Prop man level 1 Flashcards
What is meant by security of tenure in the l and t act 1954?
Part 2 of the Landlord and Tenant Act 1954 gives business tenants the right to renew their tenancies when they would otherwise come to an end, allowing businesses to remain in their premises. This legal right to a new tenancy is often referred to as “security of tenure”.
What is meant by contracting out?
Most business tenants automatically have the right to renew under the Act unless, before any lease is granted, they agree with their landlord that the right to renew should not apply. I
What are some key changes in commerical leasehold market since the l and t act was introdued?
increase in online retail and services
and landlords and tenants have been impacted by world events - Covid-19 pandemic.
Government priorities have also evolved during this time; for example, there is now an increased focus on the environmental sustainability of commercial properties.
What is an aim of reviewing the l and t act?
supporting the efficient use of space in high streets and town centres, now and in future, by making sure current legislation is fit for today’s commercial market, taking into account other legislative frameworks and wider government priorities, such as the “net zero” and “levelling up” agendas; and
fostering a productive and beneficial commercial leasing relationship between landlords and tenants.
what is the silence rule ?PM
Always remember if the lease doesn’t explicitly say the tenant is outside the L&T act it is presumed they’re inside, post 1996 leases. (Silence rule)
why are L & t relationships important?
- Establish good relationship as you are acting on behalf of the LL - tenant may want to stay and renew lease,
- good relationships avoid mediation
What is the process & timelines if you chose to use commerical rent arrears recovery scheme?
- 7 days unpaid rent
- 7 clear days warning (7 day letter)
- enforcement agents visit
- 2 clear days
- re-entry to seize goods (must not amount to more than the outstanding amount)
- 7 clear days before sale of goods at a public auction
*fees payable must be specified on entry notice
What can you use CRAR for?
RENT ARREARs only - A minimum sum equivalent to 7 days’ rent needs to be outstanding
can you crar a tenant when the lease has ended?
YES IF …
The lease ended within the last six months;
The lease did not end by forfeiture;
The rent was owed by you at the time the lease ended;
when is it not worth using crar?
- Low value goods
- If the store is closed - has to be peaceful - can’t use forfeiture snd enter the property under crar
is foreiture a valid choice to collect arrears?
NO - if you have checked the LEASE and it contains the forfeiture clause the LL can enter the property and gain posession for a breacg of the lease
- this terminates the lease and you are unlikely to get outstanding monies back
What are the 6 of the 12 principles in the rics professional statement on commercial PM
- FAIR, HONEST AND TRANSPARENT
- CAREFUL AND DILLIGENT SERVICE
3.FAIR AND CLEAR TERMS OF BUSINESS WHICH INCLUDE COMPLAINTS PROCEDURE
- AVOID Conflicts of interest - deal with them fairly if they arise
- DO NOT DISCRIMINATE UNFAIRLY
- FAIR, DECENT AND TIMELY COMMUNICATION
Is the rics prof statement real estate management 2016 the most up to date doc?
Yes - the standards are being reviewed but publication dates have not been announced
What are the 3 key principles in the guidance note on commerical PM (2011)
- ACT as an agent for the LL
- manage third party suppliers
3 DUTY OF CARE - DUTY is to the LL but will also be resp for looking after occupiers to an extent
what are 2 useful functions of a license for alterations?
- to protect the parties at rent review
- to protect the parties at dilaps
what notice must be served as part of dilaps?
section 146 notice (1925 law of property act)
What should you consider as part of the dilaps?
- is there a schedule of condition
- were alterations granted
- what does the lease require - tenant to bring back to original state?
what are the 3 forms of dilaps schedules?
interim (at least 3 years left on lease)
terminal (last 3 yrs of lease)
final- at lease end/ break when tenant has vacated and ll wants to make a claim for damages
*negotiations should be conducted on without prejudice basis until agreement is reached
what does the rics profstandard on dilaps aim to do?
reduce claims between L & T
- both parties should keep to agreed timescale
- if in dispute parties should make genuine efforts to settle
What are cost for dilaps based on?
- cost to reinstate property
OR
- the difference in value of the prop had the tenant not carried out repairs or decorations
what do LL’s insure for and do they pay this themsleves?
- LL get insurance cover for reinstatement of building for a range of risks (fire, flood, theft, loss of rent) - there is insurance premium tax on premiums
No - they re-charge the tenants
what is the key leg relating to insurance
insurance act 2016
what is the norm lease clause regarding interest on arreas?
to be paid at % above barcalys base rate
how do you collect rent monites
usually by dd as any amount of money can be taken from accoutn but standing order is a set amount
do your firms client accounting procedures comply with rics regs?
Why is it important to avoid accepting rent when a lease has expired ? and what controls do you have in place?
-This could create a new protected tenancy
- instruct accounts team to place a HOLD on the account
apart from crar what could you do to settle RENT arrears>
- drawdown on rent deposit
- court proceedings from county court - slow and costly but threat may prompt payment
what are 7 of the 9 service charge principles contained in the RICS doc?
- ALL EXPENDITURE that ll seeks to recover is in accordance wtih the lease
- Must not try to recover more than 100% of the acuta costs
- I ssue sc budgets with commentaty annually to all tenants
- Must issue service charge accounts showing true expenditure annual to all tenants
- must provide a sc matrix to tenants annaulsy
- SC monies must be helf in one or more bank accounts
- interest must be credited to sc account after eductions have been made
what is a sinking fund?
formed peruidically by setting aside money for replavment of wasting asset e,g, heating and ac plant
what is a reserve fund?
formed to meet anitcipated future costs of maintenance an upkeep e.g. redorcations, road repairs)
