Non-Negotiable Lists Flashcards
What’s the Conflict of interest check process?
- Carried out when taking on new client or instruction.
- Notify the partner in charge
- PIC will refer the case to the Workman Internal Conflict of Interest database.
- If a conflict is identified, step back from the case.
- The PIC will inform both parties of the conflict.
- Only take forward if it is agreed that it is fine to continue in best interest of both parties.
- Manage conflict with stuff like information barriers.
Whats the Anti Money Laundering Check process?
When client onboarding & to be regularly updated:
- Gain personal / organisation information
- Ensure no criminal affiliation
- Determine the source of the funds
- Check against sanctions list
Whats the client onboarding process?
- Competence check
- Conflict of interest check
- Negotiate & draft terms of engagement
- Gain organisation & billing details for client
- AML Check (check sanctions etc.)
- Draft PMA & get signed
Whats the Setting up RICS firm process?
- Notify RICS of your intention
- Appoint lead communicator
- Provide all information in line with RICS registration rules
- Get PII cover & other necessary cover
- Set up CHP, anti bribe & money laundering policies
- Set up a locum
- Add ‘regulated by RICS to business literature
Whats the Bribery Act Principles (6)?
- Proportionality
- Top-level commitment
- Risk assessment
- Due diligence
- Communication
- Monitoring & Review
Whats the 5 rules of conduct?
- Members and firms must at all times act with honesty and integrity and comply with their professional obligations, including obligations to RICS
- Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise
- Members and firms must provide good quality and diligent service
- Members and firms must treat others with respect and encourage diversity and inclusion
- Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.
Whats the RICS Ethics principles (6)?
- Honesty
- Integrity
- Competence
- Service
- Respect
- Responsibility
Whats the Requirements for handling client money?
- Data to be secured and protected
- Money is to be held in an account labelled ‘client’ and client’s name
- The account is always to be in credit
- The money must be available to the client on request
- Agreement on interest to be made
- There must be a monthly 3-way reconciliation
Whats the Firms obligations to RICS?
- To cooperate with RICS
- To provide any information reasonably requested by the standards & regulations board
- To have PII cover
- To have a locum in place
- To have a CHP
- To display ‘RICS Regulated’ on all business literature
Whats the Members obligations to RICS? (3) ?
- To cooperate with RICS
- To provide any information reasonably requested by the standards & regulations board
- To comply with CPD requirements
Whats the Workman’s complaints handling procedure?
- If someone wants to complain, do not discourage them
- Refer them to your complaints handling officer & step back
- Complaint to be sent in writing & added to complaints log
- Officer to acknowledge within 7 days, to respond in 28 days
- If an agreement cannot be reached, RICS dispute resolution service may be utilised (workman use Property Redress scheme)
How do you close down a RICS firm?
- Notify RICS you intend to close down
- Notify all clients & hand over to suitable alternative services
- Return all client funds you are holding
- Set up 6+ years run off cover
- Keep records for 6 years
What is included in a PMA?
- Identification of both parties & property to be managed
- Terms of engagement
- CHP & Dispute resolution
- MGMT Fee & Basis
- Services to be provided:
–> Budget / services / rent collection - KPIs & Reporting requirements
Talk me through a rent review?
- Upon instruction, check competence / COI, agree terms of engagement
- Request full legal pack
- Read lease - check if time is of the essence, mechanism assumptions, disregards)
- Inspect & measure property
- Gather comparable evidence & calculate market rent
- Gather client approval
- Send new rent proposal (trigger notice) to tenant for negotiation
- If no agreement can be reached, refer to dispute resolution in lease / calderbank if confident
- If agreed, pass to solicitors to document via RRM
Whats the Lease renewal process (landlord friendly notice)?
- Upon instruction, check competence/ COI, terms of engagement
- Discuss with client their intention
- Inspect / measure property
- Gather comparable evidence & carry out MR valuation
- Serve friendly notice to tenant 6-12 months in advance w/ health notice & proposed terms
- Negotiate with tenant
- If no agreement - refer to court, court might order PACT
- If agreed, solicitors to document new lease agreement
Whats the Assumptions & Disregards in a RR?
