Leasing & Letting

Question 1

Tell me your understanding of the Estate Agency Act 1979?

Answer 1

• regulates work as an estate agent
• make sure agent works in client’s best interests and both buyers and sellers treated honestly and fairly
• gives description of an estate agent - deal with people who was to buy or sell freehold or leasehold property (commercial or agricultural), you act on instructions from a client

If you are merely publishing advertisement such as newspaper then you are not an estate agent

Activities of those acting as estate agents:
- sending property particulars or arranging viewings
- offering personal advice
- arranging EPC
- providing client’s with ‘for sale’ boards

Question 2

What are the 6 key principles of the Estates Agency Act?

Answer 2

1. Disclosure of interest
2. Accuracy of property description
3. Disclosure of fees
4. Client money protection
5. Redress scheme membership
6. Professional indemnity insurance

Question 3

How does Section 18 of the Estates Agency Act 1979 relate to your letting practice?

Answer 3

Section 18 refers to terms of engagement and clarity on fees and charges.

Must be clear and transparent about all fees and charges including if a property is taken off the market without a sale. Marketing costs can be unknown so to give the best estimate possible but make this clear.

Terms of engagement to include:
- the basis - joint/sole
- the rights
- the fee proposed
- marketing costs
- details of complaint handling procedure
- confirmation of conflicts of interest
- details regarding money laundering regulations

Question 4

How does Section 21 of the Estate Agency Act 1979 relate to your letting practice?

Answer 4

Section 21 states that anyone that has a personal interest in the property or land shall not negotiate in connection with the land/property.

Question 5

What if there is no alienation clause in the lease?

Answer 5

Parties are free to deal with the lease as they wish although rare.

Landlord would want to retain control

Question 6

What does Section 19 1a of the Landlord and Tenant (Covenant) Act 1995 say?

Answer 6

Landlord can specify pre- conditions for assignment which don’t have to pass the reasonableness test such as use of the premises by the new assignee or not able to provide accounts

Question 7

What is an AGA?

Answer 7

Authorised Guarantee Agreement

Arrangement between the assignor (most recent tenant) and the landlord to guarantee lease obligations of immediate assignee

Falls away on future assignment or at expiry of lease

Question 8

Can a tenant assign a lease to a guarantor?

Answer 8

No!

Follows case of EMI group v Q&H (2016)

• HMV were tenants of lease after 1st Jan 1996
• EMI guarantors for HMV
• HMV went into administration on 2013
• HMV applied to landlord to assign lease to EMI
• landlord granted consent and licence to assign completed in 2014
• EMI later went to court and argued that they do not need to follow the same covenants
• court held that HMV could not assign lease to EMI as the Act was in place to prevent previous parties remaining liable on a tenant or guarantor
• lease stayed with HMV with EMI as guarantor

Question 9

What is an agreement for lease?

Answer 9

A contract between 2 (or more) parties to enter into a lease at a later date

Landlord has guarantee of a tenant when the agreement for lease ends

Tenant can fit out during an agreement for lease - tenant might pay a small percentage of rent, SC and insurance

Agreement for contract is legally binding

*North Warehouse had an agreement for lease for 6 months while for out works took place

Question 10

Do you need planning consent to install a marketing board?

Answer 10

Not unless size is breached

Residential - max. 0.5 sq.m. Or 0.6 sq. m two boards joined
Commercial - max. 2 sq.m or 2.3 sq.m two boards joined

*seek advice from Planning Team
Listed building or building in conservation could need planning permission for any sized signage

Question 11

Tell me about the requirements surrounding letting property and EPCs

Answer 11

From 1st April, unlawful to continue to lease with EPC of F or G

EPC is valid for 10 years

All commercial properties must have a E or above rating before a new or lease renewal can be granted

If the EPC rating was F or G but the 10 year EPC certificate has expired but the term of the lease is continuing, the landlord is ‘safe’ until a new EPC is triggered, ie. by the parties renewing, tenant carried out alterations which mean a new EPC required

Advise landlord to include a clause which prohibits tenant from commissioning a new EPC for the property this potentially requiring the landlord to do EPC works sooner than planned

EPC not required for lease renewal unless there was a valid EPC previously

Question 12

What buildings are exempt from having an EPC?

Answer 12

• Buildings with no heating, ventilation or air conditioning such as storage units, barns, warehouse
• religious properties
• temporary properties to be used for less that 2 years
• industrial sites, workshops and non resi agricultural properties
• resi properties not used for much of the year
• stand-alone detached properties smaller that 50sq.m
• Listed or certain protected buildings where MEES would alter the character or appearance