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RICS APC > Leasing and Letting > Flashcards

Leasing and Letting Flashcards

1
Q

What Uk Legislation is related to Leasing & Letting

A
  • Estate Agents Act 1979
  • Mispresentation Act 1967
  • Consumer Protection from Unfair Trading Regulations 2008
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2
Q

What does the Estate Agents Act 1979 cover?

7 Key principles

A
  1. Clarity as to the terms of agency
  2. Honesty and accuracy
  3. Agreement and liability of costs
  4. Openness
  5. Absence of Discrimination
  6. Legal obligations (tell about offers)
  7. Keep clients money separate
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3
Q

What RICS Guidance relates to Leasing and Letting?

A
  • RICS UK Professional Statement on Commercial Estate Agency 1st 2016
  • RICS Professional Statement : Code of Leasing Business Premises 1st Edition 2020
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4
Q

What are the contents of RICS Professional Statement: Code of Leasing Business Premises 2020

A
  • Part 1: Introduction
  • Part 2: Mandatory Requirements (HOT’s
  • Part 3: Lease negotiation best practice (Terms, deposit, rent reviews, services charges)
  • Part 4: Appendicies
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5
Q

What do you include in Heads of Terms for a lease?

A

1.Date
2. Property
3. Landlord
4. Tenant
5. Agent/solicitors details
6. Rent
7. Term
8. Incentives
9. Rent Review
10. Breaks
11. Repairing
12. Alterations
13. Alienation
14. Conditions

Clause on not legally biending until missves have concluded

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6
Q

What is within Terms of Engagement for Agency Work?

P&S as well

A

1 Agency Rights (Sole, joint)
2. Contact details
3. Address of Property
4. Scope of Work
5. Fee Basis
6. PII
7. Marketing Costs
8. Terms of contract
9. CHP
10. AML
11. Timescales
12. Confirmation no conflicts

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7
Q

What are HoT’s?

P&S as well

A
  • Outlines key points of lease or sale to be negotiated or agreed between LL and T or Buyer and Seller prior to formal legal missives
  • Not legally binding
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8
Q

What things do you considering when assessing Covenant strength?

A
  • Bank account info
  • Previous Landlord reference
  • Credit Check (Dun & Bradstreet)
  • Past 3 years audited accounts
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9
Q

If a prospective tenant has a weak covenant what would you consider?

A
  • Rental Deposits
  • Guarantee
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10
Q

What are some Leasing Issues?

A
  1. Major Lease terms
  • Length
    -Break Clauses
  • Alienation
  • Repairing Obligations
  1. Break Clauses
  • Timing
  • Penalty if lease terminated
  • Notice period
  1. Pre letting
  • If market shortage
  • Good for tenant to carry out bespoke fit out
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11
Q

What are the 4 elements that make up a lease?

EPDR

A
  1. Exclusive Occupation
  2. Payment of Rent
  3. Duration of specified term
  4. Registered as Deed (if more than 3 years)
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12
Q

What is a license?

A
  • Right to enter a property
  • Personal arrangement between licensor and licensee
  • Licensee requires no interest on property
  • Can be cancelled anytime
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13
Q

What’s the difference between Lease and License?

A
  1. Lease:
  • Cant be terminated until expiry
  • Rent must be received
  • Terms
  • Sublet, Assign
  • Runs year by year
  1. Licence
  • Cancelled anytime
  • Permission only to use land
  • reapply
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14
Q

What are the 12 core principles of the RICS Professional Statement on Commercial Estate Agency 2016?

P&S as well

A
  1. Act in an Honest, Fair & Transparent & professional manner
  2. Due Skill, Care, Diligence
  3. Fair and Clear terms of business
  4. Avoid Conflicts
  5. Do not Discriminate
  6. Clear communication with clients
  7. Honest Marketing material
  8. Realistic Advice
  9. Due regard for Security and Safety
  10. Appropriate PI Cover
  11. Clients money held separately
  12. Clear Identity of client
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15
Q

What Lease terms are favourable for a Landlord?

A
  • High Rent (achieve quoting rent)
  • Security (Good tenant covenant, deposit)
  • Minimum Incentives
  • Longer Term
  • Rent Reviews (higher of or fixed)
  • No service charge cap
  • FRI
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16
Q

What terms are favourable when acting for a Tenant?

A
  • Lower rental (negotiated below quoting)
  • Avoiding deposit if possible
  • Cap on service charge
  • IRI lease
  • Tenant only break option
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17
Q

Tell me when you understand a lease has concluded?

A
  • Exchange of Formal letters (missives)
  • Between Solicitors
  • Offers & Final acceptance letter
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18
Q

What is a Schedule of Condition?

A
  • Detailed recording a property’s condition prior to tenant occupation
  • Prior to entry but close to start of lease
19
Q

Why might you use a Schedule of Condition?

A
  • Used to limit a tenants repair obligation
20
Q

What is a FRI lease?

