Leasing and letting

Question 1

How can properties be let?

Answer 1

• open market (by informal tender, subject to contract)
• private treaty

Question 2

What different types of agreement are there to let properties?

Answer 2

Lease (exclusive possession)
Licence (permission to use)
Tenancy at will (unknown duration, in advance of lease)
Agreement for lease (lease subject to conditions)

Question 3

What is the difference between a lease and a licence?

Answer 3

Lease grants exclusive possession of a demise for a consideration.
Licence gives permission to use, otherwise trespass.

LTA54 defines business tenancy
6 month fixed term or in occupation for over 12 months

Question 4

How are social housing allocations governed?

Answer 4

Housing Act 1996 (part 6 allocations)
- LAs required to set up and maintain allocations scheme under part 6
- can contract out most of their allocation functions to other orgs such as private registered provider of social housing (PRPSH)
- LAs can maintain joint housing registers to PRPSHs called common registers
- most PRPSH tenancies that started after 15th Jan 1989 are assured or assured shorthold tenancies (before = secure tenancies)
- starter tenancies are periodic assured tenancies granted by PRPSHs to new tenants for 12-18 months; if trial successful, usually entitled to assured tenancy

Question 5

What is the difference between occupational leases and long leasehold interests? Give an example of a long leasehold interest you have managed?

Answer 5

Occupation lease = lease occupied by tenant for business

Long leasehold interest = 99/125/250/999 years, investment or development purposes
Example: Lakes Medical Centre owned by Blackrock,
Wilburn St Basin flats owned by development vehicle

Question 6

What are robust tenant selection procedures to assess covenant strength?

Answer 6

Anti-bribery / AML checks

Due diligence (simplified/standard/enhanced)
Identify tenant, beneficial owner
Assess purpose/nature of transaction, source of funds
risk assessment (inc reliance)
identify red flags
Companies House

Companies House info, accounts
3 years’ audited accounts
Rule of thumb turnover 3 x rent
Google! website
trade/LL references
business plan

updated SCC tenant application form
created matrix to evaluate bids (70% financial offer, 30% social value)

Question 7

How do market trends affect value? How did covid affect industrial demand? Do you have another example?

Answer 7

Supply/demand

Socioeconomic trends e.g. WFH/online shopping

Covid increased demand for industrial units as more people ordering items, logistics firms needed more space, move away from retail/office

Covid increased demand for suburban resi, gardens, homes with offices etc., less constrained by commuting

Question 8

How do you adhere to “Code for leasing business premises, 2020”?

Answer 8

PS, 1st ed

Negotiations & HoTs:
- constructive and collaborative manner
- negotiate letting terms with fair balance with regard to respective commercial interests
- party unrepresented must make aware existence of Code and recommend pro advice
- HoTs subject to contract, inc:
ID, extent of premises
rights to be granted e.g. parking/telecom access
length of term, if contracted out
options for renewal, breaks
guarantor/rent deposit
rent amount, frequency of payment, if inc business rates
VAT
rent-free/other incentive
rent reviews frequency, basis
service charge/insurance liabilities
rights to assign, sublet, charge, share premises
repairs
initial permitted use, if changes of use allowed
rights to make alterations, reinstatement obligations
initial alterations or fit-out (if known)
conditions of the letting e.g. subject to surveys/board approval/planning permission
- lease renewal HoTs must comply except from any terms stated to follow T’s existing lease with reasonable modernisation

Premises
- inc plan
- fixtures
- rights necessary for use e.g. access/cabling

Term, renewal, break
- inc if excluded LTA54
- leases should require LL to repay overpaid after break

Rent deposits, guarantees
- deposit amount, time held, how returned
- whether security for rent or all T obligations
- in line with “Client money handling”

Rent, review
- VAT
- either party to start RR process, time not of essence

Service charge, other costs
- indicate range of main services
- provide estimates service charge and insurance
- disclose known irregular events impact on SC
- in line with “S/C in commercial property”

