Landlord and tenant - lvl 2 Flashcards
Tell me about an instance of when you have reflected market conditions on rental value.
18 Southsea Road -
I carried out a lease renewal on an industrial property. The lease had expired and the I sourced evidence which suggested rent had increased. The market condition reflected on comparables.
Subsequently, it was found that the subject property was under rented.
I wrote in my rental report to my client advising that market rent had increased since the lease commenced.
How do you collate, analyse and adjust comparable evidence?
I browse the local area and seek agent’s boards, call local agents and use online websites to collate comparables and verify these. I analyse and adjust comparables to make them relevant to the subject property.
What is the hierarchy of evidence?
The hierarchy of evidence is a guide which aides in weighting comparable evidence.
It is referenced in the comparable evidence in real estate valuation, 2019 and handbook of rent review by Reynolds and Bernstein.
Tell me about a landlord and tenant negotiation you have been involved with.
633 Eastern Avenue -
I was instructed by a landlord for rental valuation and negotiation. I reported that rental valued had increased for similar shop properties and started negotiations with the tenant.
The tenant became unresponsive after initial discussion.
I served a Calderbank Letter to the tenant which became receptive to negotiations again. They made an offer my client found satisfactory and we documented the negotiations through signed rent review memorandum.
Tell me about a contracted out lease renewal you have dealt with.
18 Southsea Road -
I was instructed by a tenant on an industrial property for a lease renewal outside of the Act. The tenant was holding over and continued to pay rent. I informed them that they might be be on a statutory tenancy which is provided with protection of the Act and recommended them to seek legal advice. They decided not to do this.
Subsequent to reporting market rent to the client, I negotiated on behalf of my client. The rent increased from the passing rent.
How would you advise a tenant differently between a contracted in and contracted out renewal?
For a lease renewal which is outside of the provisions of the Act the landlord is at discretion whether they wish to renew the tenancy with the tenant. Therefore I would advise them to foster and main a good relationship with their landlord during negotiations.
A tenant inside the Act is provided with protection. The only way a landlord can refuse a new lease is under one ground of opposition under S.30 of the LTA1954. If an agreement is not reached by negotiation, either party can apply to Court where a Judge will determine the Market Rent.
633 Eastern Avenue - did you issue ToE?
Yes.
633 Eastern Avenue - what would you typically find within a ToE?
A ToE will include the following -
IPVIARCFCML -
- Identification of valuer, client, other users
- Property, Purpose(, currency)
- basis of Value, Valuation date
- extent of Investigation, nature and sources of Information relied upon
- Assumptions and special Assumptions
- Restrictions for use, distribution and publication
- confirmation of Compliance with Red Book Global
- Fee basis
- reference to CHP
- statement that valuation might be Monitored by the RICS
- any limitations to Liability agreed
633 Eastern Avenue - what is the importance of the Calderbank letter?
A Calderbank letter can protect my client’s position on costs. The costs of the Arbitrator, and expert witness costs are all payable in Arbitration. The cost of an expert may be payable in IED. The costs are payable by parties, which is dependent on how costs are awarded/determined and the parties position in respect of served Calderbank Letters.
633 Eastern Avenue - did you include any specific wording in the Calderbank letter?
Without prejudice save as to costs. The Calderbank Letter is only to be shown to the surveyor after an award or determination is issued and they are at discretion to divide the costs between both parties.
633 Eastern Avenue - what is the usual type of rent review?
Upward only rent review. The rent can only remain the same or increase at the rent review date.
633 Eastern Avenue - did the lease specify any disregards in the rent review?
- Goodwill on tenant’s occupation
- Goodwill on tenant’s business
- Tenant’s improvement works granted by the LL within 21 years
18 Southsea Road - tell me about your due diligence in this case.
- Competency check (SUK)
- Conflict of interest check
- Understanding of client’s instructions
- Obtain lease, licence and other information from the client
- For a rent review, determine whether time is of the essence.
- Inspect the site in accordance RICS Property Measurement 2018 and measure in accordance with RICS Surveying Safely 2018
- Carry out rental valuation, having regard to the terms of the lease and the hypothetical lease terms
18 Southsea Road - did you serve notice on the LL?
I began informal negotations with my client because the lease was outside of the Act.
18 Southsea Road - what does serving notice do.
You cannot serve notice when a lease is outside the Act.
