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SB APC > Leasing & Letting > Flashcards

Leasing & Letting Flashcards

1
Q

What is the Professional Standard?

A

Code for Leasing Business Premises, 2020.

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2
Q

What are the objectives of the code?

A

To improve quality and fairness of negotiations on lease terms and promote the use of a new set of comprehensive heads of terms to make legal drafting of leases more efficient.

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3
Q

What is the structure of the code for leasing business premises?

A

Introduction
Mandatory requirements
Lease negotiation best practise
Appendicies

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4
Q

Name the mandatory requirements of the code?

A

Negotiations over the lease must be approached in a constructive and collaborative manner.
If an unrepresented party comes forward they must be advised by the other party about the existence of the Code and its supplemental guide and must be recommended to obtain professional advice.
The agreement as to the terms of the lease on a VP letting must be written in HoTs stating thet are subject to contract.
At a lease renewal or extension, the HoTs must comply with the above except for any terms that are state to follow the tenants exisiting lease subject to reasonable modernisation.
Negotiations should aim to produce letting terms that achieve fair balance between parties.

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5
Q

What is included within the lease negotiation best practise advice?

A

Includes specific advice on lease terms to include rent deposits, rent reviews, service charges, repairs and alienation clauses.

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6
Q

What is important regarding the tenant selection?

A

There is an important relationship between the quality of the tenant’s covenant and the investment value of the property.

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7
Q

How did you manage your rental deposit in the case study?

A

After determining a rental deposit was required and following negotiation, I detailed the three month rental deposit in the heads of terms.
All details regarding the terms and discharge of the deposit were included within a separate deed alongside the lease and monies were kept in a separate client account.

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8
Q

Explain the use of rental deposits

A

Personal to the tenant
Must be legally documented in a rent deposit deed
Money is held in a seperate bank account
Interest goes to the tenant
Agreed terms for the release of monies
Details of the release mechanism to be stated in the deed.
Rent deposit deed attached to the lease as it is a seperate deed to the lease and personal to the tenant.

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9
Q

What did you request to determine a deposit was required?

A

Previous three years of audited accounts.

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10
Q

What is the profits test?

A

The net profit for the proposed tenants business must be three times the amount than the rent for three consectutive years.

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11
Q

What is the net asset value test?

A

The net asset value for the proposed tenants business must be five times the amount than the rent for three consectutive years

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12
Q

Which lease terms affect value?

A

Lease length
Break clauses
Alienation
Repairing obligations
User classes
Rent reviews
Security of tenure provisions
Who the tenant is in order to determine covenant strength.

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13
Q

What are the disadvantages of pre-lets?

A

A pre-let involves enterring a lengthy and complex process and a level of risk in the event of the developer of contractor not performing.

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14
Q

What is the legal framework required for an Agreement for Lease?

A

The lease - in a pre-agreed form.
License for alterations - to allow the tenant to carry out fitting works
Specification and plans - of the proposed scheme
Developer’s guarantee
Warranties - potential collateral warranties

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15
Q

What is the difference between a lease and license?

A

A lease provides an occupier with an estate in the relevant land - a license is a permission to make it lawful for them to use the land.
A lease can be assigned - a license is normally a personal right that cannot be assigned.
A lease cannot be terminated until it expires - a license can usually be revoked at any time.

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16
Q

What are the four requirements of a lease?

A

Exclusice occupation
Payment of rent
Duration for a specified term
If for more than three years then the terms must be in writing and signed.

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17
Q

What is the case law setting out the difference between leases and licenses?

A

Street vs Mountford (1985)

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18
Q

What is a wayleave?

A

This is a temporary right and recieves an annual payment.

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19
Q

What are the four usual assumptions of a rent review?

A

The property is available to let on open market by a willing tenant to a willing landlord for a term of years as stated.
Property is fit for immediate occupation and use.
All covenants observed by landlord and tenant.
Property may be used for the purpose set out in the lease.

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20
Q

What are the three usual disregards in a rent review?

A

Any effect of goodwill on tenant occupation.
ignore goodwill attached to the property.
Tenants improvements if the landlord consent has been granted for the works.

21
Q

What is the common weighting of the heirarchy of evidence?

A
  1. Open market lettings
  2. Lease renewals
  3. Rent reviews
  4. Independent expert determinations
  5. Arbitrator awards
  6. Sale and leasebacks
22
Q

What are the grounds for refusal of a new lease?

A

Section 30 of the L&T Act 1954:
Breach of repairing covenant
Persistent delay in paying rent
Other substantial breach
Provide suitable alternative accommodation
Uneconomic subdivision (compensation)
Demolition or reconstruction (compensation)
Owner occupation (compensation)

23
Q

What sections of the L&T act relate to terms of a new lease?