Alienation:
- allow T to sublet/assign whole subject to consent (not to be unreasonably withheld or delayed)
- allow corporate tenants to share premises with other companies in same group
- allow T’s to grant a bank a charge without consent
- state if LL requires assigning T to provide AGA;
any existing G is to guarantee the assigning T complies with AGA and/or the assignee is to procure a new G and/or rent deposit

Repairs:
- appropriate to length of term, condition, financial terms
- if limited to initial condition, agree SoC

Use, alterations:
- except where HoTs state reinstatement, lease should allow T to leave alterations unless reasonable to require removal
- LL’s should have no more control than necessary to protect value of their property
- for lease of entire bdg, LL should not require consent for internal non-structural alterations (need details)
- for multi-let bdgs, internal non-structural alterations consent not to be unreasonably withheld or delayed

Insurance, damage:
- LL to provide details of insurance on request
- either party to terminate unless LL agrees to rebuild at own cost (uninsured risk)/damage not reinstated within set period i.e. rent suspension period
- rent suspension to apply if premises damaged by insured risk or uninsured risk, unless act of T

Question 9

How do your negotiations and HoTs adhere to the “Code for leasing business premises, 2020”?

Answer 9

PS, 1st ed

Negotiations & HoTs:
- constructive and collaborative manner
- negotiate letting terms with fair balance with regard to respective commercial interests
- party unrepresented must make aware existence of Code and recommend pro advice
- HoTs subject to contract, inc:
ID, extent of premises
rights to be granted e.g. parking/telecom access
length of term, if contracted out
options for renewal, breaks
guarantor/rent deposit
rent amount, frequency of payment, if inc business rates
VAT
rent-free/other incentive
rent reviews frequency, basis
service charge/insurance liabilities
rights to assign, sublet, charge, share premises
repairs
initial permitted use, if changes of use allowed
rights to make alterations, reinstatement obligations
initial alterations or fit-out (if known)
conditions of the letting e.g. subject to surveys/board approval/planning permission
- lease renewal HoTs must comply except from any terms stated to follow T’s existing lease with reasonable modernisation

Question 10

How do you dhere to the principles of “Real estate management, 2016”

Answer 10

PS, 3rd ed

• conduct business honest, fair, transparent, pro
• carry out work with due skill, care diligence
• not to discriminate unfairly in any dealing
• all comms fair, clear, timely, transparent
• all marketing material honest, decent, truthful
• give realistic assessment of likely price/cost of occupancy/financial outcome of any issues, using best pro judgement
• all meetings, inspections, viewings in acc with client’s lawful and reasonable wishes, having due regard for safety of all parties

Question 11

How do you act fairly and with integrity when letting properties?

Answer 11

“Code for leasing business premises, 2020”
PS, 1st ed
Negotiations & HoTs:
- constructive and collaborative manner
- negotiate letting terms with fair balance with regard to respective commercial interests
- party unrepresented must make aware existence of Code and recommend pro advice

“Real estate management, 2016”
PS, 3rd ed
- conduct business honest, fair, transparent, pro
- carry out work with due skill, care diligence
- not to discriminate unfairly in any dealing
- all comms fair, clear, timely, transparent
- all marketing material honest, decent, truthful
- give realistic assessment of likely price/cost of occupancy/financial outcome of any issues, using best pro judgement
- all meetings, inspections, viewings in acc with client’s lawful and reasonable wishes, having due regard for safety of all parties

Question 12

How do you make your HoTs clear when letting properties?

Answer 12

“Code for leasing business premises, 2020”
PS, 1st ed

• HoTs subject to contract, inc:
  ID, extent of premises
  rights to be granted e.g. parking/telecom access
  length of term, if contracted out
  options for renewal, breaks
  guarantor/rent deposit
  rent amount, frequency of payment, if inc business rates
  VAT
  rent-free/other incentive
  rent reviews frequency, basis
  service charge/insurance liabilities
  rights to assign, sublet, charge, share premises
  repairs
  initial permitted use, if changes of use allowed
  rights to make alterations, reinstatement obligations
  initial alterations or fit-out (if known)
  conditions of the letting e.g. subject to surveys/board approval/planning permission

Question 13

How do you adhere to “Real estate agency and brokerage, 2016”?

