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Property Management > Level 1 > Flashcards

Level 1 Flashcards

1
Q

What does property management competency cover?

A

Day-to-day functions associated with property management, including works, health and safety, landlord and tenant relationships, and service charges.

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2
Q

What are key factors determining the landlord and tenant relationship?

A

Repairing and insuring obligations, supported by key RICS mandatory guidance.

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3
Q

Which RICS guidance documents/professional standards are important for property management?

A
  • Service Charges in Commercial Property (Professional Standard, 2018)
  • Code for Leasing Business Premises (Professional Standard, 2020)
    *Commercial Property management in England and Wales (Guidance Note, 2011)

*Property agency and management principles (Professional Standard, 2025)

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4
Q

What are key lease terms concerning property management?

A
  • Repairing and insuring obligations
  • Rent reviews
  • Security of tenure
  • Rent payments
  • Break clauses
  • Service charges
  • Leasehold covenants (LL & T)
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5
Q

What do RICS and courts recommend regarding leasehold remedies?

A

Pursue alternative dispute resolution methods before seeking legal action.

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6
Q

What is the primary duty of care for a property manager?

A

To the client, usually the landlord.

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7
Q

What are the two core duties of a property manager?

A
  • Collection of rent and service charges
  • Management of the property
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8
Q

What is the difference between assignment and subletting?

A

Assignment creates a direct relationship between the new tenant and the landlord; subletting involves the original tenant retaining the relationship with the landlord.

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9
Q

What must be documented before a tenant undertakes alterations?

A

A licence for alterations must be approved by the landlord in writing.

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10
Q

Briefly summarise what the dilapidations process is?

A

Actions taken at lease expiry to restore the property to its original condition, typically involving repairs.

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11
Q

What must a landlord do to recover dilapidations?

A

Serve a Section 146 notice under the Law of Property Act 1925.

Or issue an interim/terminal/final schedule of dilapidations

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12
Q

What is the Insurance Act 2016 requirement for policyholders?

A

Policyholders must provide all relevant information.

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13
Q

What actions should be taken for an empty building?

A
  • Inform the insurer
  • Maintain the fabric
  • Undertake regular inspections
  • Conduct H&S and fire risk assessments
  • Arrange security
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14
Q

What does lease restructuring typically involve?

A

Regearing to retain a tenant by granting a longer lease in return for lower rent or rent-free periods.

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15
Q

What are the two levels of a property manager’s role?

A
  • Day-to-day management of the property
  • Overseeing long-term prospects to improve value
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16
Q

What are the 12 principles outlined in the RICS Real Estate Management standard?

A
  • Honesty, fairness, transparency
  • Skill, care, and diligence
  • Clear terms of business
  • Avoid conflicts of interest
  • Non-discrimination
  • Fair communication
  • Separate client money
  • Honest advertising
  • Adequate PII cover
  • Clear identification of clients
  • Realistic cost assessments
  • Compliance with H&S regulations
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17
Q

True or False: The Code for Leasing Business Premises states that landlords can unreasonably withhold consent for assignment or subletting.

A

False. It states landlords cannot unreasonably withhold consent.

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18
Q

What is the primary role of a Property Manager?

A

Maintain/increase rent and capital values through good maintenance

This involves optimizing returns and asset management.

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19
Q

What are the two levels of property management?

A
  • Day-to-day management (repairs, maintenance, insurance, communication)
  • Long-term management (proactive redevelopment, investment, strategy)

These levels ensure both immediate and future value improvement.

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20
Q

What is a key responsibility for property managers regarding rent?

A

Efficient rent collection/payment

This includes ensuring rents are paid on time and maintaining accurate records.

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21
Q

What must property managers ensure for tenant compliance?

A

Tenant/landlord compliance with covenants/terms

This is crucial for maintaining legal and contractual obligations.

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22
Q

List strategies for enhancing asset value in property management.

A
  • Renovate/modernise
  • Regear leases
  • Redevelop
  • Sustainability investment (e.g., solar panels)
  • Limit void periods
  • Organize rent reviews & lease renewals

These strategies aim to improve the overall value and functionality of properties.

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23
Q

What does the term ‘void periods’ refer to in property management?

A

Periods when a property is unoccupied or not generating rental income

Reducing void periods is essential for maximizing rental income.

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24
Q

What is the process for risk management in property management?

A
  • Identify hazards
  • Decide who might be harmed and how
  • Evaluate risks and decide on precautions
  • Record findings and implement them
  • Review assessment and update if necessary
  • Advise those affected of the outcome

This structured approach helps in minimizing risks associated with property management.