Assumptions:
- The unit is fit to be occupied immediately
- Property can be used for intended use
- The unit has vacant possession
- Let on OM by willing lessor to willing lessee
- Tenant has satisfied lease obligations
Disregards:
- Goodwill
- Tenant’s occupation
- Any improvements with LL permission
- Any licenses
Whats the Sections 23-40 under the LL & T act 1954?
23: act applies to business tenancies
24: tenancies protected under act only to be terminated in accordance with act
25: Landlord’s notice to terminate
26: Tenant’s request for new tenancy
27: Tenant’s notice to quit
28: Agreement for new tenancy = original tenancy becomes unprotected
29: Timescales for application to court
30: Landlord’s grounds for opposing tenancy
31: Court will dismiss tenant application if s30 is successful
32: Court decides what property is comprised
33: Court power to order new tenancy for a term
34: Rent, assumptions and disregards
35: Other terms under new tenancy
36: Carrying out of order for new tenancy (order is binding)
37: Compensation where new tenancy not granted
38: Contracting out of S24-28
39: Saving for compulsory acquisitions
40: Duty to provide information
Whats the Landlord Grounds for opposing a new tenancy under S30? (7)
Fault grounds:
- Tenant has consistently not paid rent
- Tenant has not carried out repairs
- Other serious breach of lease
- Landlord finds suitable alternative accommodation
Non-fault grounds:
- Uneconomical subletting
- Landlord requires for own use (competent only >5yrs ownership)
- Landlord intends to redevelop
Bonus:
Compensation = 1x Rateable value <14 years, 2x Rateable value >14 years
Whats the Rights under GDPR (8)?
- Right to be informed
- Right of access: can access own personal data
- Right to rectification: Can request corrections
- Right to erasure: right to be forgotten
- Right to restrict processing
- Right to data portability: obtain & reuse personal data across different services
- Right to object
- Rights related to automated decision making and profiling
Whats the GDPR Principles (7)?
- Lawfulness, Fairness & Transparency
- Data minimisation
- Storage limitation
- Accuracy
- Purpose limitation
- Integrity & confidentiality
- Accountability
Whats the measurement process for NIA/ IPMS3?
- Receive instruction from client & check competency & COI.
- Agree on basis of measurement & reporting requirements
- Carry out desktop assessment of property - unit plans etc.
- Arrange access & assess any H&S risks
- Attend site with necessary measurement equipment
- Measure unit horizontally to IDF’s
- Check measurements against unit plans
- Provide measurement report to client
Whats the components of a measurement report?
Report:
- Identification of property & use
- Measurer identification
- Basis of measurement
- Measurement method + tools used
- Unit of measurement
- Date of measurement
Rules:
- Measurements stated on a level by level basis
- Any limitations to the measurement to be stated
- Any reconciliation of dual reporting to be included
- If unit conversion required, conversion rate to be stated.
What is included / excluded in NIA?
Included:
- Usable area, measured horizontally to IDF
- Skirting/ trunking
- Atria with clear height above
- Entrance halls
- Notional Lift Lobbies
- Kitchens
- Ventilation/ heating grilles
- Non structural lightweight internal partition walls
Excluded:
- Interior walls & columns
- Toilets / Cleaners Cupboards
- Corridors / Circulation areas
- Areas less than 1.5m in height
- Permanent air conditioning
- Lift rooms / Plant rooms
- Stairwells / Permanent lift lobbies
What is included / excluded in IPMS 3?
Included:
Usable area, measured horizontally to IDF:
- Skirting/ trunking
- Atria with clear height above
- Entrance halls
- Notional Lift Lobbies
- Kitchens
- Ventilation/ heating grilles
- Interior walls & columns
- Half the common wall
- Areas less than 1.5m in height
Excluded:
Standard facilities:
- Toilets / Cleaners Cupboards
- Corridors / Circulation areas
- Permanent air conditioning
- Lift rooms / Plant rooms
- Stairwells / Permanent lift lobbies
What is the difference between IPMS 3 and NIA?