Answer 13

PS, 3rd ed

Principles:
- honesty, diligence, don’t discriminate, comms timely, marketing truthful
- CoI, ToE, PII, CHP
- client money held separately, realistic assessment of rent/costs using pro opinion
- make scope of services clear to all; inspections etc. in line with client wishes with H&S

General:
- AML, client money, insurance, complaints
- confidentiality: maintain for all matters become acquainted with during instruction
- data protection of personal info
- H&S / personal safety: risk assessments

Securing instructions:
- CoI check, AML check, check rights to dispose
- ToE, fees e.g. dual fee liability, penalties, cooling off
- sub-agents, obtain client authorisation

Marketing:
- property price/rent, realistic (likely lease terms, comps)
- inspect property, measure
- report clearly, keep records
- method of letting/sale, obtain legal/tax advice if needed
- agree marketing strategy, review regularly
- provide docs e.g. EPCs
- particulars describe property accurately, disclose material facts e.g. contamination
- property clearance if needed, appropriate waste disposal
- to let board
- viewings: info on parties, key records, leave secure, feedback
- Qs responses, advise all relevant issues, keep client informed

Acting for seller - agreeing lease:
- source and availability of funds
- keep records of offers
- confirm offers in writing asap
- details given should be sufficient for client to make informed judgement, each offer strength and weakness
- communicate with buyer: confirm notified client of offer stating amount and conditions, if other offers made advise party (don’t disclose amount unless client and bidder consent, if disclose should disclose to all interested parties)
- keep client informed of negotiations
- make sure contracts drawn up and agreed, take property off market
- when client agrees to accept offer, confirm terms in writing with both parties and legal advisors
- maintain regular contact with both parties

Acting for buyer:
- property search: understand reasons, use local knowledge and networks
- communicate with client: provide updates
- when client wants to make offer, contact seller and confirm offer and any conditions in reasonable time
- only release info re client’s circumstances with consent and only to assist in successful negotiations
- physical problems: inform client asap
- CoI: if acting for no, of buyers seeking similar properties, have disclosed and received agreement to continue, ensure acting in best interests of each client and actions don’t prejudice another / take timely actions in acc with sequence of receipt of requests from clients
- progressing purchases: send acceptance of offer to client, with consent confirm details of client, progress

Ending the instruction:
- written confirmation with date of termination and details of fees
- invoice: submit clearly, setting out all costs, send within reasonable time of instructions end (termination fee should be in ToE and amount)
- final receipt sent to client when invoice paid
- if completion does not take place, if negotiated a transaction may still be entitled to fee/commission, check ToE
- recovering outstanding debts: direct deduction from client account/from sale proceeds by a lawyer easiest way but must be with consent; send reminder and state if intend to charge interest and give reasonable period to pay; follow up with phonecall and agreed payment date; consider legal advice or negotiation e.g. payment plan/ADR

Question 14

How do you adhere to “UK commercial real estate agency, 2016”? (Purple Book)

Answer 14

PS, 1st ed

Particulars:
- location, premises, measurement
- freehold/leasehold title (verify)
- services, facilities, amenities / proximity to
- fitness for purpose
- physical problems e.g. contaminated land, at risk of flooding, may inc asbestos
- history: age/ownership, date of alterations
- length of time available
- price
- for leases: liability for service charge, common repairs
- business rates
- planning permission/proposals for dev/change of use
- statutory restrictions on use
- restrictive covenants, easements, RoW

Methods of sale:
- recommend method, alternatives, risks, pros cons
- costs for both buyer and seller e.g. stamp duty
- by private treaty
- by tender
formal (binding)
informal (subject to contract)
- by auction (sale)

Question 15

How would you adhere to “UK residential real estate agency, 2017”?

Answer 15

PS, 6th ed

Part 1 – principals that shape culture of fairness and transparency
Part 2 – develops these principles for UK market

The Real Estate Agency Code

Part 1
Principles

Part 2
1. Standards and ethics
Must comply with:
- Real estate management (3rd ed) PS
- Real estate agency and brokerage (3rd ed) PS
- Conflicts of interest (1st ed) PS

Bribery Act 2010
Equality Act 2010
Estates Agent Act 1979
Consumer Protection from Unfair Trading Regs 2008 (when dealing with consumers)
Business Protection from Misleading Marketing Regs 2008 (when dealing with businesses)
Data Protection Act 1998
RICS Rules of Conduct
Before securing instructions
Marketing the property (acting for seller/landlord)
Implementing the sale or lease (acting for the seller)
Acting for the buyer
Acting for the landlord: letting the property
Ending the instruction

Question 16

What are the requirements around Councils and best value?