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25
What does the Disability Equality Duty (DED) require from public authorities?
To promote disability equality in all areas of their work ## Footnote This duty emphasizes inclusivity and accessibility.
26
What is the significance of the Building Safety Act 2022?
Covers higher-risk buildings and ensures accountability during the building lifecycle ## Footnote It includes provisions for the safety of disabled individuals in these buildings.
27
What are the two types of maintenance in property management?
* Planned (proactive) maintenance * Reactive (corrective) maintenance ## Footnote Planned maintenance is more cost-effective than reactive maintenance.
28
What is a service charge in property management?
Costs incurred by a landlord to maintain a building, often shared among tenants ## Footnote Service charges can vary based on lease agreements.
29
What should be included in service charge budgets?
* Agreed budgets before service charge year * Quarterly billing based on estimates * Annual accounts after auditing ## Footnote This ensures transparency and accountability in service charge management.
30
What are the key principles for dealing with service charges?
* Expenditure must be in accordance with the lease * Cannot recover more than 100% of costs * Budgets issued annually to all tenants * Accurate annual accounts provided * Service charge accounts held separately ## Footnote These principles promote fairness and transparency in service charge management.
31
What are user clauses in property leases?
Restrictions on the use of the building, including planning and operational hours ## Footnote These clauses can affect property value and tenant operations.
32
What are the three types of insolvency?
* Administration * Receivership (liquidation) * Company Voluntary Arrangements ## Footnote Each type has different implications for landlords and tenants.
33
What is a Section 146 notice as per the Law of Property Act, 1925?
A notice served for lease breaches, excluding non-payment of rent ## Footnote This notice outlines the breach and required corrective actions.
34
What is the difference between repairs and improvements in property management?
Repairs restore functionality, while improvements enhance value beyond original condition ## Footnote Tenants may be responsible for inherent defects but not for improvements.
35
What does the term 'forfeiture' refer to in property management?
The right of a landlord to terminate a lease due to tenant breaches ## Footnote This is typically exercised under specific conditions outlined in the lease.
36
What is the purpose of a schedule of dilapidations?
To outline the tenant's obligations regarding repairs and maintenance ## Footnote This document is crucial for managing tenant responsibilities upon lease termination.
37
What is required to forfeit a lease?
A forfeiture clause must be present and a Section 146 notice must be served.
38
What must a Section 146 notice outline?
Responsibilities of the tenant and must give reasonable time to undertake repairs.
39
What is an interim schedule of dilapidations?
A document prepared by a building surveyor and served on the tenant.
40
What does the Jervis v Harris clause allow a landlord to do?
Do the works and charge the tenant, treating repayment as a debt.
41
What protection does the Leasehold Property (Repairs) Act 1938 provide?
It protects tenants of longer leases (7+ years) with at least 3 years remaining on the lease. If T serves a counter notice within 28 days of receiving a S146 notice from the LL, this prevents the LL from re-entering the premises and they must apply to the court to forfeit/sue for damages.
42
Under what conditions will a court permit enforcement of a Section 146 notice to repair?
If the remedy is necessary to prevent substantial diminution in value, comply with legislation, in the interests of another occupier, or can be completed cheaply.
43
What is a common area of dispute in lease agreements?
Non-payment of rent.
44
What should be checked regarding a client's strategy for non-payment of rent?
Procedures in the lease and potential forfeiture if rent is below market rate.
45
What are common warning signs of non-payment of rent?
Persistent late payments.
46
What did the 2020 Coronavirus Act do regarding rent collection?
Prevented forced collection of rent.
47
List the general arrears recovery solutions in order of preference.
* Communication, Negotiation and Payment Plan * In-person tenant visit * Payment agreement or stepped rent * Use of deposit * Guarantor * Winding Up Petition * Statutory demand * CRAR
48
What should be considered when visiting a tenant regarding non-payment?
Whether the tenant is trading from the unit.
49
What is the typical interest charged for late payments?
2-4% above base rate.
50
What is the purpose of a rent deposit?
To claim arrears easily and should be informed to the tenant beforehand.
51
What does a Section 17 notice relate to?
Pursuing a guarantor for arrears.
52
What is a Winding Up Petition?
A pressure tactic for Ltd companies to pay debts.
53
What is the minimum debt required for a Winding Up Petition?
More than £750.
54
What is a statutory demand?
The first step in the winding-up process for individuals, compelling payment.
55
What is the minimum debt required for a statutory demand?
More than £5,000.
56
What does CRAR stand for?
Commercial Rent Arrears Recovery.
57
What items can CRAR recover?
