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Leasing and Letting > Leasing and Letting > Flashcards

Leasing and Letting Flashcards

1
Q

Tell me about the code for leasing business premises 2020?

A

The objective is to improve the quality and fairness of negotiations on lease terms.

Mandatory section - Negotiation and Heads of terms

HOTS must be in writing and state ‘subject to contract’

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2
Q

How can you test a tenants covenant strength?

A
  • Profits test = Business profits is 3 x more than the rent
  • Credit ratings - Dun & Bradstreet
  • Landlords reference
  • 3 years of audited accounts
  • Business plans
  • Use grantors?
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3
Q

What are the four forms of agency?

A
  • Sole selling/letting rights
  • Sole agency
  • Joint Agency
  • Multiple Agency
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4
Q

Tell me about the estate agency act 1979

A

6 principles

  1. Honesty and accuracy
  2. clarity on TOE
  3. Open and transparent
  4. No discrimination
  5. Pass on all offers in writing
  6. Keep clients money separate
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5
Q

What is s.18 of the estate agency act 1979?

A

Clarity on terms

Requires agents to give clients information before entering into a contract for estate agency work
Including;
Fees
Conflicts etc

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6
Q

What is s.21 of the estate agency act 1979?

A

Disclose any personal conflicts

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7
Q

What are considered to be unfair practises under this legislation?

A

Giving false/misleading information, hiding or failing to provide information

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8
Q

How does the Misrepresentation Act 1967 relate to your agency practise?

A

 false statement made during pre contractual enquiries which has the effect of
inducing the party to purchase
 Civil offence – sued for financial damages
 Vendor and or agent can be sued

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9
Q

RICS UK Commercial Estate Agency Professional Statement 2016

A
  • Professional statement therefore mandatory
  • Useful guidance on ethical approach

Chapters covering

  • Standards and ethics
  • Securing instruction
  • Disposals (covers marketing)
  • Implementing disposal
  • Acquisitions
  • Ending the instruction
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10
Q

What do you know about the Consumer Protection from Unfair Trading Regulations 2008

A

It controls unfair practices used by traders when dealing with consumers, and creates criminal offences for traders that breach them.

You must not mislead the average customer
Particulars must be accurate

knowingly giving false info

Unlimited fine or max 2 years in prison

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11
Q

Requirements surrounding letting a property and EPCs

A
  • All commercial buildings over 50 sqm
  • Must be instructed prior to marketing
  • Must show rating
  • Valid for 10 years
  • MEES - No less than E (new lets) April 2023 for existing
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12
Q

Tell me about the changes to the Use classes?

A

The new Class E encompasses commercial, business and services

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13
Q

What factors impact letting value / lease terms?

A
  • Rent review clause
  • Alienation
  • Break clause
  • Repair obligations
  • Security of tenure ( contracted out?)
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14
Q

What is the law in this area?

A
  • Estate Agents Act 1979
  • Consumer Protection from Unfair Trading Regulations, 2008
  • Consumer Rights Act 2015
  • Misrepresentation Act 1967
  • Bribery Act 2010
  • Money Laundering, Terrorist Financing and Transfer of Funds 2017
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15
Q

Tell me about the Money Laundering, Terrorist Financing and Transfer of Funds 2017

A

sets out obligations of private sector firms working in areas of higher money laundering risk. They aim to stop criminals using professional services to launder money by requiring professionals to take a risk-based approach.

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16
Q

What are the permitted development rights for a to let board?

A
  • Remove within 14 days of letting
  • 2 sq m, 2.3 sq m v board
  • projection 1 m from building
  • planning permission needed for conservation area or listed building
  • no illumination
17
Q

How long did lease terms have to be to be registered at the land reg?

A

7 years

18
Q

RICS papers you had regard to?

A

RICS UK Commercial Estate Agency Professional Statement, 2016
RICS Global Professional Statement on Conflicts of Interest 2017
RICS Professional Statement – Countering Bribery, Corruption, money laundering & terrorist financing 2019
RICS Guidance Note Comparable Evidence in Real Estate 2019

19
Q

What is a ready, willing and able purchaser?

A

As defined by Estate Agents Act 1978

Applicant is ready to proceed but the client decides to withdraw, agent can charge an abortive fee

20
Q

What are considered to be unfair practises under this legislation?

A

Giving false/misleading information, hiding or failing to provide information
Policed by Trading Standards Office of the local authority

21
Q

Explain what alienation is

A

The ability of the Tenant to dispose of the lease if they no longer want it. The main methods of disposal are assignment or sub or underlease.

22
Q

What is subletting?

A

Where a tenant has transferred exclusive possession of all or part of the demised premises to another party, but retains his original legal relationship with the landlord.