Answer 16

Local Government Act s123
- Local authorities are given powers under the Local Government Act 1972 to dispose of land in any manner they wish, including sale of their freehold interest, granting a lease or assigning any unexpired term on a lease, and the granting of easements. The only constraint is that a disposal must be for the best consideration reasonably obtainable (except in the case of short tenancies), unless the Secretary of State consents to the disposal

R (Faraday Developments Ltd) v West Berkshire Council, 2016 (social value)
I. The Court is not entitled to substitute its own view on the facts and merits for that of the local authority, the Court may interfere only if there was no material upon which the authority’s decision could have been reached, or if in reaching that decision, the authority disregarded matters it ought to have taken into consideration, or if it took into account matters which were irrelevant, or if its decision was irrational;
II. The Court is likely to find a breach of Section 123(2) only if the local authority
(a) has failed to take proper advice, or
(b) failed to follow proper advice for reasons which cannot be justified, or
(c) although following advice, it followed advice which was so plainly erroneous that in accepting it the authority must have known, or at least ought to have known, that it was acting unreasonably;
III. Section 123(2) does not mandate the authority to have regard to any particular
factors;
IV. There is no need for the authority’s decision-making process to refer to Section
123(2) explicitly, provided that the Court is able to see that the duty has in substance been performed;
V. The obligation under Section 123 is not to conduct a particular process, but to
achieve a particular outcome, (albeit process may have an important, or even
determinative, evidential role in deciding whether the authority has complied with Section 123(2));
VI. “Consideration” in Section 123(2) is confined to those elements of a
transaction which are of commercial or monetary value, and therefore the Court will quash a decision to sell property where the authority has taken into account an irrelevant factor, (e.g. job creation), when assessing whether it is obtaining the best “consideration” reasonably obtainable;
VII. The deliverability or credibility of a bid, or the care with which it has been prepared, are commercial factors which are relevant to an assessment of whether the “consideration” offered is the best reasonably obtainable: the highest offer on the table need not represent the best “consideration”, because an authority may conclude that “a bird in the hand is worth two in the bush”;
VIII. In order to discharge the duty under Section 123(2) there is no absolute
requirement to market the land being disposed of, or to obtain an independent
valuation.

Conditions attached to the disposal which may have a quantifiable commercial or monetary worth could include:-
o Covenants requiring the land to be used for a particular purpose;
o A pre-emption clause giving the vendor the option to buy the land back on specified terms if the purchaser wishes to sell it; or,
o A provision in the contract enabling the authority to recover land on the terms reflecting the consideration for which it was disposed of, if the land is no longer being used for the purposes for which it was disposed of at less than best consideration.

Conditions or benefits arising which cannot be considered when calculating best consideration, include those which do not have a direct commercial or monetary value to the Council such as:-
o Job creation;
o Social value – ie improved visitor numbers to a particular area;
o Using the land for a particular desirable purpose
But, these conditions can be taken into account if a disposal at less than best consideration is proposed as they are “social, economic or environmental benefits” which may arise from the disposal.

What are the exceptions to the obligation to obtain best value?
- Short tenancies (terms/ assignments of 7 years or less);
- with the consent of the SoS;
- The LGA 1972: General Disposal Consent*
(purpose for which the land is to be disposed is likely to contribute to the
achievement of any one or more of: promotion/ improvement of economic well-being; promotion/ improvement of social well-being; promotion/ improvement of environmental well-being; and the ‘undervalue’ is 2mill or less.)
Undervalue? The difference between the unrestricted value of the interest to be disposed of and the consideration accepted

