Nitty gritty Flashcards
1954 Act Part II
An Act to provide security of tenure for occupying tenants under certain leases
S24 - If a lease is inside the act, the tenancy will not come to an end if the tenant remains in occupation. Instead it will automatically continue on the same terms until it is terminated.
S25 - Landlord’s notice served between 6-12 months before the expiry of the lease. Non-hostile notice - when landlord is prepared to grant new lease (includes new terms). Hostile notice - When the landlord opposes a new lease (grounds must be stated).
S26 - Tenant’s notice served requesting a new tenancy beginning with a date 6-12 months after making request but not before contractual expiry date specified in lease. (Must include proposals under new lease. If landlord is opposed to this, a counter notice must be served within 2 months).
S27 - Two options if the tenant does not want the lease to continue. 1) They can simply vacate by the expiry date. 2) They can serve a s27(1) notice to the landlord giving 3 months notice. Section S27(2) can be served if a tenant wishes to vacate once they are holding over, but must give 3 months’ notice.
S30 sets out 7 grounds for opposition toe grant a new tenancy.
a) Breach of repairing covenant
b) Persistent delay in paying rent
c) other substantial breach
d) Provide suitable alternative accommodation
e) uneconomic sub division (compensation payable)
f) Demolition or reconstruction (compensation payable)
g) Owner occupation (compensation payable)
a-c ‘fault-based grounds’ d-g ‘non-fault grounds’
a-e discretionary and court will decide if reasonable
f-g mandatory
For redevelopment, landlord must prove firm intention.
For owner occupation, landlord must have owned property for five years & prove intention to occupy and run business.
Compensation:
-14+ years in occupation = RV x 2
- Less than 14 years occupation RV x 1
What is a rent deposit?
A rent deposit is a sum of money a commercial landlord may request a tenant pay them at the start of a lease. This sum will protect the landlord and act as a form of security should the tenant fail to uphold any lease provision, such as non-payment of rent.
How do you perform an assignment?
1) Check the lease to check their is nothing prohibiting as assignment.
2) Find a suitable tenant and inform the landlord
3) Landlord has 21 days to respond.
4) Licence to assign drafted by solicitors.
How do you serve an outside of the Act lease?
- The landlord must serve a notice known as a ‘health-warning’ warning that the proposed lease will not be protected.
- The proposed tenant must make a declaration in response, confirming they they have received the notice and accepts its terms. (Simple declaration - given when the parties have at least 14 days or more prior to committing to the new lease. Statutory - Given when parties have less than 14 days prior to committing to the lease. Must be made before an independent solicitor).
- Procedure must be completed before the lease is signed.
Which section of the L&T Act 1954 Part II is relevant for lease renewals outside the Act?
Section 38a sets out the procedure that must be followed.
Reasons for contracting outside the act:
- Landlord wants to occupy the property in due course
- Landlord wishes to develop the property as the lease end
- Rent may be lower
- Landlord wants future flexibility
The Red Book is mandatory for all valuations except if
- Advice is expressly provided in preparation for negotiations or litigations.
- Value is performing a statutory function except for the provision of a valuation for inclusion in statutory return to a tax authority.
- Valuation is provided for a client purely for internal purposes.
- Valuation is provide as part of agency and brokerage work.
- Valuation is provide in anticipation of giving evidence as an expert witness.
Method for doing a Residual Site Valuation
Gross development value (capital value of completed scheme (GDV)
- Measure. Use plans if needed.
- Valued at current date assuming present values and market conditions
- Comparable method of valuation to establish rents and yields.
- All-risks yield.
- An allowance for tenant incentives can be assumed.
- Purchasers costs deducted.
Method for Depreciated Replacement Costs (DRC)
- Value land in its existing use (assuming planning permission exists).
- Add current cost of replacing the building plus fees less a discount for depreciation and obsolescence/deterioration (Use BCIS and then judge level of obsolescence).
Physical obsolscence
Functional obsolscence
Economic obsolscence
What is a yield?
Is a measure of investment return. Calculated by dividing the rent by the capital value.
Comparable evidence guides what yield to use.
What is years purchased?
Calculated by 100/yield. It is a measure of the number of days it would take for the rental income of a property to repay its value.
What is IPMS?
International Property Measurement Standards (IPMS) - Aimed at avoiding inconsistent definitions and bringing greater global transparency.
Currently, it is mandatory RICS guidance for members to advise clients on the benefits of IPMS.
