmenet

(Also AML checks in this instance …)

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2
Q

What legislation did you have regard for during this instruction?

A

Estate Agents Act (1979)
Consumer Protection Regulation (2008)
Misrepresentation Act (1967)
Town and Country Planning Act (2007)

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3
Q

What is a Conflict of Interest?

A

When your ability to act impartially or objectively is compromised (can be actual, potential or perceived)

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4
Q

How did you carry out the Conflict of Interest check?

A

RICS Professional Statement, Conflict of Interest (2017)

I checked my company’s interal database.
I then sent a Conflict of Interest (COI) check email across the company outlining the details of the property and the client.

I waited a reasonable time for a response (1 week) before proceeding.

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5
Q

What are the most common types of Conflict of Interest to be aware of?

A

Party Conflict (Same instruction)
Own Interest Conflict (Personal interest)
Confidential Information Conflict

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6
Q

How would you handle a Conflict of Interest if one did arise?

A

1) Conflict Avoidance (can you still carry out the instruction impartially?)

2) Written Advice to Both Parties - (Set out in writing the nature of conflict, how you intend to manage it (information barrier) and request informed consent.)

3) Conflict Management - Implement the information barrier

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7
Q

How did you conduct Anti-Money Laundering (AML) checks?

A

As Fuller, Smith & Turner are an existing client - I carried out CDD (KYC) checks at the point of instruction.

The client is a PLC - so I confirmed their status on the London Stock Exchange.

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8
Q

When would you conduct enhanced due diligence (EDD) checks?

A

Enhanced Due Diligence (EDD) would need to be undertaken if ‘red flags’ occur or if dealing with a PEP - Politically Exposed Person.

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9
Q

Why are Terms of Engagement important for Surveyors?

A

To avoid claims of negligence made against you.

Clear Scope of Works / ToE give clients a clear understanding and manage expectations.

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10
Q

How do Terms of Engagement differ from Terms of Business?

A

Terms of Engagement = Bespoke, relevant to specific instructions. Sets out fee agreement and complaints handling procedure.

Terms of Business = Standard document relevant to the company and applies across all service lines.

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11
Q

What did you include in your Terms of Engagement?

A

Written agreement of the:

Date
Propety address
Client contact details / my contact details
Scope of instruction / Basis of Appointment
Complaints Handling Procedure
Proposed Fee Agreement

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12
Q

What is the ‘Cooling Off’ period and how long does it last?

A

A cooling off period of 14 days is allowed for clients who change their minds and do not want to instruct the agent.

This is in accordance with Consumer Protection Regulations (2008)

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13
Q

You mention your Complaints Handling Procedure. What is included in your Complaints Handling Procedure?

A

(Rememer 5-10-10-5)!!!!!!!!

Contact Head of Division

Acknowledge receipt of the complaint within 5 days

Within 10 working days, the Head of Division will inform the complainant about an outcome.

If disattisfied, the Managing Partner can conduct a separate review and get in contact within 10 working days.

If still unsatisfied, an independent redress system will be provded within a further 5 days - we use The Property Ombudsman.

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14
Q

What part of the Estate Agents Act (1979) relates to Terms of Engagement?

A

Section 18 of the Estate Agents Act (1979).

S.18 states that all costs/fees must be agreed in written Terms of Engagement, and the basis of agency clearly outlined.

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15
Q

What does Section 21 of the Estate Agents Act (1979) say?

A

‘Connected Person’

Disclose any personal interests within the Terms of Engagement - I did not have any.

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16
Q

What are void costs?

A

Costs a tenant would be paying if they were in occupation, i.e rent / service charge.

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17
Q

Define ‘Market Rent’

A

The estimated amount for which a property should be leased:

On the valuation date
Between a willing lessee / lessor
In an arm’s length transaction
After proper marketing

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18
Q

What is Covenant Strength?

A

The abiltiy of a tenant to meet the covenants / demands of a lease.

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19
Q

Can you briefly explain the timeline of this instruction to me?

A

Terms of Engagement signed January 2022.
Period of marketing …
Initial proposal received July 2022.
Lease signed 14th October 2022.

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20
Q

How was interest throughout this period? Did you have many viewings?

A

I did have a steady stream of viewings throughout this period with both agent represented and unrepresented parties - direct enquiries were the most fruitful.

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21
Q

What were the market trends you were seeing at time of instruction?

A

The ‘two tier’ office market was in force.

Market was becoming saturated with ‘Grade B’ stock. Lots of tenant release space with occupiers downsizing post-covid.

