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APC Revision > Leasing & Letting > Flashcards

Leasing & Letting Flashcards

1
Q

What is the Estate Agents Act 1979?

A

Not required to follow but offers guidance for best practice

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2
Q

What are the principles of the Estate Agents Act 1979?

A

Honesty and accuracy
Clarity of Terms of Engagement
Open and transparent
No discrimination
All offers in writing
Client money held separately

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3
Q

What is section 18 of the Estate Agent Act 1979?

A

Requires circumstance in which the client is responsible for fees

Terms of engagement set out the fees, basis, definition, service provided and marketing

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4
Q

What is section 21 of the Estate Agents Act 1979?

A

Requires agent to disclose person interest in transaction

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5
Q

What are the penalties for non-compliance with the Estate Agents Act 1979?

A

First offence = warning

Repeat offenders face prohibition order for failure to comply which could lead to criminal proceedings

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6
Q

What are the types of agency?

A

Sole letting = fee is let include private letting

Sole agency = exclusive rights but excludes private sale

Joint agency = two agents

Multiple agency = requires clarity under S18 of the Estate Agents Act 1979 and Misrepresentation Act 1967. Both govern the agreement

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7
Q

Outline requirements under Money Laundering Regulation 2017?

A

Requires ID checks on clients

Two types of ID

Keep audit trail

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8
Q

What does the UK Commercial Real Estate Agency 1st ed effective Nov 2016 outline?

A

Professional statement which replaces the Purple Book.
Outlines:
1 - Scope
2 - Standards and Ethics (duty of care, conflicts of interest, bribery, discrimination)
3 - Securing Instruction (legal and regulatory requirements, matters prior to instruction, ToE, off market)
4 - Disposals (legal and regulatory requirements, inspection, documents, marketing, viewings, buyer queries, client info, signs and boards)
5 - Implementing the Disposal (legal and regulatory requirements, method of sale, letting, acceptance of offer)
6 - Acquisition (search, conflicts, LH acquisition, progressing purchase)
7 - Ending the Instruction (legal and regulatory requirements, written confirmation, invoice, records)

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9
Q

What is an agreement to lease?

A

Pre let agreement

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10
Q

What are the requirements under Agreement to Lease?

A

Licence for alterations
Lease pre agreed form
Specification and plan for scheme
Developer guarantee (deposit)
Collateral warranties (design input/insurance)

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11
Q

What regulates marketing?

A

Consumer Protection Regulation 2008

Not to mislead
Concept transaction decision and material information into account
Not comply = civil/criminal action
Requires accurate particulars

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12
Q

What are the requirements of a To Let board?

A

Allowed under Town and Country Planning Act 2007
Board over 2sqm flat / 2.3 sqm V board = requires PP
Projection 1m from the building
Planning permission required in conservation/listed area
No higher than 4.6m
No illumination
Remove within 14 days of letting

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13
Q

What are the EPC requirements?

A

Must be instructed before marketing
Details show rating
Fine of 2.5% of RV = max 5k, min 500
Stored on EPC register
Not required if unheated
Use and recommends improvements
Valid for 10 years
MEES = not let if below an E

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14
Q

How to check a tenants covenant?

A

Credit check agency
Three years accounts - profit and less, balance sheet
References = bank, accountant, trade

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15
Q

Types of tenant guarantees

A

Authorised guarantee agreement (AGA) - assignment
Deposit = client money
Guarantor
Rent up front

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16
Q

What lease terms affect the value of a property?

A

Rent reviews
Alienation (barriers to assign/sublet)
Breaks - affects effective rent
- NYK v Ibrend - required vacant possession upon exercising the break
Repair responsibility
Security of tenure
Service charge - improve standards, promoting best practice, uniformity, fairness and transparency

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17
Q

What is meant by Contracting Out?

A

Opt out the security of tenure provided by the Landlord and Tenant Act 1954 Part sections 24 - 28

Procedure under Section 38a

Requires a statutory declaration which is a health warning to tenant regarding their protection
Tenant signs to confirm received and understood

Simple declaration = given 14 days or more before commencement
Statutory = less than 14 days and signed in front of solicitor

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18
Q

What incentives can be offered during lease negotiations?

