Leasing And Letting Flashcards
Would you have to undertake AML checks on joint/multiple agents?
Yes
What does PIP stand for?
Perfect Information Property
What is an agreement for lease?
Lease in a pre-agreed form
- to be executed once the Landlord or Developer has fulfilled an obligation OR any conditionality has been satisfied
What would you include in HOTs for agreement for lease to mitigate risk to client?
Long-stop date
What are the key principles of the RICS Real Estate Agency & Brokerage (2016)?
Similar to the UK Professional Statement
What is the UK Commercial Estate Agency Professional Statement (2016)?
Mandatory requirements for surveyors involved in:
- Agency
- Management
Outlines 12 core principles
Provides advice in key areas of estate agency
What are some of the core principles of the UK Commercial Estate Agency Professional Statement (2016)?
- Honest, fair, transparent and professional behaviour
- Skill, care and diligence when undertaking work
- Ensure ToBs
- Not to discriminate
What advice is provided in the UK Commercial Estate Agency Professional Statement (2016)?
Advises in key areas such as:
- Acting ethically (Gifts, Duty of care)
- Securing instructions (AML checks, Conflict checks)
- Marketing property (particulars, legal requirements)
When does Estate Agents Act 1979 apply?
Disposal or Acquisition
Freehold or leasehold
(Land and buildings)
Run me through the letting instruction on the Kings Road
x
How did you know that a party was satisfactory to your client?
Through communication
In line with KPI as party was above a 2A (£1.5m to £7m) and above Dun and Bradstreet rating
What is a Dun and Bradstreet rating made up of?
Financial Strength - H-5A Risk indicator (derived from failure score) - 4-1 (1 = minimal risk)
What is in the Code for Leasing Business Premises 2007 ?
- Landlord code
- Occupier code
- Model HoTs
What does the Code for Leasing Business Premises promote
- Quality and fairness
- Comprehensive HoTs
What does the updated Code for Leasing Business Premises 2020 cover?
- Introduction
- Mandatory requirements
- balance commercial interests
- approach negotiations constructively
- advise unrepresented parties to seek advice - Lease negotiations best practice
- Appendix
a. Template HoTs
b. Guide for LLs and tenants
Talk me through your instruction at Clapham Park Road
x
What does D2 use class cover?
Leisure
Assembly (cinemas and music halls)
What has D2 been replaced by recently?
Leisure = Class E
Assembly = sui generis
What has D2 been replaced by recently?
Leisure = Class E
Assembly = sui generis
What do you factor in when establishing net effective rent
Fit out
Rent free
What were your KPIs for Clapham Park Road?
Let the unit within 3 months
Secure minimum 5 years unexpired term
What do you mean by off-pitch space?
Not on a main pedestrian thoroughfare
Clapham Park Road - What points were you negotiating in the HoTs?
Rent amount
Break clause
Incentives
Rent deposit amount
How did you market the property?
PIP
Lettings board
What regulations govern marketing boards?
Town & Country Planning Regulations 2007
How was a rent deposit recorded?
Rent deposit deed (appendix to the lease agreement)
Sets how a landlord secures a commercial tenant’s deposit
How did you ensure your marketing list was GDPR 2018 compliant
We sent out an opt-in statement
This gives a business permission to contact an individual in the future
Why did you advise Party 2 at Clapham Park Road
Longer unexpired term (10 years no break)
Talk me through the Standards Profits Test
3 years audited company accounts
Profit = 3 years rents for minimum 3 years
What must be included in the Rent Deposit Deed?
- CLIENT account
- Interest accruing
- Separate account
- Details on return mechanism (x)
Balham High Road - What did you consider in relation to the tenant being the owner operator?
As they lived above the unit, they had a vested interest in the type of tenant they secured from a social perspective
(no noisy uses)
What went in to your HoTs?
SUBJECT TO CONTRACT
- LL sols/agent
- Tenant sols/agent
- Extent of premises
- Service charge
- Rights
- Length of term
- Alienation
- break options
- alterations
- rent frequeny
- rent reviews
- Conditions
What went in to your lease agreement?
Definitions Company names LL/tenant - Extent of premises - Service charge - Rights - Length of term - Alienation - break options - alterations - rent frequeny - rent reviews - Conditions
Balham High Road - What were you considering when inspecting the unit?
Marketability
- Arrived at destination having done a risk assessment
- Assessed availability on the high street updating my Goad
- Arrived at property and inspected from the roof downwards considering building age, access, parking and looking for defects (e.g. roof tile slippage, broken windows, burst pipes on exterior)
- I then entered the property
- Considered the configuration, specification, masking
What went in to your marketing report?
- Market commentary
- Location commentary
- Asset description
- Rental value estimation
- Proposed marketing strategy
What was your advice at Balham High Road
- 10 years
- 5 year mutual break clause
- Rent review after year 3
- Target 3 months rent free
- 6 month rent deposit
Class A of Town and Country Planning Order 1987
- A5 to A1
Balham High Road - How did you analyse the two offers on a net effective basis
Party A
- £25,000 p.a.
- 10 year unexpired term
- 6 months rent free
- NET EFFECTIVE = £25k x 9.75/10 = £24,375
Party B
- £25,000
- 5 year term
- 6 months rent free
- NET EFFECTIVE = £25k x 4.75/10 = £23,750
How do you report fees on a Leasing & Letting instruction?
Approached on a % of market rent based on:
- project size
- purpose
- timing
- value of asset
What legislation governs use classes?
Town & Country Planning ORDER 1987
What are some of the good practice principles set out in Part 3 of the Code for Leasing Business Premises 2020?
- Landlord should clearly identify extent of premises
- Tenant should be allowed time to take professional advice as to whether the tenancy should be included or excluded from the L&T Act 1954
- Rent review clauses should be clear and indexed reviews should not use “obscure formulae” resulting in a disproportionate increase outside of any agreed cap or collars.
Why was the Code of Leasing Business Premises updated?
Previous Code underused
- Potentially because it was only guidance
New Code made solely for RICS use
How do you assess Tenant Stength?
- Dun & Bradstreet
- Standards Profits Test
- 5 x NAV test
What types of leases fall outside of the requirements of the Code for Leasing Business Premises 2020?
- Less than 6 months
- Agricultural land
- Sub-lettings
Why the need for the new Class E?
Repurposing of buildings on high streets and town centres
What tips a planning proposal over going to committee over delegated power approval?
More major schemes
More democratic process
How could your scheme have ended up going to committee?
Because it is a contentious scheme
3-5 negative representations against an application for it to go to committee
We decided that the scheme was uncontentious and thus unlikely to go to committee?
What is a licence?
- A right to enter a prop
- Arrangement between a licensor and a licence
- No interest in the property
- Merely a personal right which can be terminated by a party
4 Requrements of a lease?
- Exclusive occupation
- Payment of rent
- Duration for a specific term
- Must be in writing if term is more than 3 years
Differences between a lease and licence?
- Lease provides occupier estate in relevant land - Licence grants them permission to use land
- Lease can be assigned - Licence cannot
- Lease cannot be terminated until expiry - Licence can be revoked at any time
What is a wayleave?
Temporary right e.g. allowing electricians in to fit equipment to a property
What is an easement?
A permanent right (receives an annual payment)
- Allows one party to enjoy a right over another
What is adverse possession?
When someone who is not the legal owner ends up becoming the owner through occupying the land for a specific amount of time
What are the four main assumptions on which rent reviews are based?
- Property available to let on open market
- Property is fit and able
- All L&T covenants observed
- Property to be used for purpose set out in the lease