Occupiers looking for the very best in class to return to the office.

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22
Q

What RICS Guidance for Leasing / Letting did you follow during this instruction?

A

RICS Code for Leasing Business Premises (2020).

RICS UK Commercial Estate Agency (2016).

RICS Rules of Conduct (2022).

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23
Q

What is the purpose of the Estate Agents Act (1979)? Key points of the EAA?

A

Clarify all costs/fees in writing in the ToE and clarify basis of agency (s.18)

Act with honesty

Openness regarding personal interests (S.21)

Legal obligation to tell client about all offers recieved

Keep clients money separate.

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24
Q

Who polices the Estate Agents Act (1979)?

A

National Trading Standards

Penalties can be:
Prohibition Order (right to practice taken away)
Negative Licensing
Warning order

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25
Can you talk me through the location of the property?
The property holds a commanding location on the West side of Borough High Street, just south of the River Thames and drectly opposite London Bridge station.
26
Describe the Construction of the property?
Multi-tenanted building of concrete masonry construction. The property is of 19th century construction with an exterior Stucco coating. It is of Italianate Palazzo Style architecture - symbolic of rounded corners and a 'cliff-like' facade.
27
How old was it and how could you tell?
Early 19th Century construction. Confirmed by info from the client & the Title Register. The design and construction is in keeping with similar buildings across London dating from the same period.
28
What are some common building defects in 'Period' Buildings / this style of building? What defects were you looking out for on your inspection?
Wet rot (damp) and dry rot (fungal attack) Damp penetration at roof and ground floor level Water ingress around door and window openings Structural movement
29
What did you have regard for before you inspected the building?
RICS Surveying Safely (2018).
30
What does RICS Surveying Safely (2018) set out?
The 'Safe Person' concept - individual to assume responsibility for the H&S of themselves and others. Also risk assessments - Identify the hazard and manage the risk.
31
What features were you looking for on your inspection that could have an impact on rental value?
Location Specification / condition Any building amenities (bike racks, showers, commissionaire) Outside space Natural light Age of M&E Any sustainability credentials
32
Would you say the office was 'Grade A'?
No - I would say it was Grade B. There were no bike racks / showers present The passenger lift and common parts were dated. The air condition was simple comfort cooling units as opposed to VAV/VRF/Fan coil.
33
What is 'Grade A' office space? What is the BCO Guide to Office Specification (2023)
Full access raised floor with floor boxes Approx ceiling height of 2.6m - 2.8m Raised floor void of 150mm and ceiling void of 350mm Air conditioning & double glazed windows Max opportunity for natural light 1 cycle space per 10 staff, 1 shower per 100 staff 1:8 and 1:10m2 occupational density - 1:10m2 now in 2023.
34
What air conditioning units were there on the floor?
Wall mounted, air conditioning cassette units. Traditional comfort cooling.
35
What upgrade could be made to the air conditioning? What are the different types of air conditioning?
VAV Air Conditioning (Variable Air Volume) - Highest capital cost but the most flexible. Allows air to be distributed to certain areas. 4-Pipe Fan Coil Air Conditioning - Lower inital cost and still good flexibility but higher maintenance costs due to the coil and fan. VRF Air Conditioning (Variable Refrigerant Flow) - Cheaper but higher running costs. Adjust the refrigerant volume to match a building's precise requriement.
36
What floor did you have in your demise?
Raised floor with carpet overlay. Floor boxes (Grommets) with the cabling/wiring running underneath. (BCO spec says 150mm void between raised floor and concrete slab).
37
What lighting did you have in your demise?
Recessed LED lighting.
38
What was the EPC rating of the building?
D
39
What are the latest changes to MEES regulations?
As of April 2023 - all commercial property must legally have an EPC rating of 'E' or above to be let, including existing leases.
40
I've researched your building and seen it is Listed. Why is it not exempt from having an EPC?
Having sought specialist advice - Listed buildings are only 'exempt' if compliance with EPC ratings would "unacceptably alter their character or appearence" (Brutal question but don't be caught out).
41
How did you measure the floor?
In accordance with RICS Property Measurement (2018) and RICS Code for Measuring Practice (2015). I reported on a dual basis and advised my client of the benefits to adopting IPMS.
42
What tools did you use when measuring?
I used a disto laser and tape measure. I always print floor plans and bring with me.
43
How did you calibrate the disto?
I calibrated the laser before I left against a known distance and logged the result.
44
What is the accuracy of a disto?
1.5mm - 200m (but bright sunlight can distort)
45