A

Short terms
Rent free
Rent premium
Landlord contribution to fit out

Provide a side letter to protect headline rent

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19
Q

What is the Code of Leasing Business Premises 2020?

A

Objective is to:
Improve quality and fairness of negotiation

Terms include:
Demise
Term, renewal and break
Deposit and guarantees
Rent and review clauses
Service charge, insurance and other outgoings
Alienation
Change of use, alterations and fit out
EPC
Landlord title
Management and operational performance

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20
Q

What is SDLT

A

Stamp duty land tax
Payable upon new leasehold sale
Transfers pay SDLT on:
- Purchase price of lease
- value of annual rent you pay
- calculate separately and add together = lease premium + NPV
- assignment = payable on lease price only
- net present value = total rent over lifetime of lease
NPV of rent. SDLT
0-150k. 0
Portion from 150,001-5m 1%
5m+. 2%

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21
Q

Outline requirements of the Equality Act 2010

A

Provide reasonable adjustments = aids, services, policies

Help with disabled access

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22
Q

Difference between a lease and a licence

A

Lease = exclusive possession and rent. Can be assigned. Cannot be terminated until expired

Licence = permission to occupy. Revoke anytime

Street v Mountford 1985

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23
Q

What are use classes?

A

Outline use permitted within property

Changes in 1 Sept 2020 - previous Class Order 1987

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24
Q

What are the different types of use class?

A

B - businesses that supply people i.e storage and distribution

C - sleep people i.e hotel, MHO, residential institutions

E - commercial business and service i.e shop, office, assembly, leisure, food and drink, business

F1 - learning and non residential institutions i.e art gallery, education, museum

F2 - shop less than 280sqm and community use i.e hall, recreational area, pools, skate parks

Sui generis - class of its own i.e pub, drinking establishment, takeaway, cinema, bongo hall - need planning permission

Uses within classes can change without planning permission i.e cafe to industrial

25
Q

Expectations of a Grade A office

A

Full access raised floor
Double glazing
AC
Lift
Suspended ceiling with LG3 lights
Parking
Prime location

26
Q

Expectations of industrial units

A

Minimum 6m eave height
Min 30kn/sqm loading
Three phase
WC

27
Q

Outline the check required?

A

Conflicts of Interest
Competence
Anti money laundering
Countering Bribery, corruption, money laundering and terrorist financing
Consumer Protection from Unfair Trading Regulations 2008
Business Protection from Misleading Marketing Regulations 2008
Real Estate agency and brokerage 3rd edition
UK Commercial real estate agency
Code of Practice for Commercial Property Sector
Due dilligence
RICS Surveying safety 2nd edition
Landlord and Tenants (Covenants) Act 1995
Town & Country Planning (Control of Advertisements) Regulation 2007
Code for Leasing Business Premises

28
Q

Outline knowledge of four regulations under Consumer Protection from Unfair Trading Regulations 2008?

A

Reg 3 - contrary to requirements of professional diligence
Reg 5 - false or deceptive practice in relation to a specific list of key factors
Reg 6 - omission of material information
Reg 7 - aggressive practice by harassment, coercion or undue influence

29
Q

Details some of the 31 commercial practices considered unfair

A

Claiming to be signatory of code of conduct when not
Displaying trust mark, quality mark or equivalent without consent
Claiming trader or product is endorsed
Making invitation to product but not showing the advertised product
After sales in language where trader is located
Stating product sold legally when not
Inaccurate claims concerning risk to personal security
Claims to cease trading when not
Claiming to cure illness
Impression of not leaving without contract formed
Threaten livelihood

30
Q

What is the Code for Leasing Business Premises effective 1 Sept 2020?

A

Professional statement to improve quality and fairness of negotiations of lease terms

Mandatory inclusion of HoTs

31
Q

What does Code for Leasing Business Premises 1 Sept 2020 contain?