IPMS Office, Residential currently incorporated in RICS guidance. IPMS All Buildings was published in 2023 but has not been incorporated yet.
Define gross external area
Area of a building measured externally at each floor level
Define gross internal area, what is it used for and what isn’t include?
Area of a building measured to the internal face of the perimeter walls at each floor level.
Supermarkets, retail warehouses, industrial
Doesn’t include canopies, open-side balconies, covered ways, fire escapes
Define net internal area, when is it used and what is excluded?
The useable area within a building measure to the internal face of the perimeter walls at each floor level.
Used in retail units
Excludes toilets, plant rooms, cleaning rooms, areas with headroom of less than 1.5m
What is included in a development appraisal?
Site Preparation - Demolition eg
Planning Costs
Building Costs
Professional fees - 10-15% plus VAT for architects, M&E consultants, project managers, structural engineers etc.
Contingency - 5-10% depending on level of risk
Marketing Costs - Sale around 1%. Leasing 10% annual rent
Cost of Finance - Interest rate can include SONIA rate, Bank of England Base Rate plus premium.
Developers Profit - Percentage of GDV or total construction cost - say 15-20%.
What is a FRI lease?
A full repairing and insuring lease. A lease where the costs of all repairs and insurance are borne by the tenant notwithstanding that: The landlord will almost invariably take out the insurance itself; and. In the case of a multi-let building, the landlord will carry out the repairs to the common parts.
What is the definition of fair value?
IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Required if International Financial Reporting Standards have been adopted by the client.
RICS view is that this definition is generally consistent with the definition of market value.
Movement - talk to me about subsidence and heave.
Subsistence - the vertical downard movement of a building foundation caused by the loss of support of the site beneath the foundation.
Heave - expansion of the ground beneath. Could be caused by tree removal.
Signs: Horizontal cracking in brickwork.
Water - talk to me about water damage
Damp.
Wet rote - Caused by damp and timber decay. Signs include wet and soft timber, a high damp meter reading, visible fungal growth and musty smell.
Dry rot - caused by fungal attack. Signs include fungus, (mycelium spreads across wood in fine and fluffy white strands. Other signs include a strong smell, red spores, cracking paintwork).
Rising damp stomps around 1.5m above ground level.
Condensation caused by lack of ventilation and background heating. Signs include mould and streaming water on inside of window or walls.
Damp can also be caused by leaking plumbing/air conditioning/pipework.
Contamination - what are the 3 types of survey
Phase 1 - Desktop
Phase 2 - Identification of nature and extent of contamination with detailed soil samples taken.
Phase 3 - Remediation report setting out remedial options with design requirements.
Deleterious materials
Materials that can degrade with age causing structure problems.
For example -
Reinforce autoclaved aerated concrete (RAAC) - Can degrade overtime and used in many buildings between 1960 and 1990.
High Illumina cement
Woodwool shuttering
Calcium chloride.
What are the types of asbestos.
Blue - Crocidolite
Brown - Amosite
White - Chrysolite
What is the key legislation relating to asbestos and what steps must be taken?
The Control of Asbestos Regulations 2012
Criminal offence to not comply
Duty holder must undertake a risk assessment.
Work undertaken must be done be licensed contractor.
Asbestos register must be produced and regularly updated.
Newly constructed buildings must have an architect’s signature to confirm no asbestos present.
What does EPC and MEES stand for?
EPC - Energy Performance Certificates
MEES - Minimum Energy Efficiency Standards
What are the current EPC rules?
EPC’s required for all commercial buildings with a total useful area of over 50 sq m or when newly built, sold or let for more than 6 months / or it is newly refurbished, and heating, air conditioning and ventilation services are altered.
Exemptions for listed buildings, religous buildings, temporary buildings.
Currently under MEES, a property must have a minimum rating of E, but it must be B by 2030.
What does BREEAM stand for and what is used to calculate it?
Building Research Establishment Environmental Assessment Method
Rated against nine weighted categories including water use, energy consumption, transport links, waste management.
Five ratings: Pass, Good, Very Good, Excellent, Outstanding.
What is an unencumbered freehold?
An unencumbered property is a mortgage-free property that is free of loans, charges, and restrictions.
What is an easement?
An easement is a nonpossessory right to use and/or enter onto the real property of another without possessing it. It is “best typified in the right of way which one landowner, A, may enjoy over the land of another, B”
What makes up purchasers costs?