- Common walls in half: IPMS 3 yes NIA no
- Internal walls and columns: IPMS 3 yes NIA no
- Areas less than 1.5m: IPMS 3 yes NIA no
- Passages between buildings: IPMS 3 yes NIA no
Whats the Basic definitions of measurement bases?
IPMS 1: The sum of the areas of each floor level of a building measured to the outer perimeter of external construction features and reported on a component basis for each floor of a building.
IPMS 2: The sum of the areas of each floor level of an office / resi building measured to the internal dominant face and reported on a component basis for each floor of a building.
IPMS 3: The floor area available on an exclusive basis to an occupier, excluding standard facilities and shared circulation areas, reported by an occupier-by-occupier or floor-by-floor basis
IPMS 4: The sum of floor areas in a building to a finished surface, used for measuring part of a building.
GEA: The area of a building measured externally at each floor level
GIA The area of a building measured to the internal face of the perimeter walls
NIA: The usable area of a building measured to the internal face of the perimeter walls
Whats the 4 bases of value?
- Market Value
- Market Rent
- Investment Value
- Fair value
Whats the 5 traditional methods of valuation?
- Comparable method
- Investment method
- Residual Method
- Profits method
- Contractors method
Whats the Comparable Method valuation process?
- Get instruction from client & complete competence & COI check
- Agree & Draft terms of engagement
- Desktop inspection - legal docs & area info
- Inspection - property & area
- Gather comparable evidence from Costar, Tramps etc.
- Run through comparable matrix - hierarchy then weighting
- Get your market rent psf by interpolation
- Multiply by area and you have annual MR
- Triangulate data with agents
- Provide valuation report to client
Whats the Valuation process of an over rented investment?
- Determine market rent as above
- If over rented, use hardcore / layer method
- Get your rent and split into market rent / profit rent
- Capitalise your profit rent at a higher yield up to next lease event to calculate value
- Capitalise the MR into perp at appropriate yield, and discount back using PV of £1
- Add the values together for the MV
Whats the Valuation of under rented investment process?
- Determine market rent
- If under rented, use the term & reversion technique
- Capitalise the rent of the unexpired term at the ARY
- Capitalise the reversion (MR) into perp. @ higher yield Discount back using PV of £1
- Add the term & reversion values together to get the MV
Whats the Components of the Red Book?
Introduction
Glossary
PS1-2 mandatory
VPS 1-5 mandatory
VPGA 1-10 guidance
International valuation standards
Talk me through a Residual valuation?
Basic sum:
- Gross Development Value - (development costs + developer’s profits) = site value
Long Process:
- Calcualte Gross development value (Calculate MR & multiply by YP Perp)
- Take Away Development costs:
–> Site Preparation + clearing (Provided by Building Surveyor)
–> Building Costs (Gathered from BCIS on a meter squared basis, GIA)
–> Professional fees at 10% of Construction or Redevelopment Costs (Architects, Building / quantity / environmental surveyors, Planning advisor)
–> Finance costs (7% of total Development Costs)
–> Contingency Cost (3% of development and finance costs )
- Take away Developer’s profit (15-17% of build costs or 22-25% of GDV based on the risk of the project)
- Take away Acquisition / Sale Costs (Agents + Lawyers (1.8%) & SDLT)
- This leaves you with the site value, which you need to check with the agents.
What is in valuation terms of engagement?
- Conflict of interest check
- Identification of both parties
- Identification of property to be valued
- Assumptions, Special Assumptions
- Valuation date
- Basis of value & method to be used
- Fee
- Any limitations to the valuation
- Dispute resolution method / CHP
What is in a valuation report?
