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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
Expectations of a Grade A office
Full access raised floor Double glazing AC Lift Suspended ceiling with LG3 lights Parking Prime location
26
Expectations of industrial units
Minimum 6m eave height Min 30kn/sqm loading Three phase WC
27
Outline the check required?
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
Outline knowledge of four regulations under Consumer Protection from Unfair Trading Regulations 2008?
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
Details some of the 31 commercial practices considered unfair
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
What is the Code for Leasing Business Premises effective 1 Sept 2020?
Professional statement to improve quality and fairness of negotiations of lease terms Mandatory inclusion of HoTs
31
What does Code for Leasing Business Premises 1 Sept 2020 contain?
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
Best practice under Code for Leasing Business Premises 1 Sept 2020?
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
Outline requirements of Real Estate agency and brokerage 3rd edition Aug 2016
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
What guidance does Real Estate Agency and Brokerage provide?
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
What does professional statement UK Commercial Real Estate Agency effective 1 November 2016 outline to members?
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
What does the Landlord and Tenant (Covenants) Act 1995 outline?
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
What is Business Protection from Misleading Marketing Regulations 2008 (BPRs)?
Prohibits misleading business to business marketing and advertising of goods or services
38
What is the Consumer Protection for Unfair Trading Regulation 2008 (CPRs)?
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
What is alienation?
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
What is alienation?
Ability to assign, sublet or share occupation. Assignment - another party steps into tenants shoes Subletting/underlease -
41
When does a lease need registering with land registry?
Over 7 years in length
42
What jointly and severally liable?
If more than one tenant to a lease, they are likely jointly or severally liable includes responsibilities and liabilities being shared
43
What is the section for tenant break option?
Section 27 under Landlord and Tenant Act 1954
44
What are the quarter payment dates?
25 March, 24 June 29 Sept 25 Dec
45
Considerations under surrender and renewal?
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
Under Appendix A of the Code for Leasing Business Premises, what should the HoTs contain?
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
What are the penalties for non-compliance with CPR?
Court order cease action Unlimited fine Two years imprisonment Prohibition order Also: Consumer complaint compensation Bad publicity Damage to reputation Loss of business
48
Under CPR, what is considered unfair?
False/misleading information Hiding/failing to provide information Aggressive/undue behaviour Not acting with professional care/skill Engaging in banned practices
49
Define an average consumer
Consumer who is reasonably well informed and reasonably observant and circumspect taking into account social, cultural and linguistic factors
50
Types of transactional decision under CPR?
Paying for services Buying Renting Accepting an offer Viewing a property Commissioning a survey Pay a pre-contract deposit
51
What if you don’t know material information under CPR?
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
How to comply with CPR?
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
What are the exceptions from Code of Letting Business Premise Sept 2020?
Agricultural letting Premises housing plant/equipment Advertising media Premises intended to be wholly sublet Lettings less than 6 months
54
What are four requirements of a lease?
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
What are the grounds to oppose a renewal lease?
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
What is a Tenancy at Will?
Form of licence created in writing for an unspecific period of time in which the landlord and evict the tenant at anytime
57
What is a wayleave?
Temporary right which receives annual payment Cannot be transferred
58
What is an easement?
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
Changes suggested under Renters reform bill?
End no fault evictions Decent homes standard Limit rent increases EPC changes to minimum C

APC Revision (17 decks)

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