Leasing and letting Flashcards
What additional forms of security might a landlord request when leasing a property?
Deposit
Guarantee
These are both dependant on market conditions and the strength of a tenant’s covenant
If a deposit is held, what are the rules?
It must be personal to the tenant
Must be legally documented in a rent deposit deed and held in a separate bank account
The interest goes to the tenant
Agreed terms for when the money is released
What might you request from a prospective tenant as a minimum to interpret their covenant strength?
3 years of audited accounts
A credit rating (such as a Dunn & Bradstreet report)
Previous landlord’s reference
What is the profits test?
This is whether the Tenant shows three years net profit at 3 times the annual rent
What is an assignment
An assignment involves a Tenant transferring their lease liabilities to another tenant, subject to Landlord’s approval
What is a sublease?
The re-renting of property by an existing tenant to a new third party for a portion of the tenant’s existing lease contract, but the Head leaseholder remains contractually liable for the property under their existing lease.
What is an alienation clause?
Alienation is the legal term for the ability to assign, sub-let, share or otherwise deal with a tenant’s interest in a lease of property
What is the difference between vacant possession and free of occupation?
Vacant possession is when a property is left free of people, chattels and legal interests, free of occupation may just mean the tenant no longer occupies the premises
What is the structure of the Code for Leasing Business Premises 2020?
- Introduction
- Mandatory Requirements
- Lease negotiations must be approached in a constructive + collaborative manner
- Unrepresented parties must be made aware of the code and recommended to seek professional advice
- Agreed terms must be recorded in written heads of terms stating that they are subject to contract - Lease negotiation best practice
- Advice on lease terms including rent deposits, rent reviews, service charges, repairs and alienation clauses - Appendices
- Model heads of terms template
- A guide for Landlords and Tenants on matters such as HOT’s negotiation, the premises, service charges, rent deposits and insurance, including a checklist for the payment of occupancy costs.
What is included in the misrepresentation Act 1967?
Ensure a disclaimer is included on marketing particulars, stating the particulars have been produced in good faith and believed to be correct.
What do sections 18 & 21 of the Estate Agents Act 1979 set out?
Section 18: Requires clear terms of agency to be agreed with itemised costs or fees agreed in advance, in writing
Section 21: requires declaration of any personal interest in the marketing particulars and terms of engagement, or otherwise to decline to act if it is not possible to do so ethically.
What is included in the Consumer Protection from Unfair Trading Regulations 2008?
This is a document one can refer to in Agency work.
What does the Code for Leasing Business premises 2020 include?
Introduction
Mandatory Requirements
Lease Negotiation best practice
Appendix
What is the case law on serving a break notice?
Riverside Park Vs NHS:
Tenant left some of their fit out and the court regarded that the fit out included removable chattels and therefore deemed in free from occupation as opposed to vacant possession
What were the repairing obligations in the Lease?
FRI. The tenant is required to yield up in line with their repairing obligations. My client had a dilaps liability. Could agree a financial settlement with the Landlord as opposed to refurbishing the space themselves.
What did you include in your straight line analysis?
Rent
Rates
Service Charge
Business rates
Fit out cost
Rent free 1 year rent free per 5 years
VAT (but not on business rates)
Agency boards
What is the profits test?
If the tenant’s annual net profits have been 3 times the annual rent for 3 consecutive years
What were the alienation provisions?
Sub-let (permitted part (1 floor)) of whole or part
Assignment of whole
Surrender
How did you append a value to the F1 space?
There was a good degree of F1 space nearby for comparable evidence
When would you not use zoning?
For a retail warehouse as the square footage is too high and it would therefore zoning would skew the value.
Give an example of some disclaimer clauses
Measurements are an approximate
Images are just indicative
Case Law for margin of error?
John D Wood
Premium for an assignment - How would you document this?
Talk me through your lease acquisition in the West end
2,000 sq ft within 8 min walk of Gresse Street. Organised a viewing tour of 4 properties. Produced a straight line analysis of each to compare each option across a 5 year term.
Talk me through your retail letting in Bath
Gay Street - Calculated the zone A rate using comparables from same street. Rent free was 3 months per 5 years. marketed for 3 months before negotiating terms with the most suitable occupier. Hairdressers
Talk me through your acquisition in Hammersmith
Vets client. self contained office with 10 car parking spaces. There was competition but my client had a strong covenant and was seeking a 20 year lease. I negotiated the lease with a break option at the 10th year, 18 months rent free and a further 9 if the break was not exercised.
Talk me through your disposal in Hoxton
F1 unit. Organised a launch event. Received three offers all at the same terms we had been seeking from schools. Requested 3 years audited accounts. One applicant showed the best profits.
