Leasing and Letting - L3

Question 1

(Disposal Holborn) What DD did you undertake and why?

Answer 1

Competency
Conflict of interest
Signed terms of engagement

Question 2

(Disposal Holborn) Why did you recommend to your client this was the most relevant comparable?

Answer 2

Similar existing use class
Late licence
Recent transaction date
Next door to the property

Question 3

(Disposal Holborn) How did you determine the market terms? What differentiated this offer from the other 3?

Answer 3

Using comparable evidence and speaking to local agents.
1 & 2 ) Could not trade with existing licence as wanted to move the staircase and would have to reapply for licence
3) Did not provide enough information on their concept when requested, although was highest rent could not recommend the offer
4) Chosen concept

Question 4

(Disposal Holborn) Did you have any signage at the property? Who is this policed by and when do you need planning consent?

Answer 4

No we did not.

Policed by Town and Country Planning regulations 2007.

Non-residential boards over 2 sq m (flat) and 2.3 sq m (V board)

Question 5

(Disposal Holborn) Why was it important to your client to keep the existing licence?

Answer 5

The council had been known to reduce the amount of late night licences granted and if a new application was to be made my client may not have regained the same licence.

Question 6

(Disposal Holborn) What was the condition of the property?

Answer 6

Poor condition
Previous tenant’s fit-out still in place but very worn as had been closed for a number of years

Question 7

(Disposal Holborn) Why did you measure on a GIA basis?

Answer 7

Comparable evidence

Question 8

(Disposal Holborn) What makes a good comparable?

Answer 8

Transaction
Transaction date
Location
Size
Configuration
Use class

Question 9

(Disposal Holborn) What terms did you agree?

Answer 9

20-year FRI lease, Outside the Act 1954
£190,000 pa
6 months’ rent free
6 months’ half rent
RR 5-yearly open market

Question 10

(Disposal Holborn) What is the difference between an FRI lease and IRI lease?

Answer 10

FRI - tenant is responsible for all repairs and insurance costs
IRI - tenant is responsible for the internal repairs of the property, but landlord retains responsibility for external repairs and structural maintenance

Question 11

(Disposal Croydon) What is an AGA?

Answer 11

The outgoing tenant guarantees the performance of the incoming tenant under the lease.

Question 12

(Disposal Croydon) Does an AGA also affect subletting?

Answer 12

No as responsibility remains with the outgoing tenant of the sublease

Question 13

(Disposal Croydon) What does the Landlord and Tenants Covenants Act of 1995 do?

Answer 13

Abolished privity of contract so when a lease is assigned the liability transfers to the assignee

Question 14

(Disposal Croydon) Why did you provide this advice?

Answer 14

The potential tenant was a global entity with a good track record
The short-term lease wasn’t a deal breaker to them

Question 15

(Disposal Croydon) Did you have to negotiate any terms with the landlord?

Answer 15

No but I had to negotiate terms between my client and the incoming tenant in terms of rent free periods.

Question 16

(Disposal Croydon) What major lease terms can affect value?

Answer 16

Length of the lease
Rent review provisions
Break clauses
Repairing obligations
User restrictions/permitted use

Question 17

(Disposal Croydon) What terms did you agree?

Answer 17

As it was an assignment I did not agree terms but I agreed a reverse premium paid by the outgoing tenant to the incoming tenant which was the equivalent to 3 months’ rent free.

Question 18

(Disposal Croydon) What are the different types of rent review?

Answer 18

Open market
RPI
CPI
Fixed stepped increases

Question 19

(Disposal Croydon) What were the time frames for this?

Answer 19

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