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RICS APC > Estate Agency > Flashcards

Estate Agency Flashcards

1
Q

What is the Global Statement?

A

RICS Global Real Estate Agency and Brokerage Professional Statement (2016)

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2
Q

What is the UK Professional Statement?

A

RICS UK Commercial Estate Agency Professional Statement (2016)

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3
Q

What does the UK Professional Statement Provide?

A

A set of mandatory standards for RICS members involved in agency and real estate management work supported by detailed guidance

The statement provides twelve core principles which agents must observe

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4
Q

What are the 12 core principles within the Professional Statement?

A
  1. Act in an honest, fair, transparent and professional manner
  2. Carry out work with due skill, care and due diligence and ensure all staff employed have the necessary skills to carry out their tasks
  3. Ensure that clients are provided with terms of business - which are fair and clear with details of CHP
  4. Do the upmost the avoid COI - where they do arise deal with them openly and fairly
  5. Not to discriminate unfairly in any dealings
  6. All communications with clients are fair, decent, clear, timely and transparent
  7. All advertising and marketing material is honest and truthful
  8. Client money is held separately and is covered by adequate insurance
  9. Hold app PII to ensure the customer does not suffer a loss from a negligent act
  10. Make it clear the identity of your client and ensure all parties are clear of your obligations to each party
  11. Give realistic assessments of selling prices/rents/financial costs have regard to market evidence and using best professional judgement
  12. Ensure all meetings, inspections and viewing are carried out in accordance with the clients wishes with regard
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5
Q

What is the advice for the key areas in estate agency?

A

Acting ethically - duty of care / gifts / incentives / COI

Securing instructions - legal requirements / AML checks / types of agency & H&S

Marketing the property - legal requirements / market appraisal / preparing particulars

Implementing the disposal - methods of sale & legal requirements

Acquisition of property - COI / Client comms / progressing purchases

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6
Q

What is the Blue Book?

A

RICS UK Residential Real Estate Agency Professional Statement (2017)

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7
Q

What is the purpose of the Blue Book?

A

Mandatory professional statement

Provides a summary of code practice in all aspects of property marketing for residential property

Does not relate to commercial property

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8
Q

What does the Blue Book include?

A

Relevant estate agency legislation
Standards and ethics
Before securing the instructions
Property marketing
Acting for the vendor, purchaser and landlord
Ending the instruction

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9
Q

What is the key estate agent legislation?

A

Estate Agents Act 1979

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10
Q

What can the Estate Agents Act apply to?

A

Disposal or acquisition of an interest in land

Freehold property

Leasehold property with a capital value

Land as well as buildings

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11
Q

What are the principles of the Estate Agents Act 1979?

A
  1. Clarity as to the terms of the agency
  2. Honesty and accuracy
  3. Agreement and liability for costs
  4. Openness regarding personal interests
  5. Absence of discrimination
  6. Legal obligation to tell the client about offers received
  7. Keep clients money seperate
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12
Q

Key parts of the Estate Agents Act 1979?

A
  • Specify all costs / fees in advance, in writing in the terms of business
  • Itemise all payments - no global budgets allowed
  • Specify nature of agency and selling right to be agreed
    - Sole selling rights or sole agency rights
    - Sole, joint sole agency or multiple agency
  • Advise clients of any services available to applicant ie. financial advice
  • Disclosure of personal interest
  • Personal interest should be disclosed on HOT as a minimum and if app not continue to act
  • Misrepresentation of interest/offers - you can only tell the truth regarding offers received
  • Handling clients money - follow the RICS rules
  • Procedures to follow when offers are received promptly and in writing
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13
Q

Who is the Estate Agents Act 1979 policed by?

A

National Trading Standards Estate & Letting Agency Team (NTSEAT)

Powys County Council - work closely with the local authorities and have enforcement rights

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14
Q

What is Negative Licensing?

A

Where the right to be an estate agent is taken away and not granted

This is a penalty for Estate Agents Act 1979

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15
Q

Penalties of the Estate Agents Act 1979

A

Negative licensing

Prohibition or warning order can be made against an agent

Prohibition order stops an agent practicing

Warning orders are less punitive - just written warning not to undertake the action again

Usually only 10-12 orders issued a year

Can apply to individuals or a practice and costs can also be awarded

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16
Q

What was the Order made under the Estate Agents Act 1979?

A

Estate Agents (Undesirable Practices) (No 2) Order 1991

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17
Q

What does the Estate Agents (Undesirable Practices) (No 2) Order 1991 do?

A

Estate agent must inform their clients at the same time as they are informed about their terms of business, as to any services to be offered to prospective purchasers unless offered free of charge

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18
Q

What are the regulations with regards to Estate Agency?

A

Estate Agents (Provisions of Information) Regulations 1991

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19
Q

What do the Estate Agents (Provisions of Information) Regulations 1991 relate to?