A

Sections 32-35

24
Q

If the landlord was refusing a new lease due owner occupation, how long must they have owned the property for prior?

A

5 years and prove the intention to occupy

25
Q

What is a competent landlord?

A

The person/body upon whom a notice should be served or who should serve the notice.
Must be a freeholder or superior tenant with unexpired term of over 14 months.

26
Q

Why have you agreed a lease outside of the act?

A

Landlord wants future flexibility.
When the lease come to the end the tenant has no statutory right to remain in occupation.

27
Q

What procedure must be undertaken if the lease is contracted outside of the act?

A

The landlord is required to serve notice on the prospective tenant, warning the lease will not be protected. Known as a health warning.
The proposed tenant must then make a declaration in response, confirming that they have recieved the notice and accepts its terms.
The procedure must be completed prior to the lease being signed.

28
Q

What are the types of declaration?

A

Simple declaration - given when the parties have at lease 14 days or more prior to committing to the lease
Statutory declaration - given when the parties have less than 14 days prior to committing to the lease. If this is the case then then a statutory declaration must be made before an independent solicitor.

29
Q

What are the ways to terminate a lease?

A

Forfeiture
Surrender and negotiation
Merger
Disclaimer
Break clauses
Lease expiry
Serve notice

30
Q

What would you include within a brochure?

A

Address
Photos
EPC rating
Agent contact details
Reference to being in accordance with the misrepresentation act
Date

31
Q

What are the three types of agency?

A

Sole agency - only one agent
Joint agency - two or more agents sharing a fee on a pre-agreed basis
Multiple agency - any number of agents but only the successful agent gets a fee

32
Q

What are the principles of the RICS professional statement - UK Commercial Estate Agency 2016?

A

Act honestly
Carry out work with due skill
Provide clients with clear terms of business
Try to avoid conflicts
All communication is fair
All advertising is true
Any client money is held seperately
Use appropriate PII
Ensure all parties are clear of each other obligations
Give realistic assements of selling prices/rents/costs
Ensure all meetings, inspections and viewings are carried out having regard to the clients wishes.

33
Q

What is the estate agency legislation?

A

Estate Agents Act 1979

34
Q

What are the 7 principles?

A

Clarity to the terms of agency (section 18)
Honest and accuracy
Agreement and liability for costs
Openness regarding personal interests (section 21)
Absence of discrimination
Legal obligation to tell the client about offers recieved
Keep clients money seperate.

35
Q

What is the cooling off period?

A

14 days is allowed for clients who change their minds and do not want to instruct the agent in accordance with current consumer protection regulation.

36
Q

What legislation protects consumers?

A

Consumer Protection from Unfair Trading Regulations, 2008

37
Q

What is the penalty for a breach of CPRs and BPRs?

A

Unlimited fine and/or prohibtion order.
Compensation may be included.

38
Q

What does BREEAM stand for? And what do they do?

A

Building Research Establishment Environmental Assessment Methodology.

BREEAM sets the standard for best practice in sustainable building design, construction and operation.

39
Q

Give me examples where you have implemented ESG?

A

Environmental - bike to work scheme
Social - Attending CPD events and furthering my knowledge of trends regarding the social trends of the office market.
Governance - Compliance with legislation, for example the Health and Safety Act.

40
Q

What is a WAULT?

A

Weighted Average Unexpired Lease Term.
An indicator of the average remaining years of the leases across a building/portfolio on a weighted basis.

41
Q

What is included within the BCO 2023 guide?

A

Raised flooring with floor boxes.
Approximate floor to ceiling height of 2.6m - 2.8m.
Air conditioning.
Double glazing.
Passenger lifts.
Ceiling void of 350mm and a flooring void of 150mm.
1 cycle space per 10 staff and 1 shower per 100 staff.
8m2 to 10m2 general workspace denisty.

42
Q

What is gross rent?

A

The gross rent is the rental value stipulated in a lease contract for a certain period without considering concessions, deductions, or incentives

43
Q

What does VRF stand for?

A

Variable Refrigerant Flow

44
Q

What does without prejudice mean?

A

Can’t be used in front of you in the court of law.

45
Q

What are the main methods of construction of offices? What is the construction is Lyndon House?

A

Two main methods are either steel or conrete frame.
Lyndon House is Steel frame construction.

46
Q

What is the difference between Misrepresentation Act and the CPRs

A

Misreps act is related to a misrepresentation or false statement in pre-contractual enquiries whereas the CPRs require a duty of care to all parties throughout the entirety of the process.

47
Q

Who is considered an average consumer?

A

A reasonably well informed person

48
Q

What are the ways to terminate a lease?

A

Forfeiture
Surrender and negotiation
Merger
Insolvency
Break clause
lease expiry

49
Q
A

SB APC (7 decks)

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