Leasing and Letting Flashcards
What is the main legislation in the UK for money laundering?
Money Laundering, Terrorist Financing and transfer of funds regulations 2017 (amended 2019)
Who governs AML regulations?
- Regulations are policed by HMRC
- Suspicious activity must be reported to the National Crime Agency
What are the requirements for an AML check on a private limited company?
I would request an identity document such as:
* Certificate of incorporation
* Full name
* Registered company number
* Registered office
* Names of directors and shareholders with 25% or more holding. For the above people the below is needed:
o passport or a driver’s license
o proof of a residential address (such as a utility bill or bank statement)
o Documents to show the corporate structure and ultimate beneficial owner
o Source of the funds, check to see if they have a UK clearing bank account and a UK solicitor
* Documents must be regulated by the FCA or equivalent
What are the requirements for an AML check on a private individual?
I would request an identity document such as:
o passport or a driver’s license
o proof of a residential address (such as a utility bill or bank statement)
o Copy of bank statement or utility bill
o Source of the funds, check to see if they have a UK clearing bank account and a UK solicitor
Documents must be regulated by the FCA or equivalent
What is the process you would take for an AML check if your buyer was ‘high risk’?
- Is the client on the sanctions list
- Ask for where the source of the funds will be coming from
- Do they have a UK bank account and a UK lawyer?
- Know your client (KYC)
How would you identify a high-risk client?
- Adverse media
- Known associations
How would you assess the level of fee to charge on a leasehold disposal?
- Case by case basis –for a leasehold disposal at my firm depending on the rights and agency basis.
- However typically it would on a sole selling rights basis at 10% of the annual rent exclusive of any incentives.
How would you assess the level of fee to charge on a leasehold acquisition?
- Case by case basis – for example in my Warrington transaction, I agreed a fixed fee as this is standard practice for this particular client.
- Then I had an acquisition fee basis of 10% of the headline rent which also included the acquisition negotiations and agreeing the heads of terms.
What are the two main professional statements for Leasing and Letting?
- RICS Professional Statement -Code for Leasing Business Premises 2020
- RICS UK Commercial Estate Agency Professional Statement 2016
What is the purpose of the RICS Professional Statement -Code for Leasing Business Premises 2020?
o To improve the quality and fairness on lease terms and to promote the issue of comprehensive HOT that should make the legal drafting process more efficient.
What is the Code for Leasing Business Premises 2020?
Aims to improve the quality and fairness of negotiations on lease terms and promotes the use of a new set of heads of terms.
States negotiations must be approached in a constructive and collaborative manner.
States that a party who is not represented by an RICS member must be advised by the other agent about the existence of the code and its recommendation to seek professional advice.
What are the 12 core principles of the RICS UK Commercial Estate Agency Professional Statement 2016?
- Act in an honest, fair, transparent manner
- Carry out work with due skill and ensure all employees have the necessary skills to carry out the work.
- Ensure clients are provided with terms of business that are fair, clear and detail the firms CHP procedures.
- Do the utmost to avoid conflicts of interest.
- Not to discriminate unfairly in any dealings.
- All communications with clients are fair, clear, timely and transparent.
- All advertising and marketing material is honest and truthful.
- Any client money is held separately and is covered by adequate insurance.
- Hold appropriate PI cover or omissions insurance to ensure a customer does not suffer loss through a negligent act.
- Make it clear the identity of your client and ensure all parties are clear of your obligations to each party.
- Give realistic assessments of selling prices/rents/financial costs having regard to market evidence and giving best professional judgement.
- Ensure all meetings, inspections, and viewings are carried out in accordance with clients wished having regard to security and personal safety.
What are the three basis of agency?
- Sole Agency
- Joint Agency
- Multiple Agency
What is your understanding of sole selling rights?
Sole Selling Rights – the fee will be payable even if the party is not found by the agent but by another party including the client (E.g LL).
What is Sole agency rights
only the party that introduced the occupier would receive the fee. If this the landlord no one would receive a fee.
What is Multiple Agency?
much more akin to Residential agency which is where any number of agents can be on a property but only the successful agent gets a fee.
What is Joint Agency?
two or more joint agents that share a fee on a pre-agreed basis. Typical fee split is as follows: (typically 15% split for leasehold or 1.5/2% split for freehold) or sole agency (10% leasehold or 1% freehold).
What is sole agency?
Agent is appointed for a set period of time. A fee is payable if at any time unconditional contracts for the sale of the property exchange. The purchaser must be introduced by the agent during the period of sole agency or had negotiations with during that period. There is no fee if the LL sells the property or finds the tenant themselves. The agent will still be paid a fee if a party that they introduce during the period of appointment exchanges after that period expires. If another agent finds a purchaser or tenant you will still be paid a fee but NOT if the client (LL) finds them themselves.
What makes a good comparable?
- Location, asset class, condition, specification,
What document uses the categories A, B and C for the comparable method?
RICS Professional Standard: Comparable Evidence in Real Estate Valuation, October 2019.
What are categories A, B and C for the comparable method?
- RICS guidance note Comparable Evidence in Real Estate 2019. A hierarchy of evidence which places a level of reliability onto evidence.
Cat A: Direct Comparables –
- completed transactions of near identical properties of which full and accurate information is available for
Cat B: General Market Data
Cat C: Transactional Evidence
When acting for a LL and issuing a proposal, what did you include?
o Demise
o Size
o Lease term
o Rent
o Incentives
o Break option
o Rent review
o Inside or outside 1954 Act
o Service charge (if applicable)
o Estimation of business rates
What impact would a shorter term and more regular break options have on an agreement?
- Regular break option’s increase the flexibility for the parties that have an option to break.
- For the LL’s investment valuation, a shorter term certain provides a lesser investment value compared to a longer straight term lease. This is due to a shorter income stream.