Talk me through the difference between IPMS 3 and NIA? - Massive question
IPMS 3 measures to the Internal Dominant Face (IDF) , includes columns / pillars and includes limited use areas of less than 1.5m height.
46
So, talk me through how you measured to NIA and what did you include/exclude?
For NIA: I excluded structural columns / pillars I excluded limited use areas with headroom less than 1.5m I excluded anything in the common parts outside of the demise. I included: The kitchen area in the demise Previous tenants units/cupboards occupying useable floor area.
47
Why did your client instruct you to use NIA rather than IPMS 3?
I measured the property to both IPMS 3 and NIA and dual reported these to the client. Whilst he was not a property professional, he was familiar with the term NIA and felt more comfortable using that basis of measurement. The client provided a written instruction to just use NIA.
48
What benefits of IPMS did you recommend to your client?
Consistency on a global stage Transparency of data Will allow you to compare against different markets.
49
When you measured to IPMS, where did you measure to, using your photographs in Appendix C as an example?
I measured to the Internal Dominant Face, i.e. the Inside Finished Surface comprising 50% or more of the floor-to-ceiling height for each vertical section.
50
What is an agents breakfast launch?
This is where local agents come and inspect the building and become aware of its availability.
51
What did you estimate the cost of the high-cost launch and brochure to be?
Launch = £2,500 - £4,000 Brochure = £3,000
52
Why did you recommend against adopting a high-cost marketing campaign?
Because it would have been disproportionate to the size of the instruction and prospective rent-roll. My client was keen to limit any upfront CapEx. Plus retaining previous fit out allowed the premises to be marketed as 'part-fitted' anyway.
53
What agency legislation did you have consideration for when producing the particulars?
Misrepresentation Act (1967) = Relates to false information during pre-contract enquiries. Agent MUST ensure a disclaimer is on the marketing particulars stating these have been produced 'in good faith' and correct. Consumer Protection Regulation (2008) = Prevent against unfair / misleading information. Must declare everything (good and bad) about a property. No more 'buyer beware'
54
You say you had a 'To Let' board - what legislation did you follow for this?
Town & Country Planning Regulations (2007)
55
What do you know about the Town & Country Planning Regulations (2007)?
Planning consent is required for boards over 2 sq m (flat) or 2.3 sq m (if v board). Only 1 letting board is allowed per building. 1m max projection from front of building and NO illumination Must be removed 14 days from completion of letting.
56
Who polices the Town & Country Planning Regulations (2007)?
The Local Planning Authority - can remove boards / issue fines if necessary.
57
What were the Southwark Planning Restrictions?
In accordance with the T&CPR (2007) Planning consent required if over 2 sq m (flat) or 2.3 sq m (if v board) - mine weren't! 1 x max projection and NO ILLUMINATION Only 1 letting board per building Must be removed 14 days after letting.
58
What RICS Guidance did you use to establish a quoting rent?
Comparable Evidence in Real Estate Valuation (2019). Published in 2023 as a Professional Standard.
59
What is the Hierarchy of Evidence?
Framework for weighting based on different comparable evidence: Category A - Direct Comparables. (Full & accurate info of identical properties or the subject property itself) Category B - General Market Data (databases). Category C - Other sources.
60
Why is a new letting better evidence than say a rent review, lease renewal or asking rent?
According to the Hierarchy of Evidence for weighting - a New Letting sits at the top, followed by lease renewal and THEN rent review. Open market letting is a 'true letting' Rent review is bound by the wording of the lease.
61
Were your comparables 'New Lettings'?
Yes - all the comps were within the last two years, which I judged to be a reasonable timeframe to generate enough evidence. Any further back and the evidence would have arguably been out of date due to the changes in market conditions.
62
When did the last letting complete in your building?
November 2020 - 1st floor & 3rd floor
63
How did you find your Comparable Evidence?
Inspection of local area to find agency boards. Commercial property databases and phone call to verify with local agents. Once I had assembled comps into a schedule I adjusted based on the Hierarchy of Evidence.
64
How accurate did you find the information on CoStar? What other databases could you have used?
The comparables were generally accurate although I would always phone the relevant agents to verify the details.
65
How did you verify the information from CoStar and what barriers did you encounter?
Speaking to local agents to verify the data (rent, floor area etc) Barriers: Getting hold of agents to verify the data. I would not use information as a comp until it was verified.
66
What trends did you identify from your Comparable Evidence?
Landlord's were having to concede on traditional 5-year lease terms with break options. Space of similar quality and spec were transacting in the £50s per sq ft.