A

Mandatory requirements
1 Negotiation and Heads of Terms (must: approach constructive and collaboratively, not represented be advised of code and obtaining advice, vacant possession letting must record HoTs, LR and extensions record HoTs, aim to achieve letting at fair balance)

32
Q

Best practice under Code for Leasing Business Premises 1 Sept 2020?

A

Part 3
1 The premises
2 Length of term, renewal and break rights
3 Rent deposit and guarantees - amount, time held, security for rent only or other lease obligations, when returned with interest
4 Rent and reviews - no time limits
5 Service charges insurance cost and Other outgoings
6 Assignment, subletting, charging and sharing - permit to assign while not unreasonably withheld or delayed. Assigning reasonably require AGA.
7 Repairs
8 Change of use, alterations and fit out - no more restrictive than necessary
9 Insurance and damage
10 Management and operation performance
11 EPC
12 Landlords title

Appendix:
A - template Heads of Terms
B - guide for landlord and tenants

33
Q

Outline requirements of Real Estate agency and brokerage 3rd edition Aug 2016

A

Honest, fair, transparent and professional business
Carry out due diligence and care
Clear and fair terms of engagement
Avoid conflicts of interest
Not discriminate
Communicate fairly, timely, clearly and truthfully
Ensure honest, decent and truthful adverts
Hold client money held separately
Adequate PII
Be clear with all parties of your obligations to each
Provider realistic assessment of likely prices
Ensure meetings, viewings and inspections are lawful and reasonable

34
Q

What guidance does Real Estate Agency and Brokerage provide?

A

1 Ethics - duty of care, discrimination, vulnerable customers, responsibilities for others
2 Securing Instructions - before, sharing info, acting for seller, ToE, types of agency, types of sale/lease, acting for buyers, conflicts of interest, ToE with buyers, sub agents, instructing sub agents
3 Acting for seller - advising on price, market advice, reporting, keeping records, methods of sale, marketing, online marketing, viewings, responding to buyers, keeping client informed, property clearance
4 Acting for the seller - offers, communicating with client, communicating with buyer, avoiding misrepresentation, managing acceptance of offers
5 Acting for the buyer - property search, communication with Clint, properties with physical problems, conflicts of interest, progressing purchases, holding clients money
6 Ending the instruction - written confirmation, invoice, if completion does not take place, holding clients money
7 Safety and security - confidentiality, data protection, health and safety, personal safety
8 Agency management - advertising and marketing, handling complaints, handling client money, recovering outstanding debts, insurance, training and keeping up to date

35
Q

What does professional statement UK Commercial Real Estate Agency effective 1 November 2016 outline to members?

A

Members must:
Conduct business honest, fair, transparent and professional
Carry out with with due skill, care, diligence
Provide Terms of Engagement
Avoid conflicts of interest
Not discriminate
Communicate clearly, timely, fairly and transparently
Ensure marketing material is honest, decent and truthful
Hold client money separately
Adequate PII
Clear scope of your obligations
Realistic assessment of price
All meetings, inspections and viewings in accordance with lawful and reasonable wishes

36
Q

What does the Landlord and Tenant (Covenants) Act 1995 outline?

A

Provision for persons bound by covenants of a tenancy to be released from such covenants on the assignment of the tenancy

Introduced an Authorised Guarantee Agreement (AGA) with outgoing tenant guaranteeing performance of covenants by incoming tenant

37
Q

What is Business Protection from Misleading Marketing Regulations 2008 (BPRs)?

A

Prohibits misleading business to business marketing and advertising of goods or services

38
Q

What is the Consumer Protection for Unfair Trading Regulation 2008 (CPRs)?

A

Along with BPRs, provides protection from misleading information during sales and lettings when dealing with consumers

Covers many areas of Property Misdescriptions Act 1991

39
Q

What is alienation?

A

Ability to assign, sublet or share occupation.

Assignment - another party steps into tenants shoes
Subletting/underlease - tenant grants sublease to sub tenant while remaining
Sharing - parties of the same group sharing. No new relationship formed

40
Q

What is alienation?