*It is recognised that there may be circumstances where a Council considers it appropriate to dispose of assets at an undervalue (i.e. less than the best consideration that can reasonably obtained). Councils should not divest themselves of valuable public assets unless they are satisfied that the circumstances warrant such action.
A general disposal consent has therefore been issued to give local authorities autonomy to carry out their statutory duties and functions, and to fulfil such other objectives as they consider to be necessary or desirable. However, when disposing of land at an undervalue,
Council’s must remain aware of the need to fulfil their fiduciary duty in a way which is accountable to local people.
A Circular issued in 2003 gives authorities consent to a disposal of land at an undervalue provided that:-
a) a local authority considers that the disposal is likely to contribute to the
achievement of:
i) the promotion or improvement of economic well-being;
ii) the promotion or improvement of social well-being;
iii) the promotion or improvement of environmental well-being; and
b) the best price reasonably obtainable for the property does not exceed £2,000,000
(two million pounds).

UK state aid rules (post-Brexit)

Public open space, must be advertised for 2 weeks s123(2A)

Question 17

How do you deal with sub-lettings?

Answer 17

Agree HoTs in line with head lease
Obtain head LL consent

Question 18

How do you identify Japanese Knotweed? What is RICS guidance on JK?

Answer 18

Knew typical location: adjacent footpath and river, playing fields open space
Have seen images of appearance
(purple/green coloured hollowed stem and green leaves)
IMPROVE DESCRIPTION

“Japanese knotweed and residential property, 2022”
PS (pro standard), 1st ed (Jan 2022, effective March 22)
- JK long-lived, hard-to-kill plant which, left unmanaged, can rapidly colonise and dominate green areas and affect landscaped areas and disrupt lightweight structures and garden walls
- adverse public perception out of proportion to problem
- GN to provide clarity and help rebalance perceptions
- JK “controlled waste” Environmental Protection Act 1990
- weed management generally for regular maintenance rather than permanent eradication
- JK crossing boundaries can result in expensive legal action fuelled by “no win, no fee”, can be “nuisance”
- surveyors to report within 3m of boundary

Question 19

Tell me about key points of the Consumer Protection / Business Protection Regulations.

Answer 19

In 2008, regulations changed the traditional relationship between agents and their seller client. Find out how to comply.
The Office of Fair Trading provides guidance on how to comply with the Consumer Protection from Unfair Trading Regulations (CPRs) and Business Protection from Misleading Marketing Regulations (BPRs) in relation to property sales.
Agents will need to examine their processes, as the implications of the CPRs and BPRs mark a significant departure from previous ways of working. Agents can no longer rely upon compliance with the Property Misdescriptions Act 1991 or caveat emptor to provide them with protection from prosecution. The Office of Fair Trading guidance introduces concepts such as ‘average consumer’, ‘the transactional decision’ and ‘material information’.
If members are found not to have complied with the CPRs or BPRs they may face civil and/or criminal action.

The Business Protection from Misleading Marketing Regulations 2008 (BPRs) prohibit misleading business-to-business advertising and impose further restrictions on how businesses compare their products to rival products from other companies.

The Consumer Protection from Unfair Trading Regulations 2008 (known as the CPRs) control unfair practices used by traders when dealing with consumers, and create criminal offences for traders that breach them.
The Regulations prohibit 31 specific practices that are always considered to be unfair, and create further offences for aggressive practices. They prohibit ‘misleading actions’ and ‘misleading omissions’ that cause, or are likely to cause, the average consumer to take a ‘transactional decision’ they would not have taken otherwise.
Effectively the CPRs prohibit trading practices that are unfair to consumers. There are four different types of practices to consider:
- practices prohibited in all circumstances
- misleading actions and omissions
- aggressive practices
- general duty not to trade unfairly
The Regulations recognise that different types of consumers may react to a practice in different ways, and identify three different types of consumer:
- average consumer (reasonably well informed, reasonably observant and circumspect)
- targeted consumer (where the practice is directed to a particular group of consumers)
- vulnerable consumer (where a group of consumers is particularly vulnerable to the practice or product because of their mental or physical disability, or age)
What remedies are available to a consumer?
There are three main remedies available to a consumer: the right to unwind, the right to a discount, and the right to damages.

