L&L CW Questions Flashcards
What is included in a lease?
⦁ Parties to the lease
⦁ The Term and whether the lease is included or excluded from the Landlord and Tenant Act 1954
⦁ Annual Rent
⦁ Permitted Use
⦁ Break Date
⦁ Repair Clause
⦁ Alteration Clause
⦁ Alienation Clause
⦁ Rent Review Clause
What is the difference between a licence and a lease?
A lease provides exclusive occupation of the premises, it’s for a fixed term, there is an interest in the land, and is protected under relevant statute law
What is the difference in the type of documentation you take on a serviced office and a conventional office?
⦁ A serviced office you take a licence
⦁ Conventional office you take a lease
What are the benefits of a conventional office and a licence
⦁ Conventional lease: Branding opportunities, able to make your own space
⦁ Serviced Office: Shorter terms, flexibility, better if you are growing business
What are the mandatory requirements of the RICS PS on Code for Leasing Business Premises (2020) ?
1.1 Negotiations over the lease must be approached in a constructive and collaborative manner
1.2 A party that is not represented by an RICS member must be advised by the other party or its agents about the existence of the Code
1.3 The agreement as to the terms of the lease on a vacant possession letting must be recorded in written heads of terms, stating that it is subject to contract.
1.4 At a lease renewal or extension, the heads of terms must comply with the aspects written in the document,
1.5 Negotiations should aim to produce letting terms that achieve a fair balance between the parties having regard to their respective commercial interests.
What is the RICS PS on Code for Leasing Business Premises (2020) ?
⦁ Created to make greater transparency, honesty and fairness in lease negotiations on lease terms
⦁ Created a new set of HoTs to make the legal drafting of leases more efficient
Structure:
⦁ Introduction
⦁ Mandatory Requirements
⦁ Lease Negotiations Best Practice
⦁ Appendices
What are the two key principles of the Estates Agents Act 1979?
Section 18 – specify all fees/costs in advance in the terms of business
Section 21 – disclosure of any personal interests
When are AML Checks required for leases?
- Required when headline rents is over £100,000 per annum
How do you calculate agency fees?
On a sole agency basis typically done 10% of annual headline rent, including any incentives.
How do you agree agency fees for a tenant acquisition?
⦁ Fixed fee
⦁ Percentage of the savings from the landlords quoting rent
⦁ % of headline annual rent.
What forms of marketing do you undertake in agency?
⦁ Brochure
⦁ Marketing Platforms – Agent’s Society, Zoopla, Rightmove
⦁ HTML – email mailout to agents across agent’s society
⦁ Launch – getting local agents to the building
⦁ Marketing Board
What is typically included in brochure
⦁ Name and extent of premises
⦁ Rent
⦁ Service charge
⦁ Rates payable
⦁ Photographs
⦁ Key specifications
⦁ Agents involved
⦁ Disclaimer – Misrepresentation Act 1967
What market trends did you discuss - in your level 3 office disposal in London Bridge
What is the difference between an assignment and subletting?
ssignment – transfer of interest within a lease to a new party, direct relationship with landlord
⦁ Sublease - the existing lease signs a lease with a new tenant on similar terms, no relationship with landlord, existing tenant continues to pay rent to Landlord
Why sublet not assign
⦁ Existing tenant may want to reoccupy in future
⦁ Existing or incoming tenant may want / only give away a part of the space
⦁ The incoming tenant is of a poorer covenant strength
⦁ The MR is higher than passing rent so there is a profit rent.
Why did you advise your client to retain their fit out? What are the benefits.
Reduced upfront
costs for incoming occupier
How do you approach lease negotiations?
⦁ As per RICS Professional Standard on Code for Leasing Business Premises (2020) approach negotiations in a fair and transparent manner.
⦁ Firm but fair
⦁ Understand my client’s objectives and where there bottom line
⦁ Understand areas where happy to concede and areas which cannot.
What are prime rents in Canary Wharf.
Grade A office spaces typically range between £37.50 and £59.50 per square foot, while Grade B spaces range from £27.50 to £37.50 per square foot.
What is Agent’s Society.
Online Platform for commercial agents to share properties.
When are AML Checks required for leases?
Required when headline rents is over £100,000 per annum
What is the RICS PS on Code for Leasing Business Premises (2020) ?
Created to make greater transparency, honesty and fairness in lease negotiations on lease terms
What is Stay vs Go?
‘Stay vs Go’ refers to a strategic decision-making process that businesses undertake when their lease is approaching expiry. It involves evaluating whether they should remain in their current office space or relocate to a new premises. The evaluation is based on factors such as financial considerations, including the cost of renewing vs moving, incentives from the landlord (rent-free periods/capital contributions), and exit costs such as dilapidations. Other non-financial factors include space requirements, lease term negotiability, location and accessibility, and workplace strategy and employee satisfaction.
What is the importance of a tenants covenant in leasing?
There is an important relationship between the quality of the tenant’s covenant and the investment value of a property.
What doing a letting, what is the minimum information that is usually required?
- Bank, accountant and two trade references
- Previous/existing landlord references
- 3 year audited accounts/business plan/credit rating
- Can add to quality of covenant by requesting sureties/personal guarantee or rent deposit
- Profit tests commonly used is that the net profit for the proposed tenant’s business must be 3 times the rent for three consecutive years or the net asset value of the business must be more that 5 times the rent – but consider the level of demand for the property and current market conditions