A

Ability to assign, sublet or share occupation.

Assignment - another party steps into tenants shoes
Subletting/underlease -

41
Q

When does a lease need registering with land registry?

A

Over 7 years in length

42
Q

What jointly and severally liable?

A

If more than one tenant to a lease, they are likely jointly or severally liable includes responsibilities and liabilities being shared

43
Q

What is the section for tenant break option?

A

Section 27 under Landlord and Tenant Act 1954

44
Q

What are the quarter payment dates?

A

25 March, 24 June 29 Sept 25 Dec

45
Q

Considerations under surrender and renewal?

A

Impact of security of tenure
Modify lease terms
Impact on investment value
Tenants business plan
Alternative options available
Rental level and comparison to market rent
SDLT

46
Q

Under Appendix A of the Code for Leasing Business Premises, what should the HoTs contain?

A

1 Initial information - Lease, LL, T
2 Premises and rights - description
3 Length of term, renewal rights and break rights - length, protection, options
4 Rent deposits and guarantees
5 Rent and reviews - rent, VAT, rent free
6 Assigning, sublet, charging and sharing
7 Services and service charge
8 Repairs
9 Use and alterations - permitted use, landlord works, tenant works, alterations
10 Insurance - liability for costs
11 Other - rates, legal costs, conditions
12 Contact details - solicitors, agents

47
Q

What are the penalties for non-compliance with CPR?

A

Court order cease action
Unlimited fine
Two years imprisonment
Prohibition order

Also:
Consumer complaint compensation
Bad publicity
Damage to reputation
Loss of business

48
Q

Under CPR, what is considered unfair?

A

False/misleading information
Hiding/failing to provide information
Aggressive/undue behaviour
Not acting with professional care/skill
Engaging in banned practices

49
Q

Define an average consumer

A

Consumer who is reasonably well informed and reasonably observant and circumspect taking into account social, cultural and linguistic factors

50
Q

Types of transactional decision under CPR?

A

Paying for services
Buying
Renting
Accepting an offer
Viewing a property
Commissioning a survey
Pay a pre-contract deposit

51
Q

What if you don’t know material information under CPR?

A

Take reasonable steps to identify the information include:
Recording information
Address gaps by speaking to client/third party
Verify information
Challenge/investigate
Provide material information
Disclose further info
Audit trail

52
Q

How to comply with CPR?

A

Training
Check systems
Consider how you deal with consumers
Due diligence
Verify information
Signpost wider information
Consider average consumer
Keep records
Review and revise procedure

53
Q

What are the exceptions from Code of Letting Business Premise Sept 2020?

A

Agricultural letting
Premises housing plant/equipment
Advertising media
Premises intended to be wholly sublet
Lettings less than 6 months

54
Q

What are four requirements of a lease?

A

Exclusive occupation
Payment of rent
Duration for a specified term
If more than 3 years, must be in writing, signed and registered as a deed

55
Q

What are the grounds to oppose a renewal lease?

A

Under section 30 of the Landlord and Tenant Act 1954 Part II grounds A-G

A - tenant breached covenant resulting in disrepair
B - tenant has been in persistent delay in rent arrears
C - tenant has committed substantial breaches of other covenant
D - landlord has offered the tenant other suitable alternative accommodation
E - lease was created by a subletting and the landlord intends to let the whole
F - landlord intends to redevelop, demolish, reconstruct
G - landlord wants to occupy themselves

Appeals = burden of proof of landlord in court

56
Q

What is a Tenancy at Will?

A

Form of licence created in writing for an unspecific period of time in which the landlord and evict the tenant at anytime

57
Q

What is a wayleave?

A

Temporary right which receives annual payment
Cannot be transferred

58
Q

What is an easement?

A

Permanent right which receives on lump payment
Allows a right enjoyed by one party over the land off another
Can be registered with Land Regisry

59
Q

Changes suggested under Renters reform bill?

A

End no fault evictions
Decent homes standard
Limit rent increases
EPC changes to minimum C

APC Revision (17 decks)

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