A

Provisions of information which should be supplied to a client

This information must provide information in writing regarding:

  • The services to be provided
  • Remuneration
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20
Q

How long is a cooling off period and what does it mean?

A

14 days

Allowed for clients who change their minds and do not want to instruct the agent in accordance with the current consumer protection regulation

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21
Q

Please can you tell me about the Public Register of Overseas Property Ownership in the UK?

A
  • A registration of Overseas Entities Bill is proposed but the government has not issued a timetable for it
  • Government hopes it will prevent money laundering in the property sector and make the UK a world leader in corporate transparency
  • It may require overseas companies to provide details of their ultimate owners to make the UK property market more transparent and to declare the beneficial owner of properties purchased by non-UK parties
  • The info will be placed on a public register
  • Currently Unexplained Wealth Orders (UWOs) - can be applied to the owner of any property asset over £50,000 where the Government has reasonable ground for suspecting criminal funds have been used
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22
Q

What are the Consumer Protection Regulations?

A

Consumer Protection from Unfair Trading Regulations, 2008

The CPRs are legislation to stop businesses from engaging in unfair commercial practices

23
Q

Who do the Consumer Protection from Unfair Trading Regulations, 2008 relate to?

A

Relate to Business to Consumer

24
Q

What do the Consumer Protection from Unfair Trading Regulations, 2008 do?

A

Offer broader, non-specific consumer protection for estate agents

These regulations are principle-based, with wider definitions

These two sets of regulations apply to estate agency

25
Q

What are the key facts under the Consumer Protection from Unfair Trading Regulations, 2008?

A
  1. Regulations apply to all lettings and sales
  2. Agents have a duty of care to clients and all interested parties
  3. Agent must declare everything know about a property - good and bad
  4. Agents must not exert undue pressure on potential buyers
  5. If some information is discovered during the agency process - the info must be passed on to all interested parties
  6. Any omissions can also lead to a breach of the regulation
  7. Full due diligence is required for all new instructions
  8. Must be validated by the client
  9. Policed by the Trading Standards Office
  10. Disclaimers do not apply to this criminal offence
26
Q

Property Misdescription Act 1991

A

The PMA was repealed in October 2013 and replaced with new Consumer Protection Regulations (CPRs) and BPRs

27
Q

Where do the CPRs apply?

A

To any marketing or property services which reach or are capable of reaching UK consumers

This may include businesses and properties located outside the UK

28
Q

Who do the CPR’s apply to?

A

Almost anyone you deal with as an agent may be considered to be a consumer

eg. existing or potential clients / viewers / buyers / sellers / tenant

Goes beyond paying clients

29
Q

What are the penalties for non-compliance

A

Unlimited fine

Prohibition Order

Compensation may have to be paid for up to £25,000

30
Q

What commercial practice would be considered unfair under CPR?

A

Giving false/leading information

Hiding / failing to provide material information

Acting aggressively / exterting undue pressue

Not acting with sufficient professional skill/care and in good faith

Engaging in banned practices

31
Q

Who is an average consumer?

A

A reasonably well informed person

32
Q

Business Protection from the Misleading Marketing Regulations (2008)

A

BPRs

Relates to Business to Business activities and mirror above

The Regulation prohibit misleading business-to-business advertising

They impose restrictions on how businesses compare their products from other companies

33
Q

Caveat Emptor

A

Let the buyer beware

The starting point when discussing who has responsibility for the disclosure of information

This overriding common law principles means that buyer should satisfy itself on all matters relating to the property

34
Q

Consumer Rights Act 2015

A

This Act amends existing consumer protection law and gives consumers new rights and remedies

Consolidates the law relating to unfair terms and contracts between businesses and consumes

Since Oct 15 Letting agents must clearly display a summary of their charges both in their office and on their website for the letting and management of a property

Information must be provided based on calculation of the charges and who is responsible for payment

If a residential agent holds any clients money then the firm is required to also publish a statement as to whether they are a member of a client money scheme and details of the scheme

35
Q

Who policies the Consumer Rights Act 2015 and what is the penalty?

A

Policied by the Local Authority and the penalty is a fine up to £5k per breach

36
Q

Misrepresentation Act 1967

A

Relates to a misrepresentation or a false statement (a mis-statement) of fact made by a party during pre-contractual inquiries which has the effect of inducing the party to purchase

The vendor and/or agent can be sued for damages and/or contract recinded

Civil offence - actionable as tort (not criminal) - a wrong at common law and a form of negligence

The Agent has a duty of care to check that the advice / info given and opinion is reliable

Exclusion / disclaimer clauses may be effective in protecting the vendor and their agent if it is fair and reasonable

Applies to professional opinions and third party advice

Court held that no duty of care was owed by a bank to the plaintiff relying on advice as to the customers creditworthiness, because there was no special relationship involving the undertaking of responsibility

37
Q

What can misrepresentation be?