Question 20

How does the Misrepresentation Act 1967 relate to your agency practice?
What does the Unfair Contract Terms Act 1977 say?

Answer 20

Misrepresentations Act 1967
The Misrepresentation Act exists to protect consumers from false or fraudulent claims that induce you into buying something or entering into a contract. It also allows you to claim damages.
Types of misrepresentation
A misrepresentation is a statement of fact (not opinion) which is made by a seller before a contract is made.
If you relied on that statement when deciding whether or not to go ahead with your purchase, and this then turns out to be wrong, you may be able to claim compensation.
There are three types of misrepresentation and your path to redress will depend upon whether the false statement was made fraudulently, negligently, or innocently.
The general remedy for misrepresentation is cancelling or unwinding the contract so that both parties are put back in the position they were in before they made the contract. Damages will also be available in some circumstances, either in addition to or as an alternative to unwinding the contract.
There is a negligent misrepresentation under the Misrepresentation Act 1967 where a statement is made carelessly or without reasonable grounds for believing its truth.
When a claim for negligent misrepresentation under the Act is based on negligence, the law states that the person who made the misrepresentation has to disprove the negligence.
In other words, they must prove that they had reasonable grounds to believe the statement, and that they believed the facts represented were true.
A fraudulent misrepresentation occurs when someone makes a statement that –
- they know is untrue, or,
- they make without believing it is true, or,
- they make recklessly (i.e. that person does not care about whether the statement is true or not).
This is where a person making a misrepresentation, when entering into a contract, had reasonable grounds for believing that his or her false statement was true.
In other words, it is made entirely without fault. This type of misrepresentation primarily allows for the contract to be cancelled.
However the court has discretion to award damages instead of allowing you to end the contract if it deems it appropriate. It cannot award both.

The Unfair Contract Terms Act (UCTA) 1977 regulates contracts by limiting the extent to which one party can avoid liability through use of exclusion clauses such as disclaimers.
Depending on the obligation that the contract excludes, and whether the other party to the contract is a business or a consumer, the Act renders the exclusion term void, or only enforceable if ‘reasonable’.
It renders ineffective terms that:
- limit liability for death or personal injury as a result of negligence
And subjects to a test of reasonableness, terms that:
- exclude liability for negligence
- exclude liability for breach of contract or a substantially different performance of the contract
- bind a consumer to indemnify a third party (a party not otherwise subject to the contract)
- exclude liability for misrepresentation
Innocent misrepresentation:

Question 21

How does VAT affect lettings?
What type of operator might be affected by a rent which is subject to VAT?

Answer 21

Land and property (VAT Notice 742)
Find out when transactions involving land and buildings are exempt from VAT.
You might also need to check Opting to tax land and buildings (VAT Notice 742A).

Option to tax
There is an opportunity to “opt to tax” land and buildings by formally waiving the exemption from VAT that applies to the letting of land and buildings. This planning measure can help recover additional VAT incurred on costs by converting exempt lettings into standard rated supplies. Specialist advice should be sought as the election lasts for at least 20 years and is not necessarily beneficial, as VAT must then be charged on rental income.

Question 22

Explain what you understand by the planning use classes.

Answer 22

The Town and Country Planning (Use Classes) Order 1987
The current Use Classes were last updated on 1 September 2020.

Class B - B2 general ind, B8 storage or distribution

Class C - hotels, resi institutions, dwellinghouses, HMOs

Class E - Commercial, Business and Service

Class F - Local Community and Learning

Sui Generis

Question 23

What is the profits test and how would you apply it?

Answer 23

A typical profits test would be for the tenant to provide 3 years’ audited accounts showing a net profit of, say, 3 times the annual rent.

Question 24

In a new leasing deal, how might you include a pandemic rent suspension clause?
What issues might you face when agreeing this type of lease term?

Question 25

When would you return a deposit?

Answer 25

Expiry

Early termination

Assignment

Tenant demonstrates sufficient financial standing:
Examples of this trigger are the “net profit” test where the net profits of the tenant are shown to equal or exceed a multiple (usually 3 times) of the rents reserved by the lease for up to 3 years and the “net assets” test where the net assets of the tenant are equal to a multiple (often 5 times) of the rents reserved by the lease.