- Terms of engagement
- Inspection notes
- Comparable evidence
- Other enquiries, i.e. Planning, environmental surveys
- Comparable analysis
- Valuation Calculations
- The value
What Due diligence needs to be done before any valuation?
- Competence check
- COI check
- Check for good title
- Inspect property
- Check for environmental matters i.e contamination
- Check the surrounding area (market conditions)
- Planning enquiries
- Check for alterations / improvements
- Check the EPC
- Check compliance with statutory H&S
- Research with agents
How do you arrive at your ARY?
If there is no comparable evidence available, you must build one:
Start with risk-free rate (UK Gvmt GILT Rate)
Add specific risk premiums:
- Specification
- Age
- Condition
- Location (market conditions)
- Sustainability
- Environmental risks
Add economic risk premiums :
- Country wide
- Use class
- Specific area
- Minus Rental growth
Hierarchy of evidence?
- Open market lettings
- (BONUS: An open market sublet would be here)
- Lease renewals
- Rent reviews
- Independent expert determination
- Arbitrator’s awards
What options are available for rent recovery?
- Guarantor –> (Can be pursued under L&T Covenants Act 1995 Section 17, within 6 months of debt)
- Rent deposit
- Payment Plan
- Statutory demand
- CRAR
- Forfeiture / Surrender
- CCJ
Process for rent recovery?
- Try to contact the tenant
- Arrange a meeting on site
- Inspect the site (is tenant trading)
- Check the lease: rent deposit, guarantor
- Consult with client on options for recovery
- Proceed with the preferred option
What do you do if a unit becomes vacant?
- Secure the unit
- Notify the client
- Notify the insurers, council & utility suppliers
- Issue key holding letter for H&S purposes
- Ensure statutory H&S compliance for unit (EICR, FRA, etc.)
- Clean unit for viewings & maintain repair
- Set up client void for SC & insurance
9 mandatory service charge requirements? (SVC in commercial prop. 1st ed. 2018) (PS 2023)
- All expenditure recovered must be in accordance with the lease
- Only 100% of the proper costs of the services are to be recovered by managing agents
- Budgets are to be provided on an annual basis
- Signed accurate expenditure is to be provided annually
- Apportionment is to be provided on an annual basis
- All interest is to be credited to the SC account
- SC money only to be held in a discrete account
- SC consultants to ensure tenants only withhold payments in relation to dispute period
- Following dispute resolution - any incorrect SC must be rectified immediately
Process for assignment / sublet?
- Confirm instruction with client, competency & COI
- Gain undertaking for fees from tenant
- Review lease terms
- Inspect the property to ensure lease compliance
- Compare proposed rent to market rent
- Carry out review of proposed assignee (covenant etc.) (check with chartered accountant)
- If covenant lower, recommend AGA
- If no reasonable grounds to refuse consent, recommend LL authorises
- Pass to solicitors for documentation
Process for alteration request?
- Confirm instruction with client, competency & COI
- Obtain RAMS & Scope of work
- Gain undertaking for fees from tenant
- Review lease terms
- If technical, involve a building surveyor
- Determine if improvement or not
- If LL permission required & no reasonable grounds to refuse consent, recommend LL authorises
- Pass to solicitors for documentation
Process for collecting client money?
- Set up client accounts in line with RICS Client Money Handling
- Property database contains all lease information
- New leases uploaded using forms
- Lease information feeds monthly & quarterly prelists
- Prelists checked & approved, invoices issued to tenants
- Invoices to contain dates, descriptions & amounts
- Tenant pays into central account which is then allocated to client account
- Client funds are then distributed to client on agreed basis with monthly rec.
Process for handling breaks?
- Notify client of upcoming break
- If tenant serves notice, check lease
- Review break clause & notice
- Inspect property
- If non-compliant, you could notify tenant (Rule 1)
- If break is compliant, raise break fee & collect
- Inspect unit post-vacation to ensure tenant compliance with yielding up.
Whats the Inspection process?
- Desktop enquiries
- Location Assessment
- External Inspection
- Internal Inspection
What are the purposes of inspection?
