Leasing And Letting - Summary Of Experience Flashcards
What are the SIX principles of Estate Agency Act 1979?
1) Honesty and accuracy.
2) Clarity on Terms Of Engagement
3) Open and Transparent
4) No discrimination
5) Pass on all offers in writing.
6) Keep client’s money separate.
What does the Estate Agency Act 1979 state in terms of Leasing & Letting?
States that Leasing & Letting are NOT REQUIRED to follow EA 1979 but it is best practice to do so.
What does Section 18 & 21 state of the Estate Agents Act 1979?
Section 18 - Agree TOE, fees, agency basis, services and marketing.
Section 21 - Disclosure of interest.
What are the penalties under Estate Agents Act 1979
Office Fair Trading enforces
Warning order for first offence
Prohibition Order - failure to comply = criminal.
What are the Basis of Agency ? (4)
Sole letting rights
Sole agency
Joint agency
Multiple agency.
What are the advantages and disadvantages of Pre-Lettings?
Main advantage to the tenant is the delivery of a bespoke building designed to suit their needs.
Disadvantage includes entering a lengthy and complex process and a level of risk in the event a contractor doesn’t perform.
What is the aim of the RICS Code for Leasing Business Premises 2020?
Aim is to improve the quality and fairness of negotiations on lease terms and promote new set of Heads of Terms
What is the structure of the RICS Code for Leasing Business Premises 2020?
1) Introduction
2) Mandatory Requirements
3) Lease negotiation best practice
4) Appendices
What factors can impact the rental value of a property ?
Location
Condition of the property
Vacancies
What is included within Heads of Terms ?
1) Identity of the premises and extent of the premises.
2) Special rights to be granted
3) Name of parties and agents / solicitors.
4) Length of term and whether inside or outside the Landlord & Tenant Act 1974.
5) Options for renewal / rent review.
6) Rent payable and frequency.
7) Landlord VAT eligible.
8) Rent Free periods if any
9) rights to assign, sublet or share the premises.
10) Rights to make alterations
What are some of the major lease terms that affect value?
- Length of Lease
- Break Clauses
- Alienation
- Repairing Obligations
- User Clauses
- Rent Review pattern
- No mention of contracting out of the L&T 1954 Act Part II
What are some of the documents required in respect to pre-lets.
- Licence for Alterations
- Lease pre-agreed form
- Spec and plans for scheme.
- Developer’s guarantee
- Any warranties.
What do you understand by the Consumer Protection Regulations 2008?
- Must not mislead ‘average customer’
- If members are found not to have complied, they may face criminal action.
- Particulars must be accurate.
What considerations do you have to make regarding ‘To Let’ Boards?
- Permitted development rights.
- Must be 2 sq.m or 2.3 sq.m if a V board
- Should be 1m from building
- Planning permission needed if a listed building or conservation area.
- No illumination
- Remove within 14 days of letting
What was your marketing strategy for Ponders End?
Alongside the joint agents, we targeted mailshots to existing client list who may be interested and called client list.
Advertised online
Held viewings throughout
Obtained one open day
Tell me what you know about contracting out of S.24 to S.28 Landlord and Tenant 1954 Part II?
Contracting out is set out in S.38 L&T Act 1954
A Statutory Declaration needs to be provided by an independent solicitor 14 days before.
Tenant signs to confirm received and understood.
What are some of the incentives that may be agreed in negotiations?
- Short Lease (Average is now 4.8 years)
- Rent-free period
- Reverse premium
- Fitting out costs contribution from landlord.
What are the important terms under the RICS Code For Leasing Business Premises 2020?
- The demise
- Length of Lease, renewal rights, break clauses.
- Rent Deposits and Guarantees
- Rent and Rent Review clauses
- Service charges, insurance and other outgoings
- Alienation
- Change of use, alterations
- EPC
- Landlord’s title.
What are the new use classes under The Town and Country Planning (Use Classes) Amendment Regualtions 2020.
Class E:
- Food & Drink (on premises, cafe)
- Business (office, research, development and light industrial)
- Non-residential institutions (medical health services)
- Assembly and leisure (indoor sport, gym)
F.1:
- Art galleries, library, place of worship
F.2:
- Shop no larger than 280 sq.m
Sui generis (Class of it’s own):
- Public House, wine bar, drinking establishment
- Hot food takeaway
- Cinema, concert hall, dance hall.
What are the components of Grade A spec (Offices)?
- Full access raised roof
- Double glazing
- Climate control (AC & Heating)
- Lifts
- Suspended ceiling with LG3 lighting
- Car parking
What is a classic spec of an industrial unit?
- Minimum 6m eaves height
- Minimum 30 KN/sq.m floor loading
- Full height electric loading doors
- 3 phase power
- WC
What are the 7 principles of the Estate Agents Act 1979?
1) Clarity as to the terms of the agency (Section 18)
2) Honesty and accuracy
3) Agreement and liability for costs
4) Openness regarding personal interest (Section 21)
5) Absence of discrimination
6) Legal obligation to tell the client about offers received
7) Keep clients money seperate
What legislation covers the disposal / acquisition of an interest in land (freehold or leasehold property with capital value) ?