Question 26

Does interest on a tenant deposit accrue for the tenant or the landlord?

Answer 26

The Lease Code 2020 also advises that rent deposit agreements should provide that landlords will hold rent deposit funds in bank accounts designated for holding only rent deposits and that any bank interest will accrue for the tenant.

RESI???

Question 27

What are the differences between CICs, CIOs, registered charities, unincorporated associations, limited companies when letting to not-for-profits? What information would you research on the organisation?

Answer 27

Unincorporated association – constitution

Trust – constitution

Registered Charity – charity commission website, still need to be incorporated

CIO - charity commission website, governed by Charity Law, liability of trustees is limited

CLG – charity commission website and Companies House, Charity Law and Company Law, Company Limited by Guarantee, private company that reinvests profits back into the co
(has its own members but does not have shareholders or shares – because of this they can apply for charitable status), activities governed by articles of association registered at CH

CBS – Co-operative or Community Benefit Society, orgs that carry out business either as a co-operative or for the benefit of the community
They are more expensive to set up than a charity and are generally less common as a legal form because their governance structure is more complex.
There are two different types of CBS. The more common type is a co-operative society, which is run for the mutual benefit of its members. In a co-operative, any surplus is still ploughed back into the organisation. The difference is that co-operatives are owned and run by the people who work there, its customers, or by a group of businesses that have come together to form a consortia under the co-operative model.
The other type of CBS is a community benefit society run solely for the benefit of the community, although there is much overlap between the two.

CIC - Community Interest Company, designed for social enterprises that want to use their profits and assets for the public good. CICs are intended to be easy to set up, with all the flexibility and certainty of the company form, but with some special features to ensure they are working for the benefit of the community. CICs are formed for a wide range of purposes and vary in size accordingly. CICs cannot be a charity and governance arrangements can vary greatly.
CICs must register with Companies House and also satisfy a Community Interest Test to show the primary purpose is to provide benefits to the community, rather than to the individuals, who own, run or work in them. Each year CICs are required to send a copy of their annual accounts to Companies House (like other companies), but also must produce an annual Community Interest Report as well, outlining their activities for the community and how they are involving their stakeholders in their activities.
In addition, assets and profits have to be used for the community interest so there will be a limit on the levels of distribution of profits or assets that may be made to members – this is known as the asset lock.

Question 28

What are the role of trustees in lettings to not-for-profits?

Question 29

Do you have to have a guide price in marketing particulars?

Question 30

If letting/selling by informal tender, can you ask for best and final offers after shortlisting?

Question 31

Does the Estate Agents Act apply to lettings?

Question 32

How are leases dealt with in line with IFRS16?

Question 33

What are rules around to let boards?

Answer 33

Town & Country Planning (Control of Advertising) Regs 2007

• How many Estate Agent boards are permitted to be displayed on a property?
  The law states that not more than one advertisement, consisting of a single board or two joined boards is permitted. If more than one board is displayed then the first board to be displayed will be deemed as the lawful advertisement.
• What can be displayed on a Estate Agent Board?
  No advertisement may be displayed indicating that the land or premises has been sold or let, unless an additional advertisement or a statement that a sale or let has been agreed or is subject to contract.
• What size should the advertisement be?
  Adverts relating to residential use or development are permitted to be 0.5 square metres, or if two joined up boards then an aggregate of 2.3 square metres is permitted.
• How long can the advertisement be displayed
  The advertisement must be removed within fourteen days after completion of a sale or the grant of tenancy.
• How far can the advertisement be projected from the building?
  The maximum projection from a building face is 1 metre
• How high should the advertisement be?
  No part of the advertisement should be higher above the ground than 4.6 Metres, or 3.6 metres in an area of special control
• Can the advertisement be illuminated?
  Estate Agent advertisements are not permitted to be illuminated

to let boards on listed buildings or in conservation area need planning permission (listed building consent)

Question 34

What are typical letting fees?

Answer 34

10%-15% of 1st year’s rent

10% sole agent
7.5% x 2 joint agents
5% x 3 multi agents (3)