Mock Questions Flashcards
What type of lease qualifies as an AST?
Fixed term - often 6 or 12 months
Periodic - rolling weekly or monthly
Your original tenancy started on or after 28 February 1997
You don’t live with your landlord
You won’t have an AST if your rent is: more than £100,000 a year or less than £1000 a year in London or £250 a year outside London
What is the definition of a qualifying tenant under the L&T Act 1987?
A person is a Qualifying Tenant under the LTA 1987 Act if they are a tenant of the flat under a tenancy other than:
(a) a protected shorthold tenancy;
(b) a business tenancy;
(c) a tenancy terminable on the cessation of his employment; or
(d) an assured tenancy or assured agricultural occupancy.
What did you have regard to when you were constructing the service charges?
RICS Guidance
Legislation (Landlord and Tenant Act 1985)
The Lease
What is the difference between a sinking and a reserve fund?
Sinking fund - replacement fund for major items of plant and equipment.
Reserve fund - used for periodic but unexpected large items of expenditure such as an unanticipated repair bill. Provides a buffer for leaseholders, deals with overspend and can recover unexpected costs.
What is the difference between management accounts and company accounts?
Management Accounts
- internal use by management team
- typically more granular in detail and not subject to a set format
- not mandatory and no statutory time frames
- used for strategic decision making
Company Accounts
- produced for HMRC and shareholders
- generally includes a profit and loss, plus balance statement
- follow a generic format
- produced annually
- mandatory for all limited companies
Can you tell me what the main purposes are of the RICS’s guidance note - Comparable evidence in real estate valuation’?
- to outline the principles of the use of comparable evidence
- to encourage consistency in the use of comparable evidence globally
- to address issues of availability and use of comparable evidence, especially in challenging market conditions
- to consider potential sources of comparable evidence and their relative importance
What is the purpose of having a special purpose vehicle?
- Isolates risk - prevents adverse risk from being transferred to or from the owners of the SPV
- Has an asset, liability and legal status that ensures independence and makes the SPV’s obligations secure even in case of the parent company becoming insolvent
- Also shields the parent company from transferring undue risk if the project fails
- Provides a more straightforward framework for partnering and joint ventures - shareholding can reflect capital put in
How does the OPEX budget inform the feasibility modelling?
Referring to RICS Guidance Note “Valuing residential property purpose built for renting” - first edition, January 2018
A valuer’s principal approach is likely to be an income capitalisation one, not dissimilar to the practice widely adopted by the commercial real estate sector.
The liability for the majority of the maintenance and upkeep (and associated costs) rest with the owner rather than the occupier. Hence a detailed assessment of relevant costs associated with the income that can be obtained from a property is a key consideration in the valuation of properties held for rent.
Net income needs to be determined in order for it to be capitalised.
What does the 1985 act say about the provisions relating to service charge recovery?
Section 18 - defines a service charge and stipulates that the whole or part of the charge varies according to the relevant costs
Section 19 - must be reasonably incurred and the works or services they relate to must have been undertaken to a reasonable standard. Estimates must be reasonable and balancing charges must be made.
Section 20A and 20ZA - consultation requirements
Section 20B - must have been incurred within 18 months of the demand unless the tenant was notified in writing
Section 21 - must provide a written summary of costs incurred within 6 months of the end of the accounting period or 1 month (whichever is later). Exact requirements are slightly uncertain as three updates to this section provide slightly different requirements - Housing Act 1996, LRA 2002, Housing and Regen Act 2008,
What should be included in service charge demands?
Be in writing
Contain landlord’s name and address (unless payable to a ManCo)
Formal summary of rights and obligations
What should be included in the formal summary of rights and obligations accompanying a service charge demand?
Relevant legislation - Commonhold and Leasehold Reform Act 2002 - section 153
Right to refer to FTT for reasonableness
Right to ask tribunal to not enable landlord to recover legal costs
FTT costs and fees
Section 20ZA requirements
Right to ask the FTT to determine if leases should be varied
Right to request a written summary of the costs
Right to inspect the accounts within 6 months of receiving the written summary
Right to ask for a surveyor or accountant to audit
Right of landlord to obtain court order to regain entry in event of non payment
What legislation relates to residential service charges?
Landlord and Tenant Act 1985 - basic rules
Landlord and Tenant Act 1987 - holding service charges in trust accounts (section 42)
Building Safety Bill 2020 - introduced a new type of statutory charge “Building Safety Charge” - NEED MORE ON THIS
CLARA 2002, LL&T 87, Housing Acts 1988, 89, 2004 - amended certain provisions of the 1985 act
How do you ensure impartiality in tendering?
- Base scoring on the answers provided and try not to let prior knowledge impact on scoring
- Where possible, blind score although this is usually not possible
- Have multiple people review the scoring and responses (time / fee permitting)
- Where clarifications or questions are received, provide to all bidders
- Identify and manage potential conflicts of interest
- Equal information provided to all bidders
What are the different types of ADR?
Consumer - redress schemes, ombudsman
B-2-B - negotiation, arbitration, mediation, single-issue adjudication
What are the benefits of ADR?
- Cost
- Time to resolve
- Confidential
- Expert adjudication or input