Property management:
- Lease compliance
- Stat compliance
- Occupational Details
- Defects
- H&S
Valuation - what affects value:
- Age
- Condition
- Location
- Sustainability
Landlord & tenant:
- Lease renewals
- Rent reviews
What are the contents of Surveying Safely?
- Personal responsibilities (members) & corporate responsibilities (firms)
- Relevance to RICS professional groups
- Assessing hazards and risks
- RICS Member’s places of work
- Occupational hygiene and health
- Visiting premises or sites
- Fire Safety
- Residential property surveying
- General procurement & contractor management
What do you note on a retail inspection for valuation?
- The key driver of value is location in retail
You also note:
- Specification
- Frontage ratio
- Masking
- Condition
- Visibility from street
- Fit out
- Floor to ceiling height
10 GAAP Principles?
- Regularity
- Consistency
- Sincerity
- Permanence of methods
- Continuity
- Prudence
- Non-compensation
- Periodicity
- Materiality
- Utmost good faith
What are common building defects?
- Subsidence
- Heave
- Wet rot
- Dry rot
- Leaks
- Ponding / slipped roof tiles
- Spalling / effloresence on brickwork
What is the format of company accounts? (Companies Act 2006)
- Cover page
- Information and contents page
- Directors report
- Accountants report
- Statutory P&L account
- Balance Sheet
- Notes to the Accounts
- Detailed P&L Account
What is included on an EPC report?
- Identification of property
- Identification of assessor
- Floor Area
- Date of assessment
- Expiry Date
- EPC rating
- Environmental impact (CO2) Assessment
- Estimated energy cost
- Recommendation report & potential score
What buildings are exempt from requiring an EPC
- Religious buildings
- Temporary buildings (<2 yrs)
- Buildings not occupied >4 months annually
- Buildings with no heating
- Buildings due to be demolished
Exemptions for failed EPCs:
- All cost effective improvements either within 7 year payback period or under the green deal’s golden rule have been carried out
- Consent to undertake works is refused by a third party such as a local authority or incumbent tenant
- A suitably qualified expert advises that the works would devalue the building by 5% or more, or would damage the property
9 BREEAM Categories?
- Management
- Health & wellbeing
- Energy
- Transport
- Water
- Materials
- Waste Management
- Land use
- Pollution
“Many Engineers Take Walks Making Wonderful Landscapes Pretty”
9 protected characteristics?
- Race
- Sex
- Gender reassignment
- Age
- Marriage and partner
- Pregnancy and maternity
- Disability
- Religion or belief
- Sexual orientation
4 types of illegal discrimination?
- Indirect
- Direct
- Harassment
- Victimisation
Types of ADR?
ADR means anything outside of court, including:
- Arbitration
- Adjudication
- Independent Expert
- Mediation
- PACT
What are implications for Landlord when tenant goes into administration?
The administration process initiates a moratorium period during which landlords are prohibited from taking legal action against the tenant in administration, including termination of the lease, CRAR, Forfeiture.
Tenant may consider a surrender if approached but are under no obligation
If rent being paid, equivalent amount can be claimed from administrator
Administrator may seek LL consent to assign lease
If administrators cease paying rent, it nevertheless continues to be contractually payable under the lease. However, the landlord will be an unsecured creditor in respect of these arrears and may be unlikely to see much of these when the administrators’ final distributions are made.
What are implications for Landlord when tenant goes into liquidation?
A liquidator may agree to disclaim the Lease; If landlords require certainty as to whether the lease will be disclaimed, they can to serve a “notice to elect” on the liquidator, which will give the liquidator 28 days to decide whether to disclaim the lease. If they do not elect to do so in this time, the liquidator will lose their right to disclaim the lease.
When a tenant’s company is liquidated and owes you money, the landlord essentially becomes an unsecured creditor.
Landlord can deduct funds from rent deposit
Landlord can seek to forfeit the lease
Landlord can consent to assignment of lease to new tenant