Stamp Duty Land tax - is in bands
If property worth less than £150,000 = 0%
If property is worth between £150,001 - £250,000 = 2%
If property is worth above £250,001 = £5%
Agents Fees = 1%
Solicitors fees = 0.5%
Plus VAT for both
What does EBITDA stand for?
Earnings Before Interest Tax Depreciation and Amortisation
What is included in a set of public limited accounts?
Chairmen’s statement
Auditorys report
Income statement (P&L)
Statement of financial position (Balance Sheet)
What is the difference between balance sheet and a profit and loss sheet?
Balance sheet is a statement of the business’s financial position showing its assets and liabilities at a given date.
Profit and loss account is a summary of the business’s income and expenditure transactions.
What is included in a business plan?
Analysis of opportunities
Risks of the business
Resources Required
SWOT
Fee forecasts
Budgets, Cash flows
What types of dispute resolution do you know?
Arbitrator - decides a dispute acting in accordance with statute
Independent expert - Can be appointed by the agreement of the parties (check lease)
Alternative Dispute Resolution (ADR) - CEDR
RICS Dispute Resolution Service
What are the principles under UK GDPR?
Article 5(1) Personal data must be:
Processed lawfully, fairly, and in a transparent manner
Collected for specified, explicit, and legitimate purposes
Adequate a limited to what is necessary
Must be kept up to date
Kept in a form that permits identification for no longer than necessary.
Article 5(2) - Controller is responsible for and able to demonstrate, compliance with the principles.
What are the requirements and fines for not complying with UK General Data Protection Regulation and the Data Protection Act?
- Data protection impact assessments undertaken for high risk holding of data.
- Data controller decides how and why personal data is processed and is responsible for GDPR.
- Data security breaches must be reported to Information Commisioners Office (ICO) within 72 hours where there is a loss of personal data and a risk to harm individuals.
Fines of up to 4% global turnover or £17.5m (whichever is greater)
What are the individual rights under UK GDPR?
1) Right to be informed
2) Right of access
3) Right to rectification
4) Right to erase
5) Right to restrict processing
6) Right to data portability (to use their own purposes)
7) Right to object
8) Rights to automated decision making and profiling
What is the freedom of information act?
Gives individuals the right to access held by public bodies (companies house, land registration)
Exemptions are allowed if contrary to GDPR requirements or it would prejudice a criminal matter under investigation
What is an non-disclosure agreement (NDA)
Legally enforceable contract between two parties relating to sensitive information.
Will create a confidential realtionship between a person who has sensitive information.
Legal action can be undertaken if breaches.
What are the 9 protected characteristics under the Equality Act 2010?
Gender reassignment
Sex
Age
Marital or partnership status
Religion
Race
Sexual Orientation
Disability
Pregnancy and maternity
What is an unconscious bias?
Associations we hold which are deeply ingrained and outside of our consciousness or control
What are the key skills for effective team working?
listening
discussing
persuading
respect
helping
sharing
participating
communicating
reflecting.
How does the Equality Act 2010 link with Inclusive Environments?
An inclusive environment is one which is designed and managed to allow people with a diverse range of needs and abilities to access and use it.
The Equality Act includes 9 protected characteristics, and an inclusive environment is one that caters to all needs under this.
The act also extends the existing requirement for reasonable adjustments to be made to help disable people if they would be placed at a substantial disadvantage if the work was not carried out.
When faced with an obstacle to access for disable persons, The act requires the service provider to remove or alter the feature, or provide a reasonable means for avoiding the obstacle or reasonable alternative access to the service.
What is included in a risk assessment?
- Identify the hazards present
- Identify the people at risks from the hazards eg. employees, contractors, visitors
- Evaluate the risk, considering the likelihood and severity of any accidents. Existing precautions in place should be identified and evaluated.
- Record the findings on a suitable form
- Review the risk assessment regularly.
- Advise all those affected of the outcome of the risk assessment and methods of work and precautions to minimize or eliminate risk.
What is the ‘safe person’ concept?
An individual who assumes individual behavioural responsibility for their own, their colleagues’ and others health and safety while at work.
What does the Health & Safety at Work 1974 act relate to?
Duty of the employer to ensure as reasonably practicable the health and safety at work for all employees.
What are the ‘Six Pack’ of H&S Regulations?
- Management of Health and Safety at work
- Display Screen Equipment
- Manual handling Operations
- Personal Protective Equipment at Work
- Provision and Use of Work Equipment
- Workplace health, safety and welfare.