23
Q

What is assignment?

A

Where a tenant (assignor) transfers all his legal rights and responsibilities to another tenant (assignee) who enters into a direct relationship with the landlord. Requires landlord consent.

24
Q

Planning for a marketing board?

A

Town and Country Planning Act

-Planning for non-resi boards 2sqm+ (flat) or 2.3sqm (V)
-Planning for boards on listed buildings/conservation area
-Consent needed for illumination boards or remote boards
-Must be removed within 14 days of completion
Some local authorities have more restrictive requirements

25
Q

What factors impact letting value / lease terms?

A

Rent, longer lease, stronger covenant, shorter rent free, rent review arrangements, break options

26
Q

Talk me through the marketing process?

A
  • Check for conflicts,
  • Anti money laundering checks
  • issue terms of engagement (inc fee and any penalities for noncompeltion)
  • Check to see any disposal will comply with existing legal agreements
  • Inspect- anything that could impact the value?
  • Measure
  • Market appraisal - giving realistic advice of the likely selling price or rent - not redbook val.
  • EPC
  • Floor plans
  • Asbestos risk register
  • Access is compliant with Equality Act 2010
  • Market the property (ONLY WITH CLIENTS approval)
  • Prepare sale or leasing particulars
27
Q

How has covid impacted the market?

A

£38 psf City centre City
£23.50 psf Out of town
Prime – 4.75 % (Grade A offices in the city)
Secondary – 7% (weaker than 2020)
Tenants are looking for more flexible working spaces, shorter lease terms within the office sector

Industrial has been stagnant but remained strong

Covid clauses within leases, the WHsmith (covid clause won, stop paying rent when non essential shops close) and Poundland case ( covid clause lost - hadnt been agreed, o’may test)

28
Q

What needs to be included on marketing particulars?

A

-Location or address
-Fixtures and fittings
-Physical or structural characteristics, form of
construction or condition
-History, including the age, ownership or use of
land,
-Price
-Freehold or leasehold
-Existence and nature of any planning
permission or proposals for development,
construction or change of use
-Leases and licences, liability for service
charges and common repairs

29
Q
  1. How did you analysis the offers at Toghill?
A

Asses their business plans and covenant strength
Looked though accounts
Assessed who was more financially viable
Not just based on amount offered

30
Q

What lease term did you advise on Army Reserves, Coniston Road?

A

Longer term of 25 year to satisfy funding conditions rather than 5 years.

Tenant of good covenant strength.

31
Q

At Bristol and bath science park? How would you market this in current conditions?

A
  • Could reference commercial real estate agency PS 2016
    Check for conflicts,
  • Anti money laundering checks
  • issue terms of engagement (inc fee and any penalties for noncompeltion)
    -Check to see any disposal will comply with existing legal agreements
  • Inspect- anything that could impact the value?
  • Measure
  • Market appraisal - giving realistic advice of the likely selling price or rent - not redbook val.
  • EPC
  • Floor plans
    -Asbestos risk register
  • Access is compliant with Equality Act 2010
  • Market the property (ONLY WITH CLIENTS approval)
  • Prepare sale or leasing particulars
32
Q

Who monitors estate agency act 1979 and what are the penalties?

A

Trading Standards Office,

Warning Order or Prohibition Order (stops agent practicing)

33
Q

What are the headline rents and yields for offices in Bristol?

A

£38 psf City centre City
£23.50 psf Out of town
Yields
Prime – 4.75 % (Grade A offices in the city)
Secondary – 7% (weaker than 2020) Whilst supply is limited of these types of offices the demand for such within this location (Yate) is likely to be low.

34
Q

How do you carry out customer due diligence checks?

A

I.D, Company name and address, directors, any financial information depending on the instruction.

35
Q

In what circumstances is it not appropriate to use a licence?

A

exclusive possession, for a long period of time,
where 54 act applies,
Street v mountford

36
Q

What do you have to include on marketing particulars?

A

-Location or address
-Fixtures and fittings
-Physical or structural characteristics, form of
construction or condition
-History, including the age, ownership or use of
land,
-Price
-Freehold or leasehold
-Existence and nature of any planning
permission or proposals for development,
construction or change of use
-Leases and licences, liability for service
charges and common repairs

37
Q

What are the Stamp duty thresholds?

A

Up to £150,000 Zero
£150,001 to £250,000) 2%
(the portion above £250,000) 5%

38
Q

Fee difference between sole agency and sole selling rights?

A

A sole agency contract is one where the agent expects to be the only one with the right to sell your property. Sole selling rights is the same as sole agency except you have to pay the estate agent even if you find your own purchaser, such as a friend.

Leasing and Letting (1 decks)

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