A
  • Full Repairing and Insuring Lease
  • Tenant has responsibility for all internal and external maintenance, decoration and repair
  • More valuable for LL’s due to no liability and costs recoverable through dilapidations if tenant doesn’t comply with obligations
21
Q

What is an IRI Lease?

A
  • Internal Repairing and Insuring Lease
  • Tenant liability narrower
  • Internal parts only
22
Q

What is Sub Letting?

A
  • Original tenant passes the right to exclusive occupation but remains head tenant
  • Leaving Tenant still responsible for lease obligations, rent, repair etc
23
Q

What is an Assignation?

A
  • Tenant assigns in full the lease obligations to new tenant
  • Old tenant no longer bound to lease conditions
  • Not binding until LL approves
24
Q

What guidance is relevant to Leasing and Letting?

P&S as well

A
  • Estate Agent Act 1979
  • RICS Professional Statement on Commercial Real Estate Agency 2016
  • RICS Professional Statement:
    Code of Leasing Business Premises 2020
  • Consumer Protection Against Unfair Trading Regs 2008
  • Misrepresentation Act 1967
  • Business Protection Against Misleading Marketing regs 2008
25
Q

Market Street

How did you determine the market rent for the retail unit, and what factors were taken into consideration?

A
  • Comparable evidence of similar properties in terms of:
  • Location
  • Size
  • Use
  • Used SQFT to ensure rent
26
Q

Market Street

What lease term was agreed?

A
  • 10 years with a break at 5
  • Mutual only break which was standard and LL was happy
27
Q

Market Street

What was the rent free period you negotiated?

A
  • 5 months rent free (suggested 3 first)
  • LL happy due to previous tenant trashing the unit and leaving it in bad condition
28
Q

Market Street

What platforms did you circulate the marketing details on?

A
  • G+S website
  • Zoopla
  • Novaloca
  • LinkedIn
29
Q

Market Street

How did you measure this Property?

A

NIA taking appropriate measurements needed to calculate ITZA (Zoning)

30
Q

Market Street

Did you zone this property?

A
  • Yes, for ITZA
  • ITZA 870 sqft making Zone A: £21 per sqft
31
Q

Market Street

How did you communicate with Tenant and Solicitor?

A
  • Phone call
  • Email, this gave paper trail
32
Q

Market Street

How did you advise your client on the rent free period?

A
  • Tenant asked for 6 months
  • I put this to the client and suggested to negotiate given the internal condition
  • I said that a higher rent free in this case may be beneficial given the condition and the tenant being of good quality and have met the other terms of Rent and term
33
Q

Dalziel Place

What kind of marketing details did you create and issue?

A
  • Brochure
  • Put on G+S website
  • Novaloca
  • Shared on LinkedIn
34
Q

Dalziel Place

What was your responsibility in conducting viewings with prospective tenants?

A
  • Firstly dealing with enquires that came in
  • Speaking to or emailing prospective tenants on suitability of unit
  • Arrange dates and times of viewings
  • Ensuring I arrived promptly to open up
  • Follow up email after viewing
35
Q

Dalziel Place

What were the terms of the two offers that were substantially ahead of the third?

A
  1. Offer 1: £13,000
    3 month deposit
    15yr Break 5yr
    4 months Rent free
    New business
  2. Offer 2: £14,000
    6 month deposit
    15yr Break 5yr
    0 months rent free
    New business
36
Q

Dalziel Place

What was the recommendation to the client?

A
  • Recommendation was to accept the offer at the asking rent
  • Same term but this offer had no months rent free and 6 month deposit so a stronger offer given both new business’s
37
Q

You mention the Estate Agents Act 1979, is there any other legislation in respect of marketing a property?

A
  • Misrepresentation Act 1967
  • Consumer Protection from Unfair Trading Regulations 2008
  • Control of Asbestos 2012
  • Data Protection Act 2018
38
Q

Market Street/Dalziel Place

Can you tell me about any other incentives (in addition to rent free periods) you’ve used to secure a tenant?

A
  • Building repairs
  • Step rental
  • Cap on repair liability
  • Tenant only break option
39
Q

Market Street

You secured a letting with a break clause at year 5 in Haddington – can you outline typical features of a break clause and what a tenant would typically have to do to instigate it?

A
  • Can be tenant only
  • Can be mutual
  • Usually at each 5th year
  • Notice period of 6-12 months
40
Q

Is there anything else you could have asked other than a deposit for security for your client?

A
  • Personal Guarantees
  • References from other landlords
41
Q

What main points of a lease can effect the value?

A
  • Remaining lease length
  • Break options
  • User Clause
  • Security of tenure
  • Repair obligations
42
Q

What is an Alienation clause?

A
  • Allows tenant to sub let or assign their lease
43
Q

What is Tacit Relocation?

A
  • At expiry of lease if no party has taken action for new terms, lease will continue for another year
  • 40 days notice if wanting to terminate
  • Scots law and being reviewed to be renamed to Automatic Continuation
44
Q

Can you tell me what Headline Rent is?

A
  • Gross Rent
  • Without incentives

RICS APC (24 decks)

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