Estate Agents Act 1979
What does Section 18 of the Estate Agents Act 1979 refer to?
Terms of agency
What does Section 18 say about terms of agency?
Must be clear
Must be agreed in writing, including any additional market costs or disbursements
Must be itemised (not global)
What does Section 21 of the Estate Agents Act 1979 say?
Must be open about personal interests
Personal interests must be declared in particulars and Heads of Terms (or don’t act if its inappropriate)
What should you do in negotiations according to the Estate Agents Act 1979?
Act in the best interest of your client
Inform client of offers in writing
Treat buyers/sellers honestly, fairly and promptly i.e. give no misleading information and don’t discriminate
Do you need to inform your client if you offer a service to a prospective tenant?
Yes
Under the Estate Agents Act 1979, do you need to belong to an approved redress scheme?
Yes
Who enforces the Estate Agents Act 1979?
National Trading Standards
What are the 3 agency basis?
Sole agent - 1 agent
Joint sole agency - 2+ agents sharing fee
Multiple agency - several agents and winner takes all
Where would you find wording on agency rights to include in your Terms of Engagement
Estate Agents (Provision of Information) Regulations 1991
What is a ready, willing and able purchaser?
Fee due if purchaser introduced who is prepared and able to exchange unconditional contracts for purchase, even if client subsequently decides not to proceed.
What are sole selling rights?
Fee due if unconditional contracts exchanged during period of sole selling rights, even if purchaser found by another agent or client. After expiry of sole selling rights, fee due if contracts exchanged with purchaser introduced during period or with whom agent had negotiations.
What are sole agency rights?
Fee due if unconditional contracts exchanged with purchaser introduced by agent or another agent or with whom agent had negotiations during period of sole agency.
No fee due if the purchaser is found by the client.
What does the Property Misdescriptions Act 1991 say?
Nothing - its been repealed
What was the main change brought in by the Consumer Protection from Unfair Trading Regulations (CPRs) & Business Protection from Misleading Marketing Regulations 2008 (BPRs)?
Wider scope so cannot rely on caveat emptor principle.
What is an average consumer under the CPR/BPRs?
Reasonably well informed, observant and circumspect (modified if the consumer is vulnerable or targeted)
What is material information under the CPRs/BPRs?
Required by average consumer to make informed transactional decision.
Under the CPRs/BPRs, when may a commercial practice be deemed unfair?
Giving false/misleading information
Omitting material information (required to make informed decision)
Aggressive practices e.g. harassment, coercion, exerting undue pressure
Not acting with standard of care and skill in accordance with honest market practice and in good faith.
Engaging in banned practices.
Explain a factor you have come across which impacts upon letting value / lease terms?
One factor that impacts letting value in an office would be limited amenities such as no lift would impact on a prospective tenants offer and could impact the letting value.
One factor that impacts lease terms could be the financial strength of the prospective tenants especially for secondary property. This could impact on increased rent deposits and potentially one or two guarantors.
Explain an example of when you have provided marketing / leasing strategy to a client?
Recently, I spoke to my client on adapting our marketing strategy for a multi-occupied building in Central Birmingham. At the time of reporting to my client, we had 6 vacant office suites. Having undertaken market research and spoken to local agents, it was apparent that we were marketing the property at too high a £ psf. Therefore, I suggested we reduce the £ psf on the offices and assess the interest levels at this reduced price.
Talk me through an example of when you have let a property?
I let an office unit in Birmingham to an existing tenant who was looking to expand their premises and take another suite of offices.
Tenant approached me in the first instance.
I submitted Heads of Terms / Proposed offer via the client first before issuing to the tenant.
I negotiated with the T for 2 weeks ensuring that the new lease for the new unit was expiring on the same day as the existing lease of the Ts existing unit.
Once Heads of Terms were agreed, I issued these to our clients solicitors and instructed them to draft the new lease.
Birmingham Office Letting - How did you market the vacant units?
All vacant units were being marketed by local agents for both retail and office units.
Why did you proceed with an existing tenant within the building rather than going to the market?
An existing tenant expressed interest in one of the vacant suites. From our clients perspective, we had a working relationship with the existing tenant, we knew that they were a good payer of rent and service charge and had a strong covenant in terms of their financial position. We also minimised marketing fees for the client.
What did you include within your heads of terms?
Name of parties.
Name of L&T’s solicitors.
Property Address
Rent Payable and Frequency
Rent Review Date
Service Charge Payable
Ponders End - Tell me about the marketing strategy?
Drone Video and Marketing Photographs to be produced.
Property was fit for purpose for a tyre/car workshop.
Approach this type of tenant first.
Why did you use joint agents - Ponders End?
Client wanted to use an agent located nearby the property who had local market contacts and knowledge as well as my company to oversee the process.
What type of tenant did you secure - Ponders End?
Car Workshop / MOT Servicing company. This was the type of tenant we were approaching and looking for as the property was tailor made for this type of business.