Non-perishable items only.
58
What is the notice period required before CRAR can be used?
7 days warning notice.
59
What must a lease have for forfeiture due to non-payment of rent?
A forfeiture clause.
60
What does Section 146 of the Law of Property Act 1925 govern?
The right of re-entry (for repairs)/forfeiture for landlords when a lease covenant is breached
61
What must be provided to the tenant before forfeiture can occur?
A formal notice specifying the breach and time to remedy.
62
What is the timeframe typically allowed to remedy a breach before forfeiture?
Usually 21 days.
63
What happens upon re-entry after forfeiture?
The lease is terminated immediately.
64
What is the last resort for landlords regarding lease forfeiture?
Court action.
65
What are dilapidations (definition)?
Disrepair which has arisen as a result of a breach of a tenant's repairing and decorating obligations in a lease
66
What is the current trend in the UK office sector service charge market?
Office service charge costs on the rise again after a flat 24/25. 3.6% increase expected. Increasing cost pressures due to high interest rates, energy costs and people costs creating uncertainty.
67
What are the timescales for providing service charge budget and reconciled accounts as per RICS PS Service Charges in Commercial Property (2018) ?
Budgets should be issued at least one month prior to commencement, and reconciled accounts issued within four months of the end of the service charge year in question. Often these timescales aren't met, which leads to cost uncertainty and delays in returning credit when SC is underspent
68
What are some of the key principles of the RICS Professional Statement Real Estate Management (2016)?
-Act with honesty, integrity, professionalism and competence -Avoid conflicts of interest -Advertising and marketing material must be honest and truthful -Client money must be held separately and covered by insurance -Hold PII (there are 12 principles total)
69
What are the key takeaways from RICS Professional Statement Real Estate Management (2016)?
-Aimed at commercial and residential PMs -12 key principles -Provides advice on ethics, new lettings and lease renewals, managing real estate, safety and security -Will be superceded by the overhaul of standards and guidance for prop man (one of three standards published already)
70
What are the key takeaways from the guidance note on Commercial Property Management in England and Wales, 2011?
-A guide to best practice for commercial property managers containing a lot of useful information -Focuses on how a property manager can be efficient, effective and accountable to their client and comply with statute law -Primary duty of care is to the landlord or client -Gives specific advice on many areas including rent collection, service charges, managing buildings, H&S -Includes summary of all relevant statue law and model terms of engagement
71
What is an assignment?
Transferring the legal interest in a property to another party. The new tenant has a direct relationship with the LL
72
What is sub-letting?
When a tenant rents out part or whole of their demise to another party. The new sub-tenant has a direct relationship with the main tenant and pays them the rent, who then pays rent to the LL
73
Why might you sub-let rather than assign?
-Stipulated by the lease -For part of the demise and not the whole -If market rent is higher than the passing rent, there is a profit rent -If tenant wants to re-occupy in the future -New party is of lesser covenant strength
74
What is a cost undertaking?
An agreement by the tenant to pay for the landlord's surveyor's and legal costs. Should be drafted and sent by solicitors because it is legally enforceable.
75
What are landlord remedies for illegal alienation?
Forfeiture, damages or injunction
76
If LL consent is provided for assignment/sub-letting, what is then required?
A license for assignment/sub-letting
77
What is an FRI lease?
Full repairing and insuring. Tenant responsible for internal and external repairs, even if tenant not responsible for the disrepair. Tenant responsible for insurance, either through paying LL premiums, taking out their own policy or self-insuring (gov)
78
What is an IRI lease?
Tenant responsible for internal repairs, maintenance and insurance, LL responsible for structural and external repairs.
79
How can you prove statutory compliance when managing property?
Good documentation and records e.g. Asbestos Management Plan & Surveys, EPC, Fire & Risk Assessment, Gas Safety Certificate, PAT testing Regular inspections and assessments as required by statute e.g. gas safety testing Compliance e.g. Equality Act 2010, planning permission Seek professional advice where required e.g. building surveyor
80
Which legislation prevents a landlord for unreasonably witholding consent for tenant improvements?
Section 19(2) of the Landlord and Tenant Act 1927
81
Which legislation prevents a LL for unreasonably delaying consent for assignment?
Landlord and Tenant Act 1988
82
If a tenant pursues section 19(2) of the LTA 1927 to make improvements, what can a LL do/impose?
-pay its costs --reinstate; and/or pay compensation for the diminution in the value of reversion.
83
When could a LL refuse consent for alterations?
-Tenant in breach of covenant -Alterations reduce value of the property -Evidence of long term structural instability

Property Management (2 decks)

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