A

Fraudulent / Negligent or Innocent

38
Q

What is the leading case in the Misrepresentation Act 1967?

A

Hedley Byrne & Co Ltd V Heller & Partners (1964)

Relates to liability to negligent statements

Refers to the test of reasonableness (also under Unfair Contracts Terms Act 1977)

The case created three tests to decide against agents liability for negligent statements

39
Q

What were the three tests to decide agents liability for negligent statements? Misrepresentation Act 1967

A
  1. Forseeability - the damage is reasonably forseeable
  2. Proximity - the relationship can be characterized in law as being sufficiently proximate
  3. Fairness - it is regarded as fair, just and reasonable for such a duty of care to arise
40
Q

What were the three tests to decide agents liability for negligent statements? Misrepresentation Act 1967

A
  1. Forseeability - the damage is reasonably forseeable
  2. Proximity - the relationship can be characterized in law as being sufficiently proximate
  3. Fairness - it is regarded as fair, just and reasonable for such a duty of care to arise
41
Q

Tenant Fees Act 2019

A

Act aims to improve transparency and affordability in the residential lettings market

Bans various fees often charged to residential tenants for new lettings

Refundable tenancy deposits must now be capped at five weeks of rent if the annual rent is less than £50k pa - or six weeks if above

42
Q

Who is the Tenant Fees Act 2019 policied by?

A

National Trading Standards Estate & Letting Agency Team (NTSEAT)

Operated by Bristol City Council

43
Q

Regulation of Property Agency (RoPaA)

A

Applies to estate agents across the UK and letting and managing agents in England

Final Government report published in July 2019 - proposed that all property agents be regulated by an independent regulator with mandatory qualifications for agents and a code of practice

All qualifying agencies will have to be licensed and abide by a new code of practice

Transparency of charge, disclosing conflicts of interests and administrations of service charges are priorities

A new regulator would take responsibility for redress schemes and Client Money protection schemes

No date has been announced for proposed legislation

44
Q

What regulations control the marketing signage?

A

Town & Country Planning (Control of Advertisement)(England) Regulations 2007

45
Q

What are the regulations for non-residential boards?

A

Planning consent is required for boards over 2 sqm (flat) and 2.3 sqm (v board)

Only one board per building

46
Q

What are the regulations for residential boards?

A

Maximum size allowed 0.5 sq m flat and 0.6 sq m V shaped

47
Q

Regulations for both boards?

A

Must not project more than 1m from the face of the building and not above 4.6 m from ground in a safe condition

Must be removed 14 days after the completion of transaction

Certain Local Authorities will have more restrictive requirements such as London Boroughs

Must have owners approval

Policied by the Local Planning Authority who can remove boards / issue fines & order costs

48
Q

VAT

A

Specialist advice is always recommended

Some occupiers can not register for VAT

A LL can choose to elect a property to charge VAT / to recover VAT on costs expended - When this happens rent (and SC) is charged subject to VAT

This has implications for occupiers who cannot be VAT registered

Transfer of ongoing concern (TOGC) - purchasers are not treated as a supply of goods or services for VAT purposes

This can reduce liability for VAT eg. in the sale of a property let to a tenant

If the property is registered for VAT and the rent is subject to VAT it may be possible to not charge VAT on the sale

49
Q

Who cannot register for VAT?

A

Financial institutions, charities and medical practitioners

50
Q

Capital Allowances

A

Important form of tax relief upon capital expenditure for the construction or purchase of commercial property or business assets

They can generate substantial tax savings / relief on the value of plant and machinery fixtures such as air conditioning and lifts

51
Q

Capital Allowances

A

Important form of tax relief upon capital expenditure for the construction or purchase of commercial property or business assets

They can generate substantial tax savings / relief on the value of plant and machinery fixtures such as air conditioning and lifts

The allowances can be offset against taxable profit

Specialist advice is always required

The Finance Act 2019 includes some significant changes including Enhanced Capital Allowances, Structures and Building Allowance and the Annual Investment Allowance

52
Q

Land Registration Act 2002

A

The Act provides a framework for electronic property conveyancing by allowing formal documents to be executed electronically

All freeholders and new leases granted for terms over 7 years or existing leases sold or assigned with 7 years left to run must now be registered with the Land Registry with a compliant lease plan

Also introduces a new regime for adverse possession making a claimant prove 10 years of use

The Land Registry is aiming to archive comprehensive registration of all property and land by 2030

53
Q

What must a Compliant Plan have?

A
  1. Drawn to a metric scale (normally 1:100 or 1:200)
  2. Have a scale measured bar
  3. Have the scale noted on the plan
  4. Include a 1:1250 scale location map
  5. Full address including post code
  6. A north point
  7. Demise in red outlining on the inside edge of the property

RICS APC (25 decks)

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