67
Why do you think the market was saturated with similar 'Grade B' stock?
'Flight to quality' - Occupiers wanting the very best space when returning to the office. Also downsizing post-covid, market is awash with tenant release space.
68
What rent did you opt to quote in the end?
Quoted: £55.00 per sq ft
69
How did you manage the clients expectation here? Were they pushing for a higher rent?
I set out my recommendation in a clear and concise way. The client understood market conditions were tricky and was happy to recieive rental income in line with the building's profile. I did set the quoting rent at £55.00 per sq ft to afford negotiation room as a buffer.
70
What did you do once you recieved the offer?
I immediately reported it to the client in writing, in accordance with the Estate Agents Act (1979).
71
What is the objective of the RICS Code for Leasing Business Premises (2020)?
Objective: To improve the quality and fairness of negotiations on lease terms. To provide a comprehensive set of HoTs to make the legal drafting process more efficient.
72
Why did you provide them with the RICS Code for Leasing Business Premises (2020)?
It is mandatory that a party not represented by an RICS advisor must be advised about the existence of the code and recommended they seek professional advice.
73
What is Covenant Strength?
The ability of a business to meet the covenants of the lease - e.g. rent, service charge obligations.
74
How did you assess their covenant strength?
Profits Test (3x3) The businesses' net profit must be 3x the annual rent for 3 consecutive years. Or Net Asset Value 5x the rent. Also used an external Credit check - Dun & Bradstreet
75
Why did they not meet the profits test?
Their last 2 years showed significant profits - clearly post covid.
76
What is Net Effective Rent?
Net Effective Rent = Takes into account all incentives (rent-free period) hence it is the 'true' market rent.
77
What is Headline Rent?
Headline Rent = Rent paid after any rent-free period or incentives (artificially inflated as ignores rent-free period / incentives).
78
Why did you analyse the Net Effective Rent?
I wanted to devalue the proposed headline rent to calculate the actual 'net effective' rent. This was key to achieving the deal. The NEF is the 'true' market rent because it takes into account all incentives.
79
How did you calculate the Net Effective Rent?
I used the straight line method and accounted for the rent-free period.
80
Why did you revert with a 4-year lease, when their opening proposal was a 5 with a 3?
The only way they were prepared to pay a higher rent was to have a shorter lease term. It became clear flexibility was essential and they required that 2nd year break.
81
Why was it so crucial the headline rent remained high?
To protect the investment value of the building. The headline rent ignores any rent free period.
82
Tell me the difference between Net Effective Rent vs Headline Rent?
Net Effective Rent = Rent taking into account all incentives (rent-free period and concessions) hence it is the 'true' market rent. Headline Rent = Rent paid after any rent-free periods or incentives (artificially inflated as ignores rent-free period).
83
What were average rent-free periods doing in the market at the time of letting?
Average 2.4 months per term certain. On a 5-year lease circa 12 months rent-free.
84
What deal terms did you agree?
£53.00 per sq ft with 8 months rent-free. 4 year term with tenant break after 2nd year.
85
What was the timing for completion agreed in the HoTs?
Both parties to complete the lease within 20 working days from receipt of legal documentation.
86
What would you do differently next time? Lessons learnt?
Supplementary marketing initiatives to secure an even quicker deal - produce space plans in house. Timings - Enforce a commencement date for the rent-free period to incentivise the tenant to complete the lease within the timeframe.
87
Was there a deposit?
Yes - Equivalent to 3’ months rent held for duration of the term.
88
When did the lease complete?
October 22
89
Was there a rental deposit you negotiated? (Learn this & conditions for deposits)
Yes - deposit equivalent to 3 months rent + VAT to be held for the duration of the term.
90
Was the break option mutual or tenant only?
Tenant only
91
Did you have any rent reviews in the Heads of Terms?
No - because of the short duration of the lease
92
Was the building listed?
Yes - it's Grade II listed
93
So what did this mean for you - why did the building have an EPC of D?
Listed buildings are only exempt from EPCs ... if "compliance with EPC regulations would UNACCEPTABLY ALTER their character or apperence" This is a sutble but important difference. So this is why Bank Chambers has an EPC D. Because complying with the regulations "does not unacceptably alter its character or appearence"
94
You say the building was listed - what did this mean for you when putting the marketing board up?
In line with Town & Country Planning Regulations (2007) I had to get planning permission (from Southwark Council) and Landlord approval before implementing. (Planning permission took roughly 6-8 weeks)

APC Revision Sesh (22 decks)

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